Philip Walcoff - "The Fast Forward MBA in Business Planning for ...

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Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"Breaking out the revenue among the various elements of your business (clients, product or serviceofferings, and departments or divisions) in Exercise 25 will help you determine how you need to growyour business. This is easier in larger companies, because departments or divisions typically do theirown revenue breakouts; in smaller companies it might be more difficult to do. In a small company, youmight want to set your revenue goals by defining revenues by product or service area.For example, if you are in the photography business, you could break out the revenuesbyPage 97cameras and accessories, film sales and developing, and frames, albums, and other photographicaccessories. If you are in the construction business, you could break the revenues out by remodeling andnew home construction and by labor and materials. If you are in the computer business, you mightbreak out your revenues by hardware sales, software sales, training, and consulting.Another approach to setting a five-year revenue goal is to depict a specified growth rate, as follows:• Achieve a compound annual sales growth of 25 percent per year through the next 5 years, resulting ina revenue of $15 million in 2005.By client area:CommercialIndustrialGovernment$8 million$6 million$1 millionBy service or product area:Waste-removal servicesRecycled products$7.5 million$7.5 millionBy operating division:file:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (110 of 219)16.02.2005 13:54:23
Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"ScrapHaulingDemolition$5 million$5 million$5 millionIn this case, the company is in the waste-removal and recycling business. Its 5-year $15-million revenuegoal is expressed in three different ways: (1) by customers (commercial companies, industrialcompanies, and government organizations), (2) by service or product breakout (waste removal andrecycled products), and (3) by what the company will be selling and how it will be organized (scrap,hauling, and demolition).Notice that the five-year revenue goals in the two examples presented support two areas of the missionstatement. First of all, they address the mission statement's first question of what the company is sellingand who it is selling to; and second, the goal shows growth over the next five years supporting a portionof the fifth Mission Statement element—a growth commitment to the stakeholders.Page 98EXERCISE 25: DESCRIBE YOUR FIVE-YEARREVENUE GOALSReview the two examples presented in the preceding text, anddocument your own five-year revenue goals in your businessplan (see Appendix B). Select a total revenue goal and thenbreak it out, as shown, by client area, business area, or anyother way to portray some distinction in terms of where therevenues will come from. In developing your five-yearrevenue goals, refer to your earlier documented response toQuestion 1 on your mission statement, ''Who are my clientsand what am I selling?" This should provide the basis for therevenue breakout of your five-year goals.Profit Goalsfile:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (111 of 219)16.02.2005 13:54:23
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