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

Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"A second five-year goal should address profit—the major reason for companies to be in business. Somebusiness owners are reluctant to state a profit goal in fear of giving their employees the impression thatthe boss is getting rich off of their efforts. Profits provide job security and professional and financialgrowth for your employees. In addition, your bankers demand a profitable company, profit helpscapitalize the company, and profit is that pot of money to be spent on investments in the growth of yourcompany. By all means, establish a profit goal.Profit goals are typically presented in terms of pretax profits. Review your recent profit history anddetermine where you would like to be, within reason, in five years (Exercise 26). Refer to yourpreviously defined revenue goal. Profit goals can be expressed in a number of different ways. Someexamples of five-year profit goals follow:• Total dollars—pretax income of $600,000• Earnings before interest and taxes (EBIT)—achieve an EBIT of 11 percent• Percentage of revenues—9 percent of revenues (pretax)• By business element:Pretax profit bydivision:GovernmentCommercialInternational$6 million$2 million$1.5 millionfile:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (112 of 219)16.02.2005 13:54:23