A thing worth doing is worth doing badly. Yes I know that it should be well. My grandma drummed into me that whatever I did I should do it as well as I possibly could. But grandma said that there was another side to it. If it were worth doing, even doing it badly was better than not doing it at all. Never be put off from doing something that ought to be done because others can do it better, said Grandma, The others may not do it and then it never gets done. So its hard for you to estimate sales take a stab at it anyway! I wish I had a dollar for every small business operator who told me that it was impossible to prepare a projection of cash-flow requirements because their sales were so sporadic and uneven. Its strange in a way that although it is true that each business is unique, it is also true that all small businesses are the same. Most small retail firms average about 30% as a gross profit. That gives them an average mark-up on purchases of about 42%. It doesnt matter what sort of shop, you can use that as an average. Similarly, all other expenses average out at about 20% which gives a net return on sales of 10%. Arent there firms that do better than this? Too right there arebut some do much worse. So a projection based on averages for your industry will probably be badly out-of-whack. You might think the result is a bad job but it will be one hundred times better than none at all. The owner will know quite a number of concrete figures without having to guessitimate. She will know many of her outgoings: - Rent
- Average wages (these will fluctuate a little)
- Loan repayments
- Plant lease payments
- Her private spending requirements
- Accounting and bookkeeping fees (she should have been told on engagement)
- Insurance premiums
- Registration fees
- Subscriptions
And with all this information her advisor can estimate the amount of profit which will be required to keep cash-flow positive. From the required profit it is a simple task to calculate the sales that are needed to produce the required profit. Hey! I hope to have higher sales than that. But now weve made a start, we can build in some of your expectations, and now we have a projection that we thought couldnt be done. But will it be right! No it will never be right on the money, but it doesnt have to be. Each week/month we will compare what actually happened with what we had hoped to happen and work out our strategies accordingly. If sales fall short by 10% in the first month we have a far greater chance of recovery over the 11 months than if we had no plan at all (even if we thought it was a bad one). And for those proprietors who do a plan and do not compare it to actual until the end of the year any shortfall will be lost forever. A thing worth doing is worth doing badly. It applies to all aspects of business and life. I often hear owners say, I can not up-sell. Im no good at it. Maybe, but it is necessary. Who is going to do it if you dont? Get a little training and start doing it badly. Youll be surprised at how good you get. A thing worth doing is worth doing badly. |
