Business Mentor Weekly #39 • Three Year Sales Projections

Use market numbers to check reasonableness, but don’t use them to
generate the numbers directly.. . . having laid bare your business
model, you can track your progress. You projected a 3 percent response
rate? When the actual rate comes, you have early warning if you need
to tweak your plan.

Implement This Principle: Create a three year unit sales projections.
This type of a forecast allows for reliable sales figures because it
takes into account unit forecasts based upon all promotional
activities.

To Get These Results: The unit forecast provides a more reliable
source for forecasting sales and cash flow.

Thoughts to Ponder: Sales unit projections force you to consider your
entire business model, including the development of business
mechanisms that are supported and support your promotional activities.

See http://emeraldv3.com/PHPList/lt.php?id=YhgIBVVXAFRPAQxLUVUA for more on
business
mechanisms.

When forecasting, take into account:

Next periods revenue will be more like the last three periods revenue
than any other factor without significant changes.

Sales forecasting is designed to give you more information so you can
make more informed decisions and get better results.

“There are various factors that may adversely or positively affect
the computation for sales projection based on their direct or indirect
impact in the company’s business plan.

These factors include:

External Factors

Seasonality of the business
Relative state of economy
Direct and indirect competition
Political events
Styles or fashions
Consumer earnings
Population changes
Productivity changes
Product enhancement and new products

Internal Factors

Labor problems
Credit policy changes
Sales motivation plans
Inventory shortages
Working capital shortage
Price changes
Production capability shortage
New product lines
Expected cost of raw materials, storage, shipping
Product past sales
Present market share
Recent trend in Sales”

~ San Jose State University, Sui Generis Team

Take Action: Create a spreadsheet with every promotional marketing
initiative your company uses. Include direct and indirect activities
such as direct sales, website, blogs etc. Make sure to use unit
projections first, from the unit projections by product you can then
project revenues.

Email me for a promotions projection spreadsheet by replying to this
email. It contains over 60 promotional initiative ideas you can use to
rev up your sales and marketing activities.

Next Week’s Topic: ProForma Income Statement

Business Mentor Weekly #40 • Pro Forma Income Statement

The numbers on a pro forma income statement won’t be perfect but the
exercise of analyzing all your sources of revenue and expenses is one
that will assist your business planning process immensely. ~ Joshua
Feinberg

Implement This Principle: A three year forecasted income statement
includes sales, cost of goods sold and net profit forecasts. Sales
projections provide a look into the future based upon internal data,
what is known of the past and qualitative data, gleaned from outside
the organization.

To Get These Results: The sales forecast provides an approximation of
what the future staffing, financing and product development
requirements are. A well developed forecast will reduce stress and
keep you on track.

Thoughts to Ponder: Bad news in business often comes in the form of
economic downturns, the loss of a client or lost opportunities. A well
maintained pro forma cash forecast will help keep you focused on
reality, and in turn relieve stress. If the forecast is based in
projections of unit sales as outlined in last week’s mentoring
weekly newsletter, you will also have an idea of what activities are
required to make your projections accurate.

Take Action: Go to my website

http://emeraldv3.com/PHPList/lt.php?id=YhgIBlZTBVRPAARLUVUA

(under free resources) to get a copy of the spreadsheet template I
have used to develop promotional activity requirements, unit sales
forecasts and pro forma income forecasts. Start with the promotions
that fit your business. Enter the number of units you believe each
promotion will generate in sales. Go to the next sheet (below on the
left) and enter in your products and pricing information, the sheet
will calculate your sales based upon your unit projections from the
previous page. Enter in your monthly projected expenses and the sheet
will calculate your projected net profits. Update this spreadsheet
monthly as results come in to fine tune your forecasts.

Next Week’s Topic: Develop Mission Statement

Business Mentor Weekly #41 – Develop Mission Statement

Companies whose employees understand the mission and goals enjoy a 29
percent greater return than other firms. ~ Watson Wyatt Work Study

Implement This Principle: A mission statement lets everyone in the
organization know how you are going to win. It must be based upon the
strategic objective.

To Get These Results: A well developed mission statement keeps
everyone on the same page and working toward the company’s vision by
implementing your strategic objective.

Thoughts to Ponder: U.S. workers want their work to make a
difference, but 75% do not think their company’s mission statement has
become the way they do business. ~ Workplace 2000 Employee Insight
Survey

Vision is a being statement, mission is a doing statement. Your
mission statement needs to explain how you are going use your
strategic objective to accomplish your mission; how you are going to
win. It tells the reader how you are going to achieve your vision. It
encompasses your entire planning process, which is why it comes so
late in the mentoring program.

Take Action: With your vision statement and your strategic objective
in front of you, craft a statement about how you are going to use your
strategic objective to fulfill your company vision. Once you have your
statement crafted run it by others you respect for honest reflection.
Make changes if you must, but do not allow others to deter you from
what the mission statement is intended to accomplish. When you are
satisfied post it in conspicuous places, teach your mission to
everyone in the organization, force yourself to include its principles
in your thinking and the thinking of everyone connected with your
business.

Next Week’s Topic: Establish Initiative System

Business Mentor Weekly #42 • Establish Initiative System

“There is nothing so useless as doing efficiently that which should
not be done at all.” ~ Peter F. Drucker

Implement This Principle: Well designed initiatives guide the company
with a systematic approach to all new projects. An initiative includes
project objectives, project strategies, and anticipated results in
your customer’s world, removes variances in deliverables and assigns
tasks, schedules and metrics for measuring success.

To Get These Results: Projects are focused; team members are
accountable, productive and accomplish the right results for the right
reasons; they are in effect, effective and efficient.

Thoughts to Ponder: You can efficiently make the best blue
screwdrivers in the world, but if what your customers what are black
screwdrivers, you have become ineffective. Being effective in business
requires Vision, Planning, Preparation, Execution and Measurement or
Feedback. Effective leadership requires not one or two, but all these
steps to take place. Our leadership system, (which we call VLS) has at
its core an initiative quadrant system, a systematic way of assuring
all company initiatives are both effective and efficient. If you are
having trouble keeping costs down, delegating decision making and
improving performance, VLS will get you on track and keep you on
track.

Take Action: Establish a low end dollar amount or allotted time you
or your employees can commit to without spending approval. Using the
initiative principle above, establish a systematic approach to
implementing initiatives. Reply to this email if you would like a
visit to review how VLS can help you more effectively grow your
company.

Next Week’s Topic: Establish Management Objectives

Business Mentor Weekly #43 • Establish Management Objectives

Definition of Motivation; “the psychological feature that arouses an
organism to action toward a desired goal; the reason for the action;
that which gives purpose and direction to behavior.” ~
wordnetweb.princeton.edu, (notice that without a firm goal or
objective there is no motivation.)

Implement This Principle: Every manager needs to establish his or her
primary job objectives and have them approved by the chain of command.

To Get These Results: Everyone in the organization knows what they
should be working on from a big picture perspective. Conflicts are
reduced and the since of accomplishment is greater when one works on
things which matter.

Thoughts to Ponder: If you do not set objectives with and for your
people they are left to motivating themselves, to work on what they
perceive is the objective.

An objective must be executed within the context of a well thought
out strategy, develop a strategy to accomplish your objective. If you
have been tracking with the weekly mentor program, you have already
developed the strategy for every major department in your
organization. Following a strategy assures you are executing tasks to
meet your objective within a framework which has been previously
vetted.

Owners and CEO’s only have seven or eight objectives, they are
provided here for your review, they come from Peter Drucker’s “The
Practice of Management.”

1. MARKET STANDING: Management should set objectives indicating where
it would like to be in relation to its competitors.

2. INNOVATION: Management should set objectives outlining its
commitment to the development of new methods of operation.

3. PRODUCTIVITY: Management should set objectives outlining the
target levels of production.

4. PHYSICAL & FINANCIAL RESOURCES: Management should set objectives
regarding the use, acquisition, and maintenance of capital and
monetary resources.

5. PROFITABILITY: Management should set objectives that specify the
profit the company would like to generate.

6. MANAGERIAL PERFORMANCE & DEVELOPMENT: Management should set
objectives that specify rates of worker productivity as well as
desirable attitudes for workers to possess.

7. WORKER PERFORMANCE & ATTITUDE: Management should set objectives
that specify rates of worker productivity as well as desirable
attitudes for workers to possess.

8. PUBLIC RESPONSIBILITY: Management should set objectives that
indicate the company’s responsibilities to its customers and society
and the extent to which the company intends to live up to those
responsibilities.

Take Action: Organizational objectives should be developed
collaboratively with the person responsible for executing them,
remember, management is a collaborative process, and leadership is
serving people under you and taking responsibility for making the
tough decisions.

Test the resulting objective to see if it is a SMART objective to
implement. SMART is a litmus test system, these are questions you ask
yourself about the objective as you write it to make sure it meets
SMART criteria.

Is the objective:

• Specific

• Measurable

• Actionable

• Reasonable

• Time-bound

How are you going to measure success: How are you measuring
successfully meeting your objective? An objective that is not
measurable is not an objective, it is a wish.

Next Week’s Topic: Establish Management Tasks