It is obvious really what are you to do with all that Chocolate you receive from Valentines Day and Easter – use it to sustain you through your Financial Year business planning.
Everyone goes crazy as the New Year starts setting resolutions and goals they wish to achieve in the coming year, but rarely do people do the same at the beginning of the financial year
Before 30 June please take these three steps to plan for the next financial year:
Step 1 – The Review
By now you will have your financial reports for the current financial year from your Accountant. You will also have your current half year Financial Year results from your accounting software. These two reports are gold for planning your budget for the current year, pull them apart line by line. Start with your Sales then review each expense line as a percentage of your sales to identify your actual KPI’s (Key Performance Indicators) of COGS (Cost of Goods Sold) and Labour. Whilst you are at it identify your Average Transaction Value (ATV) and how many transactions you do each day; each month; each year.
Step 2 – The Budget
Use the KPI’s from step 1 to create your budget for next year. Most importantly improve these KPI’s to identify a bottom line profit that you can aim for. After all, this is why you are in franchising to make a profit
It’s time to do a bit of dreaming and let your imagination get carried away with you. As always, start at the top, what if you could increase your sales by just 1% or 5%? What would this figure look like? Divide it by 52 to get a weekly figure that you have to aim for, is this achievable? Name the figure and set it as a weekly goal to reach.
Now reduce both your COGS and labour by between 1% – 5% of this new sales figure and enter these figures into your budget. Enter every other figure into the budget using last year’s figures as a guide to get that new profit figure at the bottom. What does it look like? What percentage of sales is it? Continue to play around with these figures to arrive at a profit figure that you feel is achievable and one that you feel happy with. Then it is onto the business plan to ensure that the budget goals you have set yourself can be achieved.
Step 3 – Business Plan
I like to compare Business Planning to planning a road trip. You have your starting point – Step 1 “The Review”. Your have your final destination – Step 2 “The Budget”. Step 3 is the road map that gets you from the starting point to the final destination.
For each KPI that you have decided on in your budget, you need to plan the journey on how it is going to happen.
Ask yourself questions like; How will I increase my turnover? How will I improve profitability? How can I improve customer loyalty? How will I communicate with my staff? What are my goals for the coming year both personally and professionally?
The answers to these questions will give you the directions for your road trip.
It is a common saying in business that most business don’t plan to fail they simply fail to plan and this is so true. By taking the time to plan your year ahead, you are increasing the opportunity for success AND you have a great use for all that Chocolate!
To help you on your planning journey please download my Budget Starter template from my website.