by Danielle Andrews, President of The Wedding Planners Institute of Canada Inc.
Talking about money can be scary, but everyone is in business to make a profit. If your business is not making money, it’s a hobby, and you work way too hard for this to be just a hobby!
36 percent of men planning to open a business plan to do so to become wealthy, while only 23 percent of women planning to open a business do so for the same reason.Paul Lima. Globeandmail.com Business
Most entrepreneurs, whether male or female, start their businesses because they love what they do and want to make a career out of it. When starting a business, the business owner often thinks about things like a flexible work schedule, being their own boss and choosing who they will work with. Often, making a proper salary and profit do not become motivating factors until they want their business to be their only source of income. This is where a Profit Plan comes in to play.
What is a Profit Plan? Similar to a Business Plan, a Profit Plan is an essential exercise you need to complete to properly plan for the financial success of your business.
What should a Profit Plan include?
- Business Plan
- Desired Salary
- Product Suite (Services/Products you plan to sell)
- Projects (What you need to do to sell those Products/Services)
- Promotion Strategy (how and when you will promote those Products/Services)
- Predicted Expenditures and Static Expenses
A fact that many people do not realize, is that the amount of revenue that a business generates does not all go to the owner, the costs of doing business must always be factored in and accounted for.
For businesses generating under $250K per year, this is the revenue breakdown:Profit First by Mike Michalowicz
50% goes to Owner’s Salary
30% goes to Operations
15% goes to Tax
5% is Profit
If your desired Salary is $50,000, you know that your business needs to generate $100,000 of revenue. In order to create a Profit Plan for earning this $100,000 you need to figure out your Baseline Revenue. This is the signature service in your Product Suite, it is the meat of your business and what will bring in the most money/profit. For most Wedding Planners, their Baseline Revenue is their Full Wedding Coordination service. You then need to determine how many Full Wedding Coordination service packages you need to sell in order to reach 80% of your Profit Plan. Of course the best and safest strategy for a Wedding Planner to collect fees is a Monthly Payment Plan, which just so happens to be the best way to properly predict your income as well!
Next, you need to determine your Projects. This is what you need to do in order to sell those services to generate the desired profit. Projects would include wedding shows, blogging, social media, and all actionable facets of your Promotional Strategy or Marketing Plan. You need to look at the Wedding Market in your area to determine when is the best time to promote your Signature Service in order to fill up your calendar so that you have predictable revenue all year long. For Wedding Planners, it is best to do their heavy promotion in Engagement Season and around the time of any local Wedding Fairs and Shows.
Another important aspect of your Profit Plan is determining your business’s expected Expenses and Expenditures. Once you have determined what these expenses and expenditures are, it is important to look at ways to reduce those costs, an therefor increase your Profit.
A failure to plan, is a plan to fail, so make sure you are ensuring the success and longevity of your business by properly managing and planning your company’s profits and revenues.