UlTImATE SUccESS GUIdEthese customers and how many sales can be expected from this prospect
base. You must be able to estimate the exact amount of sale per satisfied
customer and the amount of growth and net profit per sale, per product,
per customer, per call.
The measure of your ability as an entrepreneur is your ability to cre-
ate a business plan and a budget, and then to achieve those results on
schedule. Anyone can pull numbers out of a hat. But the best business
people are the people who meet or exceed their numbers consistently
and dependably. This is the true measure of how good you really are.
First, you determine how much you are going to sell, how you are go-
ing to sell it, and who you are going to sell it to. Second, you determine
how you are going to deliver the product or service and collect payment
for it. Third, you estimate all of the expenses involved in achieving the
sales on the top line.
Take every single conceivable expense, in order, from the largest expenses
to the smallest, from cost of goods sold, salaries, rent, utilities and trans-
portation all the way down to the cost of shipping and postage stamps. It
is useless to play games with yourself, or to ignore unavoidable expenses.
There is nothing that makes a business plan less believable than the fail-
ure of the entrepreneur to include every expense that will be incurred.
Once you have added up all your expenses, you then create a “fudge
factor” of 20% of that total number. For example, if your top line sales
for the month are going to be $10,000 and your total expenses to achieve
those sales will be $5,000, you create a fudge factor of 20% or $1,000
and you include that as a real expense. Believe me, it will become a real
expense, no matter what you do.
Now you have an accurate projection of your net income for that month.
You do this for every month, taking into consideration seasonal fluctua-
tions, vacations, cycles and trends in demand over the year, and estimate
your financial results for the next 12-18 months.
FoCUs on the nUMBeRsEvery month, you review your actual figures against your projected fig-
ures to see how close you were. By using a spreadsheet program like
“Excel,” you can keep accurate and current books. By changing any one
of the numbers in your financial plan, you can then push a button and