Checking in on Your Profit Plan

AbilityAs we start the second month of 2016, I thought it would be a great opportunity to check in on your profit planning activities. Last fall, I wrote about some of the excuses heads of companies have when it comes to profit planning and many of them revolved around the sheer complication from putting one together and not really knowing where to start.

Understanding that Presidents and CEOs often have little or no time to dedicate to even some of the more important tasks involved in running a company, I’ve put together a few of the ways we can help you understand and build your own profit plan.

First of all, profit planning is more than a budget – it’s taking control over your company’s destiny and preparing a plan by which you can get to profitability. It’s best to involve all key employees in your company, because without thoughtful insight into how your company expects to be profitable, there is little to no ownership in the process of bringing it to fruition.

But, you probably already know all of this.

The unknown comes from not knowing HOW to get all of these critical pieces into one master plan that you can actually use throughout the year. Here is our simple 4-step process that we bring to your team in order to prepare your company’s Profit Plan:

We spend time with you and any key members of your team to help you uncover and identify your objectives and initiatives for the year.

We utilize your existing financials to help complete forecasts, including:

  1. Sales by month (e.g. by product, product line, category, customer)
  2. Cost of Sales (same basis as Sales)
  3. Gross Margin
  4. Head count and related Payroll Expenses
  5. Marketing Expenses
  6. Sales Expenses
  7. General & Administrative Expenses (i.e. overhead)
  8. Finance Expenses
  9. Other expense categories unique to your business

The next step is to make sure we have all of the information in the right place. We work with you and your team to review, revise and approve all expenses as well as the Profit Plan and Forecasted Cash Flow.

We work with your existing CPA or use our own staff to enter the Profit Plan detail in your Accounting Software to enable us to begin reporting actual results to the plan.

The end result is a clear understanding of where you want your company to be and how you plan to get there. Each of the key action items and line items are designated by the person responsible, along with projected start and complete dates. We can then help you manage the process and keep everything on task.

The Profit Planning process normally takes between 6-8 weeks with a consistent and committed focus, and we can help you make the process less painful so that you are getting to profitability as soon as possible. If you’d like to have a discussion to see what’s involved in getting the process started, I’m happy to provide you with a complimentary session to see if it’s a good fit for you and your company. Contact me today.

Written by

Rick Arthur is a CFO whose expertise is built on Financial Intelligence and 35 years in senior financial roles. Coupled with a CEO’s perspective and the experience of building his own $20 million company, he brings a unique depth of insight into business from the top down. Wired to get to know people, Rick works hand-in-hand with business owners of intentional, growth-oriented companies, solidifying relationships as a trusted advisor and confidant to his clients. He leverages his experience to help business owners gain traction and stay laser-focused on the company’s vision, cash flow, and profitability – all while creating big picture solutions for strategic planning, growth and sustainable success.