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"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
Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"Page 99Pretax profit by products and services:ProductsServices25 percent12 percentAs shown here, the profit goal can be expressed in a number of ways, including total dollars, percentageof revenues, and dollars (or percentage of revenues) broken out by operating organization or productsand services.EXERCISE 26: DESCRIBE YOUR FIVE-YEARPROFIT GOALSDocument your five-year profit goal in your business plan(see Appendix B). Define a goal for the entire company or,preferably, break it down by appropriate organizations (e.g.,divisions, groups, and profit centers). As stated earlier, theprofit goal, in dollars or percentage of revenue, is usuallystated as income before taxes or before interest and taxes.Customer Satisfaction GoalsYou should have at least one goal reflecting client or customer satisfaction that addresses two areas ofyour mission statement: (1) the benefits of your products and services and (2) the commitment youmake to your customers (Exercise 27). Some examples of client or customer satisfaction goals follow:1. 95 percent customer satisfaction, as evidenced by surveys2. 90 percent repeat business from previous year3. 95 percent annual client retention rate4. Client satisfaction evidenced by 90 percent repeat business in all market segments and 95 percentrating in client surveys5. Monthly visits to client sites by all senior managersfile:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (113 of 219)16.02.2005 13:54:23
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Philip Walcoff - "The Fast Forward MBA in Business Planning for ...

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