Growing a business takes lots of planning and preparation before it will prosper. Often times business owners try to build a business without any planning or preparation. But it just won’t work.
Planning is defined as a list, summary or outline of tasks to be completed in order to reach a goal, task or accomplishment.
Preparing is defined as taking the necessary action to put something, ie. the tasks in the planning stage, into a suitable state that is fit to be used.
Prosper is simply defined as to flourish or to thrive.
Let’s put this process to use in finance and business.
As a business owner, you want your business to grow from one year to the next right? OF COURSE YOU DO! Well that can’t happen unless you take the time to map out where your going and how you’re going to get there
Scenario 1
Your total gross sales increased by 25% from year one to year two. However, while your next profit was still the same amount, say $25,000, your net profit percentage decreased from $10% to 8% of total sales. You want your net profit to remain at 10% of gross sales.
- Plan how much your income or sales will be for the year by creating a budget. This budget will include a detail list, line by line, of every sale or expense that will pass through your door. How much income do you want to come into your business? How much do your total expenses need to be to hit that target?
- Prepare to hit your goal of 10% net profit to gross sales growth rate by analyzing your sales and expenses. Now that you know what your gross numbers needs to be, how many more customers do you need to bring in that income? How will you increase your client base which will in turn increase your sales? What expenses are running too high and can be cut down? What, if any, expenses can be cut altogether?
- Experience prosper as you implement step two and monitor your progress minimally once per quarter. At the end of each quarter, determine if you are on track to meet your target or if you need to “tweek” some of your projections.
So you see there are a ton of questions that need to be answered and addressed before your business will begin to prosper. Was that too numbers related? Ok try this example.
Scenario 2
You have this great idea and you want to start your own business. You think it is something potential customers want so you decide to go for it. You set up your business name, get some business cards and start seeking clients everywhere you go. And what happens? Womp womp wooommmppp.
- You need to create a business plan that includes a financial projection plan. What will your sales be? What product or service will you offer? Who will be you target audience? Where will you find your target audience?
- Once you have answered those questions, and a few others, prepare a marketing plan to determine how you are going to achieve those goals. This plan is the HOW to your who, what, when, where, and why.
- Follow you marketing plan and financial projection plan, and watch as your business begins to prosper. Remember to do an assessment every quarter to ascertain whether or not you are on the right track towards your goals.
Have you started a major project or task without the proper planning and preparation? What lessons did you learn from your experience?
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