How to translate your goals into a budget
So you have put together your business goals for 2015.
Why not translating those goals into a budget? By doing that you can have a much clearer idea of whether your strategy is feasible, if you have the necessary resources and it will also help you to focus on what is important.
Here are some examples of three business goals changed from words into figures that hopefully will help you to do the same with yours.
Goal example 1: Increase profit
Karen has a yoga studio. She wants to attract more customers and increase her bottom line by at least 30%. She makes around £65,000 after paying all the costs and 30% of that would be £19,500.
Her studio operates at almost full capacity in the evenings and early mornings. However during the day she struggles to fill up the room. Her normal price is £12 per class. She decided to create an offer for mums in the area where they can bring their non-walkers babies along for a discounted price of £9 per class. She reckons that she will be able to gather at least 9 people in the mid-morning sessions and another 7 in the mid-afternoon. She will employ a teacher rather than giving these classes herself and they charge £30 per class. We can ignore the other costs (like studio rent, etc) since they are fixed and will incur anyway.
There you go. It seems that Karen’s plans are quite feasible as long as she manages to bring that many attendees each month.
Goal example 2: Hire help
Daisy has been a Coach for over a year. She is amazing at what she does and has no problem getting new clients being most of them referrals from current clients. Because she does everything by herself she finds that only 45% of her time is chargeable (around 18 hours per week) as she has to do all her admin, expenses, booking, etc. This year she wants to be able to outsource some of these tasks and increase her chargeable time to 60% (around 24 hours per week). That would be an increase of 6 chargeable hours per week and she charges around £105 per hour. Daisy thinks that 10 hours of a Virtual Assistant would suffice for what she needs. She wants to see whether this idea would be cost beneficial.
The 6 extra hours that Daisy would be free up in order to do more chargeable work would be more than enough to cover the expense of having a VA and she would still make an extra £330 per week (around £17,160 per year (£330 x 52 weeks).
Sounds like a good deal to me.
Goal example 3: Rent an office
Elise has worked from home since she quit her corporate job to start her own business as an Independent Consultant. She now has full time Personal Assistant and she is associated with other consultants being able to make a margin by including them on her proposals. She thinks that an office would be useful for them to have meetings and do technical work together. It would also look more professional for her clients and hopefully grant her more proposal wins.
I do not have enough information in order to create Elise’s budget but here is the template for her to plot her estimated figures and check whether she can afford the premises or not…
You get the gist!
The important message here is that most of our goals can but plotted into a modelling template so you can have a more clear picture of what you have to be paying attention to in order to achieve your goals and be able to manage your own expectations. Will you achieve your goals by the half year mark, by the end of the year?
Which figures you know are vital to your results and you need to be monitoring? What kind of other preparations will you realise that need to do? Do use budget to manage your business? Do you find that they are useful? Please share your experience in the comments below.
Get my free report: "5 Mistakes Eating Your Profits Now & How to avoid them"!
Latest posts by Morena Russell (see all)
- How to create abundance in 2017 - January 6, 2017
- 4 Habits Of A Highly Profitable Business - December 2, 2016
- How To Manage Your Money When You Have Inconsistent Income? - November 25, 2016