A new year means a fresh start, a chance to build on good decisions and lessons learned in the previous year. Or it’s time to make adjustments and eliminate habits that didn’t benefit you or your business for the long haul.

 

Many professional service business owners cringe at the sound of the ‘B’ word (budget) since they are so focused on managing ‘now’. For some, budgeting is akin to being stuck in a straightjacket, as many owners thrive on the adrenaline generated by continuous on-the-spot decision-making.

 

Yet there comes a time when planning is a necessity. However, instead of grimacing, think of what the B word really is—it’s your future. Alan Lakein inspires planning with this thought: “Planning is bringing the future into the present so that you can do something about it now.”

 

Once you are reminded of the benefits of the B word, it is hard to argue against setting aside time to wear that straightjacket. Here are a few of the paybacks:

 

Align with your values. Building the business you want involves knowing and aligning with your values. Your earning and spending directly reflect your values.

 

Focus your team. Glue your team with a common purpose and you won’t be able to stop them from achieving the same goal.

 

Decrease financial worries. The only way to be clear about money and what is possible is to spend time with the numbers.

 

Finance yourself. Rather than getting stuck in the debt payback hamster wheel, plan ahead to see how the cash will flow. Explore the ‘what if’ scenarios that match your goals.

 

Understand trade-offs. Perhaps hiring a new employee means you may not be able to move to the new office this year. Or that you can only afford to provide employees healthcare insurance this year and not retirement account contributions, too.

 

Increase your creative focus and energy. By answering the core questions of your plan, your mind load will be lighter and you will have space to focus on what counts.

 

It is easy to get lured into a get rich quick fantasy when you hear stories of people who got lucky enough to monetize their great idea. But for most, achieving big dreams is the result of learning how to make a series of conscious decisions which lead you closer to your goals one step at a time.

 

Solid decision-making and fewer financial worries increase your confidence and allow your busy brain to channel energy and enthusiasm into product ideas and sales resulting in greater success and a more creative lifestyle. And isn’t that why you started your business, in the first place?

 

Convinced? We knew you would get there! Here’s how to make it happen:

 

1.      Build your team. Not everyone is able to analyze numbers or has spreadsheet skills. If this is you, find a partner or team who can support your planning. Don’t let the skill barrier block your way.

 

2.      Review historical information using last year’s Profit & Loss by Month report. Note numbers that seem high or low. Once you have an understanding of why the odd numbers exist, either correct them or jot down the explanations. Is it possible that the same type of fluctuation might occur again this year? Reviewing several past years adds additional insight.

 

3.      Fire up your computer and open up a blank spreadsheet. Pulling in last year’s report electronically is a time saver, but if you don’t have that just build your own format and use the data you have in hand.

 

4.      Envision sales by reviewing current client contracts, expected workload, project end dates, proposal pipeline, and environmental factors affecting current and prospective clients’ businesses. Calculate and plot out across the 12-month spreadsheet.

 

5.      Explore expenses: In professional services firms, between 50-70% of revenue goes to pay staff, so give this area serious consideration. Will you add staff this year to support the workload? Don’t forget to figure in all wage-related expenses, such as taxes, payroll administration and benefits.

 

6.      Tally the numbers. Most thriving builders of the B word are conservative on revenues and pad expenses. Once your revenues and expenses are mapped on the spreadsheet, total them up, and then subtract your expenses from your revenues.

 

As the year progresses, your actual numbers may not align with your estimates. You can and will make decisions that don’t line up with your plan which is OK. When you see variations, spend time understanding why and ingest the lesson for next year.

 

“Make no little plans; they have no magic to stir men’s blood and probably will themselves not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will not die.”

(Daniel H. Burnham, American Architect and Planner)

 

Now, go. Let the fun begin -- build your firm’s future by starting with the B word.