Our profit plan sessions involve a stage process. With the objective of completing a live working 12 month forecast.
First stage focuses on the core values and the long-term aspirations of the business. In order to create a plan for the proceeding 12months, it is imperative the long term (3-5 years) goals have been discussed and clarified. We do this by establishing the following:
- What is your business known for in the market place
- What size business would you like to build? People? Locations? Turnover? Profit?
- Are your team on the same page as you?
- Are you doing the right tasks in your business
We then shift the focus towards the financial performance of the business. By assessing the past financials trends and analyzing the future objectives, we begin piecing the 12 month forecast.
During the second session we are now in a position to present the projected:
- Profit and loss statement
- Balance sheet and
- Cash-flow statement
The next stage is the most important, this is where we begin to create the strategies to achieve the forecasts and goals. Our role is to translate ‘the numbers’ into ‘activities’.
These activities can cover:
- Number of leads required
- Sales conversion rate
- Number of appointments / meetings
We also confirm other key performance measures including:
- Gross profit margins
- Wages to sales as a %
- Debt collection turnover days
Quite often a forecast or budget is meaningless because the targets set are not aligned to the resources of business, therefore, we help test the forecast to assess whether the business can achieve it. Otherwise, additional resources needs are required including:
- Marketing activity
- Number of sales people
- Extra machinery or equipment
- Extra capital or finance
It is our opinion that annual planning is essential in all businesses to operate without any goal setting. As a result they feel like they are standing still and have no real vision of the future. Isn’t it time that you planned to make a profit?