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"Information Systems, $20millionInformation systems, $10 million (T.Jones)Data management softwareproducts, $4 millionSpecialized technologytraining, $8 millionConsulting (advisoryservices), $8 millionData management software products,$0.6 million (W. Stephans)Consulting (advisory services), $9.4million (M. Wells)No specialized technology trainingobjectiveenue goal and an annual revenue objective. Notice that each annual objective has a champion (names inparentheses)—the person responsible for achieving each stated objective.The company in Table 8.1 has a $40-million five-year revenue goal. It can be seen that it plans toapproximately double this year's revenues in five years. The annual revenue objective comes directlyfrom the five-year revenue goal in terms of being broken out by client area and business area.Comparing the five-year goal and the annual objective, the following can be seen for this year'sobjective: (1) The company is primarily a government contractor, although it is beginning to move outin the commercial arena; (2) the company doesn't plan to enter the international market this year; and(3) the data management software products business area is still in the formative stage, with significantgrowth planned over the next five years. In addition, the company does not plan to initiate a thrust in thespecialized training business area in the coming year.Page 113Developing a Revenue ProjectionIn setting your annual revenue objective for the current (or approaching) fiscal year, you should developan annual revenue projection to serve as a basis for setting your targets. For most manufacturing andservice businesses, this projection should reflect contracts or orders already received, orders underwaybut not yet received, proposals submitted but not yet awarded, proposals being developed but not yetsubmitted, and leads identified but not yet moved to the order or request for proposal stage, as well asany other category of potential sale that is applicable to your business. Apply probability percentages toeach of these categories (e.g., existing contracts, 100 percent; orders underway, 70 percent; outstandingproposals, 30 percent) in order to arrive at a factored forecast that more realistically reflects orapproximates reality. Figure 8.1 presents an example of a 12-month sales (or revenue) projection wherethe monthly sales range from $100,000 to $150,000. Figure 8.2 shows the cumulative sales projection;as indicated, the company expects to exceed $1.5 million over the projected 12-month period.file:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (126 of 219)16.02.2005 13:54:23
Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"If the targeted fiscal year is just beginning and your factored forecast shows revenues of $5 million, youmay want to set your revenue objective higher than this number (depending on the nature of thebusiness and how far you want to stretch), because you have 12 months to identify and acquire newbusiness. On the otherFigure 8.1Monthly sales projection.Page 114Figure 8.2Cumulative sales projection.hand, if your factored sales forecast shows $1 million and the typical period from lead identification toa final sale is 9 months, you should probably not target much more than $1 million.file:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (127 of 219)16.02.2005 13:54:23
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