Where do you see your business in the next five years? Have you written down what you would like to accomplish and how you are going to grow your business? If you haven’t taken the time to forecast your growth, chances are you may wake up five years from now and find your business in the very same spot.
Forecasting growth will allow you to make a plan that considers all the elements required to achieve the growth you’ve got your eye on. We know that planning and executing a plan for growth is one of the top issues that small business owners find difficult, so we are sharing three simple steps to get you started.
Step 1 – Set Your Five Year Goals
Goals need to be measurable and have specific benchmarks.
Set at least one goal for each year (from year one to year five) that will show business growth.
Goals could be related to revenue targets, product or service developments or growth in staffing and team development. Examples of specific goals include:
Hire a bookkeeper who specializes in small businesses to support cash management in year one.
Offer two additional services by the end of year two.
Make $500,000 in revenue by year three.
Step 2 – Forecast Revenue and Expenses for the Next Five Years
Start with current expenses (both fixed and variable), and then do some research into what new expenses will be incurred to help you reach your goals. Using the examples in step one, you could research how much it would cost to hire someone to do your bookkeeping as well as what it would cost to implement new services (equipment, marketing, more space, etc).
Once you have done your expenses, forecast your revenue. It is best to do a conservative and an aggressive projection – think big! This exercise is about forecasting your growth and building your business so don’t feel afraid to set lofty targets.
Step 3 – Track and Analyze Performance
In a previous blog post, we’ve talked about the dangers of not having a cash management process that tracks and provides clarity when it comes to your financial position. The same theory applies to all areas of your business. You must be tracking and analyzing not only your finances but your inventory, staff and even your clients. Once you have a clear picture in all areas of your business, you can build on what is working and change what is restricting your growth.
Planning for growth can be a very exciting time. Once you’ve created a plan to help you reach your growth targets, find yourself a support system that can help you achieve your goals. Simply Bookkeeping supports small businesses in Oakville, Mississauga, Burlington and Milton by building a solid financial picture which helps them to be ready for business growth. Contact us today to find out how we can help you forecast your business growth!