The Importance of Planning for Profits
Planning for profits can be an extremely effective strategy used to improve a young business. Regardless of what industry you’re affiliated with, building a business from the ground up can prove to be rather difficult.
The aches and growing pains associated with a young business can be alleviated if your entrepreneurial venture is approached appropriately. The importance of planning has been hammered into most of our brains since were in grade school.
Although we’ve heard it so much that it has essentially become a cliché, the value of sufficient planning cannot be stressed enough. When running a business, there are countless events or occurrences that can derail us from meeting our entrepreneurial goals in an efficient manner.
Planning for the unthinkable and seemingly impossible is the best way to ensure financial success in your home business!
Mathematically Planning for Profits: Back to School!
When planning for profits, it is crucial to do some math and come up with some projections. The most efficient way to make accurate projections is to use statistics from the previous year. According to many different successful entrepreneurs, you should initially take a look at the number of leads your business generated in the previous year.
After assessing the total number of generated leads, tally up the number of customers that were converted from sales leads to clients. After doing so, figure out at what rate you are converting leads into clients. This will not only help you project future earnings but also put your conversion rate in perspective.
Honing your ability to convert leads is just as important as planning for profits! After you calculate your conversion rate, calculate your revenue and subtract the amount of money you injected back in to your business. The result of this equation is your profit from the previous year.
Planning for Profits: More Money, Please!
Now that you’ve broken down your business mathematically, it is time to personally assess your earnings.
Are you satisfied with your previous year’s earnings? Would you like to increase your profit margin? You definitely don’t want to make less money….right?!
Regardless of your personal answers to these questions, your newly calculated numbers can help you plan for profit. The conversion rate number you calculated is definitely the number one determinant of future earnings. I say this assuming your conversion rate is stable or will improve!
A little optimism won’t hurt you either. Check out my residual income formula!
To finish the process of planning for profits, you simply need to come up with a realistic profit goal. After doing so, use your conversion rate from the previous year to predict how many leads you must generate in order to reach your profit goal.
Planning for Profits: Help Yourself!
When you own and operate a business of any kind, the ball is always in your court. The success of your entrepreneurial venture solely depends on the amount of work you put into it.
By planning for profits, you can realistically plan for the future. Doing so will assuredly make managing your business a much less stressful venture. Planning for profits can stabilize your business’s growth and efficiently help in planning for the future.
PS – Who else plans to add 100% commissions in your business?
Filed under: Business
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