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Plan to Make Money

© Bert Markgraf

Many small business owners get into their chosen field of activity and try to make ends meet. They work hard at anything that turns up and try all kinds of things. After a while, they find something that seems to work and they start doing more of that. It's all kind of haphazard and what's missing is planning.

Start by calculating how much money you have to make to stay afloat. Then, increase that to how much you'd like to make. Now you have a range and your aim is to plan for the top of that range.

Analyze the amount you want to make in terms of amount of product you have to sell to achieve your target. How much per month, how much per week and per day and at what profit margin? How much time do you have to sell a unit of product? How many customers will you need? What costs are associated with selling that amount of product?

Let's say you need $40,000 to live but you'd like to make around $80,000.00 selling products costing you $1000.00 each. Your office, telephone, car etc. is going to cost another $20,000. Now you can work backwards. If you sell your product for $1500.00 you'll have to sell at least 120 and up to 200 to cover your expenses and achieve your goals. Assuming you'll lose some days to administration, that's 3 - 5 per week or one every day or two. Is this feasible?

Look at the number of potential customers you can expect and the price that your product is selling for in your market. Can you expect to sell more if you reduce the price or should you raise the price because you know you can sell a certain number anyway? Calculate through a dozen or two possible scenarios and see which make the most sense to you. Put everything on a spreadsheet and change one thing at a time to see what happens to everything else. What you're doing is getting a good feel for how your business is going to run and laying the groundwork for planning what you're going to do.

At the end of this process you should know what makes the most sense for you and your business. Are you going for low profit and high volume because you can identify a lot of customers who will probably buy from you? Or are you offering extras which allow you to charge higher prices, make a better profit but on fewer units? You'll know that and you'll know how many units you have to sell each day, how much money should be coming in and how many customers you need. Best of all, you'll know that if you're following your plan, you'll end up achieving your goal.

The copyright of the article Plan to Make Money in Small Business is owned by Bert Markgraf. Permission to republish Plan to Make Money in print or online must be granted by the author in writing.