The very simple art of Business Planning using Metrics
“Making money is art and working is art and good business is the best art.” – Andy Warhol
They say a voyage of a thousand miles begins with a single step … it is very important that this first step is in the right direction. They also say that business planning can be hard, boring, unnecessary and merely a process to get funding. Business planning though can be very simple indeed. It can also be very motivating and it can certainly be exciting.
Some people write down big hairy audacious goals that frankly are too big that even if they are moving forward towards them it doesn’t feel like they are.
This really simple process gets rid of limiting self belief and is a great starting point.
There is a real life scenario:
A client had a business turnover of £335,000 and we suggested to him that we could easily increase that to £500,000 within 18 months.
It had taken him 20 years to get to £335,000 so at first he didn’t see how we could do this.
Example of Business Planning using Metrics
Try this exercise yourself with your business following the same guide.
Target turnover: £500,000
Current turnover: £335,000
Increase in turnover required: £165,000
Annualised value of average client: £1000
Actual new clients required: 165
Time period to achieve goal: 18 months
How many clients a month required: 165 /18 = 9
How many clients a week: just over 2.
There are 2 people involved in the acquisition of clients (sales) in this company so each just needs to focus on bringing in 1 new client a week.
Download our business plan template
It is now entirely achievable. This simple break down allows focus, clarity and doesn’t overburden the business.
Points to consider when Business Planning using Metrics:
Turnover is for vanity and profits are for sanity … and cash is reality. This model is based on the fact that you are happy with current profits levels and turnover is merely an easy way to work out financials. Profits should never be reduced to succeed your turnover goal.
As you increase your turnover and your % capacity, you will be able to increase prices and therefore profit.
If the example above was your business, can you honestly say that you wouldn’t need to change anything to accommodate 165 new clients – do you need to review your procedures and processes to make sure you don’t create problems for your business with more sales!
Planning your business and having a central strategy to achieve these plans is what will set you apart from your competitors – but seek experienced and skilled support to help you achieve the clarity and vision you seek.