Target Profitability and Take Your Bite-sized Business Plan to the Next Step

In writing about Key Success Factors (KSFs) as a tool for managing a small business, I recently suggested that you create a “bite-sized” business plan. The process is simple; just take twenty minutes and one piece of paper. Jot down:

1. Your top three goals for the next 30 days.
2. What activities are required to achieve those goals?
3. What measurement(s) will chart your progress?

Once you have these fundamentals identified and written down, ask yourself this question: “If I do these activities properly and hit these goals, how much profit will I make?”

If you’re like the owners of most small business, you won’t know the answer! Why? Because most plans don’t include a line item for profit! It’s true; look at the “bite-sized” plan you’ve written. You almost certainly have a top line, or a revenue number. You’re bound to have something written down for targeting your expenses. Did you subtract the expense from the income and commit to a profit target?

• If you did, congratulations, you’re in the small minority.
• If you didn’t, then don’t fret – instead ask the question, “What’s the right amount of profit?”

Don’t fall into the trap of simply accepting the difference between the income and expense projections. Instead, establish a specific amount of profit you want to achieve. By targeting profit as a line item, you’ve taken a big step towards turning it into a reality.