Build a Fail-Safe Plan
Everyone has doubts, that is normal. Everyone feels unsure at times, that is also completely normal. Plans help us overcome these fears and hesitations, so they are important. More importantly, assume you will succeed! Believe it in your heart and soul. Then you will do the work to make that true. Everything you do can be financially successful, but you must know your numbers to make that a reality.
Here are some questions you should be able to answer:
What are my products?
Which product makes the most money after expenses?
Which product makes the least money after expenses?
What is my profit/loss? If you are just contemplating starting: What does my profit/loss need to be?
It you currently are experiencing losses ask these additional questions:
How long can I sustain these losses?
What backup financial resources am I using to carry me while I am experiencing a loss?
What options do I have to improve this situation?
Is reducing expenses an option?
Is increasing prices an option?
Should I be outsourcing something so I can focus on sales, operations, etc.?
Would I save money outsourcing some functions?
If you have gotten started and are making a profit, ask these additional questions:
Exactly how much am I making after expenses?
Is this a high- or low-income month?
Will income from these months be needed for slower months?
How much does my profit margin change month to month?
Is it time to expand my business?
Those are some really hard questions to answer. If you found that a simple task, congratulations you are already on the path to being a super star in your business. If you found those questions very difficult to answer, I would say you have some homework. This is where data is your friend. I challenge you to jump in fearlessly and simply start looking at your numbers. If there is nothing to look at then I urge you to start tracking those numbers. Look at my Easy Business Task List and see what key daily tasks could help you be ready to answer these questions. Daily tracking is key to long-term success. Don’t worry, those questions above that seemed so daunting will become much easier to answer after you start a routine that builds a daily picture for you!
If after all this you are still wondering, now how on earth am I going to have enough information to even start making a plan? Here is my short cut. This is not the real answer because having good numbers is the only way to really know. However, if you will sit down and calculate all your income this last week, and all your expenses from the last month you sort of have a starting guestimate. Multiply your income this week times 52. Multiply your expenses last month times 12 and add on extra stuff like once-a-year insurance costs or property tax expenses. There is a really rough guestimate of what will happen over a year’s time. Now, subtract expenses from income and you have a guestimate of what you might make (net profit). This is the annual profit/loss you can use to start this journey. I warn you, this is not ideal, but it is less dangerous to make an educated guess and put a plan in place than to try to be successful with no plan at all!
So, now comes the fun part! Let’s get this organized into a plan for success. Let’s build that Fail-Safe Plan!
#1 Make A List:
If you follow me long enough, you will see that I love a good list! Good things always come from good lists! How can we enjoy a beautiful meal with our family without a thorough shopping list? How will we reap the rewards of our business without having all the ingredients in front of us? Think of your bookkeeping as adding all the ingredients needed to a pot of stew, the better the ingredients, the more delicious the stew.
Revenue/Profits:
List all major sources of revenue highest income to lowest income.
List all the areas of expansion you think you might be able to create.
List all the new marketing ideas you’ve had lately that you haven’t started yet.
Expenses:
List all major costs categories from highest costs o lowest costs.
Make a list of alternate vendors for some of these costs and see if you can find an instant win by simply changing vendors.
List the major activities in your business and approximately how many hours are spent on each task per week.
List all process improvements that might help reduce those man hours. (This also can be an instant win, sometimes it is one task eating up all our profits!)
List all the options for outsourcing that would be easy to use to replace those expenses and check pricing.
Visualize Success:
There are a million ideas out there about building a business plan. I suggest you browse some of them and get an idea of which ideas speak to you. I also suggest you look at my 10-Year Plan and see if that can help you get on track with ideas and/or inspiration to get a plan in place. You need to do this exercise. Whatever manner you decide to use is irrelevant. Write a vision statement and make a plan. The things that are making you hesitate can all be overcome. You have your lists, and whether those numbers are perfect or not, you have a decent idea of what to expect. So, take this moment and really believe in your ability to succeed. That is all a business plan really is: a written description of how you will succeed.
Now, I want you to go make that stew! And, like any good stew, change the ingredients as needed. This is why reviewing plans is so important. You will need to take out this plan no less than once a year and revise your goals. Business plans that create successful businesses are not a piece of paper, they are living things that serve as your guide as you make plans and changes for the future. This is your recipe, so adjust it as the ingredients change!
Be Diligent!
So, you answered the hard questions. You built that business plan. And you’re all ready to succeed. How is this fail-safe? I cannot guarantee you will succeed, but what I can tell you is this: You know what it needs to look like now, and you know if you are not meeting your own expectations. This knowledge and a fierce desire to succeed will give you everything you need to overcome obstacles. Keep up your daily bookkeeping! This will be the launch pad for all your future sucess. Remember, data is key. If you know your numbers, you can design a fail-safe plan.