Your Road Map to Success

Jennifer H. Elder, CPA, CMACopyright October 2008

If you don’t know where you are going,

you may end somewhere else – Casey Stengel

Even if you know where you are going you probably won’t get there

– Tom PetersIf you fail to plan then you are

planning to fail – Alan Lakein

NO PLAN

PLAN WITHOUT FEEDBACK

PLAN WITH FEEDBACK1. Starting in ORLANDO, FL on S MAGNOLIA AVE go toward E SOUTH ST

go 264 ft

2.Turn LEFT on E SOUTH ST(SR-15 N) go 0.24 mi

3.Take ramp onto I-4 E toward DAYTONA BEACH go 49.08 mi

4.Take the JACKSONVILLE LEFT exit onto I-95 N go 786.65 mi

5.Continue on I-395 N toward WASHINGTON go 11.68 mi 6.Bear LEFT on I-295 S go 1.2 mi 7.Take LEFT fork onto SOUTHEAST FWY toward PENNSYLVANIA

AVENUE go 0.79 mi 8.Take the PENNSYLVANIA AVENUE exit onto PENNSYLVANIA AVE SE

go 0.65 mi

9.Bear LEFT on FAIRLAWN AVE SE go 106 ft 10.Take ramp onto DC-295 N go 3.41 mi 11.Continue on MD-295 N go 0.32 mi 12.Take the ANNAPOLIS/RICHMOND exit onto US-50 E go 23.89 mi 13.Take exit #24/ROWE BLVD/BESTGATE RD/ANNAPOLIS onto ROWE

BLVD(MD-70 E) toward ANNAPOLIS/ROWE BLVD SOUTH go 1.78 mi

 14.Continue on NORTHWEST ST go 0.12 mi 15.At CHURCH CIR, take fourth exit onto DUKE OF GLOUCESTER ST go

0.24 mi

16.Arrive at the center of ANNAPOLIS, MD  

Time: 13 hours 32 mins, Distance: 880.12 miles

BUSINESS PLAN FINANCIAL PLAN

formal, extensive7-8 sections, 20-30

pages long-range, 3-5 yearswide – SWOT, marketgeneral strategiesoverall business goalscommunication tooldecision-making tool

externally (bankers, investors)

KISS2-3 sections, 5-10 pagesshort-term, 1 yearnarrow – current to near

termdetailed tacticsdepartmental targetscommunication tooldecision-making tool

internally

WHY HAVE A PLAN?

External requirements – banks, investors, partners

Planning process develops consensus on direction/destination

Creates specific steps to achieve targetsUseful guide when you encounter

challengesProvides a yardstick to measure progress

STARTING A FINANCIAL PLAN

Where are you now?Where do you want to go?How will you get there?How will you know when you arrive?

SET TARGETSSales revenue ($ and #)Product costs and marginsControllable expensesAccounts Receivable/Accounts PayableFinancingCustomer satisfactionEmployee training/coachingEmployee satisfactionVendor relationships

EVERY TARGET MUST BE SMART

S – SPECIFIC - what, where, why, how

M – MEASURABLE – be able to assess progress

A – ATTAINABLE – within reach

R – RELEVANT – apply to overall business goals

T – TIME sensitive – set a deadline

EVALUATE & ADJUSTtrack progress monthly, quarterly,

annuallycompare to targetsadjust plan

continuallyreward

performance!!!

TYPES OF TARGETSCUSTOMER SERVICE SALES

# calls per rep per dayaverage call length# missed callscustomer satisfaction

survey scores

# sales calls per weekclose ratio increase in units sold increase in particular

customer type

TYPES OF TARGETSROUTE SALES FINANCE/HR

Sales $ per routeGallons delivered per

route# missed stopscustomer satisfaction

survey scores

complete month-end close within 7 days

# HR issues addressednegotiated contract

savings# employee training

seminars

TYPES OF TARGETSPRODUCTION OPERATIONS

gallons produced per week

gallons per manhour# out-of-stocks# water complaints

Sales revenue per employee

Charitable contributionsemployee satisfaction

survey scores# accident free days

SUCCESS FACTORS

leadershipconsensuscommunicate to everyoneapplicationfeedback

RESOURCES

sba.goventrepreneur.com/businessplanbalanced scorecard.orgwikihow.com/Write-a-Business-Plan

looking back to measure your progress

FINANCIAL STATEMENTSFour Statements –

Income StatementBalance SheetStatement of Cash FlowsStatement of Owner’s Equity

INCOME STATEMENTSales

(Cost of Goods Sold)Gross Profit(Expenses)

Operating Income+/- Other

Net Income

READING THE STORY

look at numbers in CONTEXTcompare periods and yearslook for TRENDScompare to your financial plancompare to industry standards

IBWA Benchmark Study

UNICORN BOTTLED WATER

June 2008 Gross Sales = $730,396June 2007 Gross Sales = $693,896INCREASE of 5.2%May 2008 Gross Sales = $745,734DECREASE of 2.1%

UNICORN BOTTLED WATERGross Sales

April May June2008 $777,801 $745,734 $730,396

-5.2% -4.1% -2.1%

YEAR-TO-YEARApril May June

2008 $777,801 $745,734 $730,396

-5.2% -4.1% -2.1%

2007 $754,848 $725,815 $693,896

-3.2% -3.8% -4.4%

GROSS PROFIT

2008April May June

SALES 777,801$ 745,734$ 730,396$ CGS (511,015) (487,710) (476,218)

GP $266,786 $258,024 $254,178

GP% 34.3% 34.6% 34.8%

GROSS PROFITApril May June

2008 SALES 777,801$ 745,734$ 730,396$ CGS (511,015) (487,710) (476,218)

GP 266,786 258,024 254,178

GP% 34.3% 34.6% 34.8%

2007 SALES 754,848$ 725,815$ 693,896$ CGS (497,445) (480,490) (461,441)

GP $257,403 $245,326 $232,455

GP% 34.1% 33.8% 33.5%

EXPENSESCONTEXT

Single numberPercentage

Common Size Statements - % of Sales

Compare to budgetsTRENDS

EXPENSES

April May JuneSALES 16,659 16,488 16,501 PROMO

-2.0% -1.0% 0.1%

COMMON SIZESALES PROMOTION EXPENSE

April May JuneSALES 777,801 745,734 730,396

EXPENSE 16,659 16,488 16,501

% of SALES 2.14% 2.21% 2.26%

SUMMARYFinancial Plan is your road map to

success!Success depends on implementation!Feedback and adjustments are key!

“Good plans shape good decisions. That's why good planning helps to make elusive dreams come true.”