Well, we made it. The election is over, we know the outcome, and now it’s time to buckle down and get to work on next year. The first thing you need to establish is— what is it EXACTLY that you want to accomplish? There are many scenarios you may be toying with. A gross sales increase, new product rollout, or maybe you just want to break even.
Many companies see GROWTH as their primary driver. We get asked all the time what that percentage year-over-year should be. I wish I could say there was a standard answer, but the truth is, the end goal is whatever YOU are happy with. Many industries say that 2-3% growth is a reasonable rate to strive for. But, if you are looking at expansion down the road, you may need to increase that goal so you have future funding. Our typical recommendation is to use your past financials to set up that realistic number. If you have been averaging 5% sales increases for the last five years, then strive for 5-7%, for example.
A financial growth goal may not be the ultimate goal for you however. Perhaps you want to expand your product line, and in order to increase your offerings, you have to invest a significant amount of money to get it off the ground.
In that case, it may be obvious that your financials will be in the red while you invest in research and development. In those situations, it’s ok if success is less about numbers and more about reaching particular milestones that will help you grow over the long haul.
The possibilities go on and on. Wherever you find yourself in this spectrum, the first step is to know what those goals look like, so you can use them to move to the next step, budgeting.