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"In contrast to the manufacturing and service business area, where specific contracts or businessopportunities can be identified, revenue forecasting for the wholesale or retail business takes on anotherset of factors dealing with historical data, new lines, new locations, and other considerations.Independent of the type of business you are in, it's important to project your revenues over the planningfiscal year to have a realistic basis for setting your revenue and sales objectives. I am not suggestingthat annual revenue objectives be tied directly to your revenue projection. The revenue projection canbe considered more or less in the bag, whereas you want your annual objectives to be somewhat moreaggressive.EXERCISE 32: DESCRIBE YOUR ANNUAL REVENUEOBJECTIVESIn defining your annual revenue objectives, review theexample presented in Table 8.1, the five-year revenue goalsyou defined earlier, and your annual revenue projection.Document your own annual revenue objectives for thecurrent (or upcoming) fiscal year in your business plan (seeAppendix B). Select a total revenue objective and then breakit out, as shown in Table 8.1, by client area, business area,product area or any other way to portray some distinction interms of where the revenues will come from. Don't forget toassign a champion (it may be you) for each of your revenueobjectives.Page 115Profit ObjectivesJust as you developed five-year profit goals, you should have annual profit objectives (Exercise 33). Insetting your profit objective for the current (or approaching) fiscal year, review your recent profithistory and your most recent income statement—also called a profit and loss (P&L) statement. Theincome statement provides a picture of the company's profitability. Table 8.2 presents an example of anincome statement for a $5-million company. Note that operating income is referred to as earningsbefore interest and taxes (EBIT) and profit is referred to as net income. The current (1999) and previous(1998) years are presented for comparison and, as indicated, sales have increased 18 percent and profits22 percent—a relatively good year.file:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (128 of 219)16.02.2005 13:54:23
Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"With the profit history and your five-year profit goals as a baseline, this year's profit objective mighttake the form of one of the examples shown in Table 8.3, which presents examples of five-year profitgoals and associated annual profit objectives.As Table 8.3 shows, the annual profit objective can be expressed in a number of ways, includingdollars, percentage of revenues, andTABLE 8.2 SAMPLE INCOME STATEMENT, $KIncome Statement 1999 1998Gross income (sales) $5,000 $4,250Less cost of goods sold (3,625) (3,110)Gross profit 1,375 1,140Gross margin 27.5% 26.8%ExpensesSales and marketing 595 485General and administrative 175 160Less depreciation 95 85Total expenses 865 730Operating income (EBIT) 510 410Interest charges 85 62Income before taxes 425 348Taxes @ 35% 149 122Net income $ 276 $ 226file:///C|/Documents and Settings/gasanova/Local Setti...orward_MBA_in_Business_Planning_for_Growth/e-book.html (129 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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