How do I set realistic goals for a business plan?
I am just getting started with my own business. I am thinking through my budget and how long I think it will take to start producing revenue. I feel like I am making guesses. Is there a way to make this more of a science?
google "SMART" GOALS and you will see more depth to each of these topics. Setting goals around this set of objectives will ensure you have realistic targets for your business.
Happy to help with this, its all abut scenario mapping and what if calculations, then you go with the one that feels right against a likelihood matrix. Give me a shout of you'd like more help. Neil
I use a 3-phase process with my clients. Discovery -> Roadmap -> Execution
Each phase has several steps. The trick is to create a specific vision and lock onto it. Do an accurate assessment of the current state of things. Measure the GAP from here to there. Then create milestones every 90 days on the way to the desired outcomes. The quarterly milestones must contain S.M.A.R.T. goals. Specific, Measurable, Action Oriented, Relevant, and Time Sensitive. Put those in your calendar and execute. Measure your progress. Hold yourself and your team accountable.
It gets down to this: What do you want to have happen? What are the things most likely to cause that to happen? Do you have what you need to do those things? Are you disciplined enough to do those things. What are you going to stop doing to make room for what you must do?
Make lists. Be sure they are focused on the mission, vision, and purpose. Every moment or dollar invested should be about the journey to a specific outcome.
That's how we built a billion dollar school picture company, from small beginnings in garages and living rooms. This works, whether you are trying to lose 20 pounds, win an event at the olympics, or build a business. True focus and the power of believing is all within your grasp.
First of all You need to plan your cash flow , your ability to run the business , you need to calculate you expenduture & expected income during first 3-6 months , once you start you need to manage your expenses , you can pass difficult times once you start earing .
You practically answered the question yourself. The keyword here is "Realistic."
Think in terms of current priorities vs. what you're willing and able to invest in this business in terms of time, funds, resources, investor partner relations, depth of social interaction, degree and sophistication of marketing strategy etc. Regarding your business plan I say initially consider a plan with business building tasks that are relatively simple and easy to fulfill with low overhead costs, and put in place a plan to gradually grow from there. You'll find a helpful article on the subject at http://www.smallbusinesssuccesstips.net/p/online-business-plans.html.
Do research on what similar business have achieved in terms of revenue etc, talk to people in the industry, suppliers and vendors of this industry as well as online research. Set realistic goals based on your level of investment in the business and how many people you can hire to help you generate business. For eg, if I am starting a new Italian restaurant, I would go and visit several Italian restaurants in the city to see what type of business and revenue they are making, talk to employees, suppliers, other founders of restaurants, industry studies etc and then compare your level of investment and table head count and dish prices, to come up with preliminary estimates of customer headcount, table turn and in turn revenue, and then budget
Good question Sara, thanks for asking it. Too often I see small business owners set unrealistic goals within their business because they don't understand the cause and effect within their company. You must understand where you have capacity challenges within your business and set your goal and objectives to deal with them. We call this process "tuning your revenue engine". You can watch our resources video here on mosaicHUB to learn the concept http://www.mosaichub.com/resources/resource/tuning-your-revenue-engine-2 .
Once you have this information it is easy to set realistic goals and develop a "high impact business plan" to achieve them. There is more on this process on our website http://dinoeliadis.com/business-planning-with-high-impact/
I hope this helps Sara. Good luck! - Dino
Have you given thought to all the parameters of your business idea?
For my prospective clients, I provide them with a questionnaire of 20 questions that you must honestly answer. Completion of this form will organize your ideas
Good bits of mixed advice. You need to be realistic about three things, What you have as a starting point. What your market opportunities are and finally what it is going to take for you to realise the outcomes you desire/envisage.
Starting with the money/resources you have should only be done to help you identify what else you will need. If you know not your market ... your are doomed (borrowed from Sun Tsu - The Art of War).
Downloading a template and creating your own business plan is also fraught with faults ad you don't know what you don't know. Go invest in a Coach/Adviser and do the plan together. It will be more realistic and achievable.
Here is an easy read on SMMART goals:
The problem with most goals is; they are not actually goals but wishes. Saying you want to make a certain revenue in year 2 or 3, be profitable by 20XX, have a second store by 20XX, there is very little you can do short of criminal action to fulfill such wishes.
Real goals come from concrete actions you know you can perform based on resources you have at your disposal. I once built my own house. I calculated the price of materials and fixtures, knew the tools I would have to work with and the amount of time it would take to construct and finish and estimated (set a goal) to finish in 6 months and a cost of $90k. It took 7 months but I came in at $75k on expenses. I missed both goals but came fairly close to both and was happy with the results.
When you build a business you need to take into consideration hard costs like tools, fixtures, rent, office supplies, etc., and also your soft costs like payroll, advertising, commissions, taxes and so forth.
I have created a 5 year sample proforma for you to consider. You can change the numbers, add or remove items but just be sure you look at the formulas so you know what is happening because change a formula into a hard number and you've just changed the reliability of the entire proforma. You can download it from this link: https://www.dropbox.com/s/m6n43wjnwfifpxg/Sample%205yr%20Proforma.xlsx?dl=0 Good luck with it!
If you've already validated your product or service and determined that there is a market for what you're selling, then the next step is to figure out your sales cycle--from first contact with potential customers to closing the sale. If it's a big ticket capital purchase, that implies a different process from trying to get shelf space with a major retailer. Determine which model is closest to yours, research similar businesses and estimate from there. Keep in mind the previous suggestions about overestimating your expenses and underestimating your revenues.
Have you done any Market Research. What will your Market share be. How wide is your business net being spread.
There are software programmes that you can buy, but they all work on using last years figures as a basis for the new year.
Based upon your Market Research, you will need to put your finger in the air and guess. Dont forget to all for the Cash Flow implications.
Sara, by your profile it says you have a business idea that you are looking to turn into a business. Based on that I recommend forget about the business plan for the time being and do what I call a Feasibility Assessment.
Does your target market possess these 3 MUSTS.
1. Irrationally Passionate
2. Great in Number
3. Easily Reached
Drill down on the real benefit of the product or service you plan to provide. Does it help the end user fulfill one or more of these 6 basic human needs. The more the better.
1. Certainty - does it increase the end-users feeling of safety and security for themselves and for their loved ones in terms of physical safety, emotional stability or financial stability. Does it help them overcome the fear of making bad decisions?
2. Variety/Uncertainty - Does it help the end-user overcome boredom, get their adrenaline going, otherwise excite or entertain them in some way. Get the dopamine flowing.
3. Significance - Does your product or service help the end-user feel more important, achieve a higher social or professional status.
4. Connection - Does your product or service help the end-user feel a connection with you or others. As a whole humans are social animals.
5. Contribution - Does your product or service help the end-user feel a sense of making a difference for the better?
6. Growth - Does your product or service help the end-user grow personally or professionally? If a person or business does not continue to grow they indeed begin to atrophy.
If your product or service provides 3 or more of the human needs above it can actually prove addictive and guarantee a high level of customer/client satisfaction, retention and business growth thru word of mouth (face to-face and virtual) referrals.
If the answer to these questions is a unqualified YES, then many of the other responses here can give you a starting point for developing a business plan. The majority of your effort should be on the marketing and sales plan. If a all possible your business model needs to insure that you get paid upfront for the product or service your are providing to help you manage cash flow and allow you to grow your business organically.
As my mentor Jay Abraham points out, there are only THREE WAYS to grow a business but a multitude of tactics and techniques to do so.
1) Increase the number of clients/customers
2) Increase the profit generated on each sale
3) Increase the frequency at which your clients/customers buy from you.
Make sure that you focus on those three aspects when developing every part of your business plan. Make sure you build a sales process that offer additional products or services to during/after the initial sale (Upsells, downsells and bolt-ons) Take massive action on your marketing and sales plan and Measure Everything. This will give you the science behind your plan.
Key initial data points are
1) Cost to Acquire a New Customer/Client
2) Average profit per initial sale
3) Percentage of people taking advantage of upsell and downsell
Test different marketing methods, focus on the ones that work and spend as much as you can on acquiring new customers while maintaining profitability. I am going to end here but hopefully this give you enough to think about as your get started. I typed this up kind of quickly so please forgive any typos or poor grammar.
Take care Sara, and All The Best.
Recommendations are excellent given to you...... I would add that you make sure of a Mission and Vision Statement, and look at Zero Based Budgeting as a starting point for your budgets
It seems from your question that you are still undecided on the type of business to want to invest in. Before we get into the investment and revenue generation, first we need to understand the area of your interest. More importantly, you need to answer the following question, which would give a clearer picture:
• What is it that you are looking to provide?
• Is it a product or service?
• What is your targeted market and user base?
• Where would you like to be in the next 3 to 5 years?
If you can answer these questions, then it would help me in deducing a plan for your business requirement.
You are a great question.
Seeing that you are "just starting" there are many things to consider. I have helped many companies who both start up and at the same time develop a plan "on the run".
While it is still early days, I always ask the first to decide if they do infact have a business, is it sustainable, do you have a product / service which meets a need and or is a worthwhile solution. What is the expected life of what you are offering, I.E. will it be taken over by technology. If so will you be able to adapt.
Once you have a firm understanding of this, you should be able to start putting together a business plan, from which you should be able to put together the first 1-2 plan. Which is your start up plan. Including market analysis, trends, Competitors, Competitors analysis and history at least back 5 years. Include competitor reach and employer numbers along with industry ranking and estimated $ value. Put together a SWAT analysis for your business, along with a perceived SWAT on all of your competitors.
You may also want to include "Competitor countermeasures" and your response to their reaction to your entry into the market.
All of which should help you to formulate your business strategy, from which you can estimate the costs of business and the scale from Start up to.
It's a lot of work but well worth it.
I don't think that there is a formula. I work with startups all t he time on Business Plans. I would start with a Plan that include Goals around Revenue, Relationship Management (Customers, Partners, and Employees ) and Customer Success. From there I build Objectives and then Actions. This may help lay out what you need to do.
The number one thing to remember is that your business must produce a profit or why bother. I realize it's difficult to make an estimate regarding the unknown quantities of products or services that you will sell but you must be honest with yourself and realistic about your numbers. I have a free download of a Business Plan worksheet that should be helpful for your planning. Just remember one thing, when your prepare your Financial Statements (I also cover them with free downloads) you must be prepared to cover all of your costs for 1 year plus either through your own input of Capital, a Working Capital loan, or an outside investor. I tell my clients - you can not run out of Cash in October of the first year - if you do your company will fail.
You first need to decide what you want your business to achieve over the next five years and then break this down into yearly goals and objectives. As this process can all seem very daunting just ask yourself "what are my highest priority goals for this year?" and how am I going to achieve them? You might wish to increase profit by 5% therefore what are you going to do to achieve this? What marketing are you going to have to consider, how much will this cost approximately? Will you need additional help etc? Working out what you want to achieve and how you are going to achieve it will help to work out your costs and your budget.