Why do many people start businesses? For some people, it might be the lax schedules, the fact that they are their own boss, or the freedom such a lifestyle provides. But there is one reason, which most business owners will likely respond with: profit.
Of course, you can’t have a business without profit, right? No matter how fun, enjoyable, or relaxing it is to have your very own hustle, it won’t be able to continue if you don’t have the resources to make it stand on its own. You don’t want your business to fail, do you? Of course not.
So, here is how to create a profit plan to ensure you won’t lose money or at least minimize it.
1.) Predict Expenditures – In order to plan and budget, you’ll first need to predict how much you are going to spend while running your business. How much do you think operations are going to cost? Advertisements? Travel expenditures? Estimate just how much you perceive your business is going to spend in a certain amount of time, be it a month, 6 months, or a year- as long as you think it is accurate. This may seem like a hassle to complete, but it’s more than worth it in the long run.
2.) Predict Profit – After you predict how much you’ll be spending, the next thing to do is to predict how much your business is going to earn based on the current trends you are experiencing. Don’t worry if it doesn’t turn out to be completely accurate because what’s important is that you get close. When it comes to expected profit, try to slightly underestimate rather than overestimate.
3.) List down expenses – Be sure to write down EVERY single expense the business makes during its operations, no matter how little-said expense would be- even the cheapest of things add up over time, after all. Make sure there are no holes in your accounting, as much as possible. If you list down your expenses, you will know where exactly you are spending too much, and where you are spending too little.
4.) Budget accordingly – Once you know your expenses as well as expenditure and profit prediction, you can now budget your income accordingly. Do you think you’re spending far too much on a particular item? Then make solutions, such as halting the use of it or finding a cheaper alternative. Balance your budgets in order to create a system wherein you are more likely to gain profit than to lose money. This might just be the most crucial step in profit planning because one mistake can cause you to lose quite a hefty amount of money, so be careful.
5.) Create reports regularly – Weekly, monthly, and even yearly reports will allow you to look at the trends of your business and where your money is going, so be sure not to forget about this. The reports will also be able to tell you whether you are earning or losing money overall, so it serves as a great place to stop and look at if you get lost.
[…] No matter how loved a business is, it cannot go on without some sort of profit. You need to think about how you will actually earn from it. Think up business strategies, such as placing additional fees on your products to cover costs and participating in partnerships with other brands, and set up monthly goals in order to make sure you’re not losing any money. If you don’t plan for your business financially, it is bound to fail. For more information, I would recommend reading, “How to Create a Profit Plan.” […]