Entrepreneurs Money Tips

How much money is your business going to make today, this week, this month? Do you have income projections and goals for your small business?

If the answer is yes, stop reading and go do something else productive with your time. 

Did you answer no? Saying no to income planning is basically saying no to money. What do you think?  Is it smart for any small business owner to say no increased profits?

Although it may sound a little silly when worded that way, not setting income goals for your business is literally letting money slip through your fingers. If you don’t know how much you need to make this month, how do you know what you need to do to get there?

Begin With the End in Mind
Have you ever heard of the business, organizational, and personal productivity consultant and author Stephen Covey?  Years of his analysis and observation yielded a list of habits that are common to highly effective people.  Beginning with the end in mind, Covey’s second habit, means “to start with a clear understanding of your destination”.

If you don’t begin each month with an income goal for your business, you are not optimizing your profits.  Having a goal doesn’t mean you’ll always hit it.  However, it does force you to create a plan to meet that goal.  Even if you don’t earn as much as you plan on in a month, if you track the steps you took and the results that you did see, you’ll be in a much better position to make that much money in subsequent months.

Income Planning Benefits
Let’s look at an example of how powerful setting an income goal should be.

Target Daily Income – $500

How in the world are you going to make $500 a day?  Lets dig into some more specific questions.

1) How much is a conversion worth in your business?  ($50)

2) What is your conversion rate?  (4%)

3) How many customers do you market to each day  (50)

Assuming the numbers in bold next to each question are your answers, you’re earning (4% * 50) * $50 = $100 a day

Suddenly closing the $500 day gap seems much more managable, right?  Well maybe not yet but we can see that we need to:

• Change or repackage what we’re selling to increase the value of a conversion
• Modify our sales process to increase the conversion rate
• Increase the number of people we market to

It’s near impossible to improve everything at once so our best bet is to focus on increasing just one of these at first. Now we can identify and take concrete steps towards increasing our income and reaching our profit targets.

Income Planning for New Businesses
So the next question might be, what if I don’t know my conversion rates or daily customer reach since I just started my business?  The answer is two-fold.

• Start doing something
• Start tracking everything

Of course the obvious first step for a new company is to open its doors and start making some sales.  Right away, come up with some best guess estimates in terms of your conversion profit, conversion rates, customer reach, and target profits.  Track everything in your business process and at the end of a short period of time you’ll be able to set reality based income goals.