Business
Development Report

This Report will provide you with a pathway to increase your business success. The first step in the
process is to know the Turnover and Activity you require to maintain your personal income and pay
business expenses, we refer to this as your Present Breakeven or maintain the Status Quo.

The next step is to set new personal income and company profit goals for the next 12 months, and then establish the Turnover and Activity required to achieve the desired goals.

Note: The term ‘Activity’ means the activity steps required to achievethe Turnover (revenue) goal, this includes the number of sales required, the number of Quotes/Proposals submitted, and the number of Leads required (people interested in your product or service).

For many the hardest process in developing a Business Plan is goal setting and establishing the
Activity required to achieve the desired outcomes, you may have heard the saying ‘Businesses do not plan
to fail, they fail to plan’.

Once you have established your Turnover and Activity goals the next step in the planning phase is the
‘how to’, which is how you are going to achieve those goals.

In this report the ‘how to’ is referred to as your ‘Action Plan’.

This report will list your goals for the next 12 months and the Activity required to achieve those goals.This is your recipe for success.

We have divided the report into 4 sections as follows;

1. Present Breakeven Summary.
2. “Next Year’s Goal”.
3. A Summary of Next Year’s Goals.
4. A Pathway to Achieve Your Goals.

Section 1 – Present Breakeven Summary

The first step in developing your Business Plan for the next 12 months is to establish the Turnover
(total sales/revenue) required for the business to Breakeven. The Present Breakeven, for our purposes,
is based on your previous year’s business performance, it will include Owner Income and it will also
include business Operating Profit (as stated on your end of year Profit and Loss Statement), for an
established business it is maintaining the status quo from last year to the next year.

Definition: In this report when I refer to the term Present Breakeven,
it is the amount of Turnover (revenue) required for the business to Breakeven based on your ‘present’
business activities, that is making no changes to Turnover Drivers, or in other words, business as
usual.

The Present Breakeven Analysis is based on the following information:

• You pay the following Franchise Free on turnover …
  0
• Your Average Gross Profit is … 45%
• Annual Expenses – Includes a Flat Franchise fee, if any (excluding Owners Income and a Percentage
  Franchise Fee, if any) …
  $374,400

Note: Annual Expenses include an annual inflation adjustment of … 4%

• Owners combined annual income … $180,000
• Last year‘s Operating Profit …
  $70,000
• Months of selling activity per year … 11

Explanation: Months of selling activity. Many business operations do not actively sell every month of the year, for example some may close over the Christmas (holiday) period, or a salesperson may take annual leave, and as a result, selling activity may only take place over 11 months (or less) of the year.

Note: Monthly Turnover is for 11 months of the year.

Note: Activity (sales, leads and Quotes/Proposal) numbers are for 11 selling months of the year.

• Total Gross Profit required to achieve Financial Goal including Franchise Fees
  $624,400

Note: Annual Expenses are the expenses to run your business, it does not include any Cost of Sale items, which are attributed to the direct cost of selling a product or service, not the running of a business.

To Achieve Present Breakeven

• Annual Turnover required to achieve Present Breakeven =
  $1,387,556
• Franchise Fees included =
  $0
• Monthly Turnover = $126,141

Congratulations, you now know the annual and monthly Turnover required to breakeven (or
maintain the status quo). The next step is to discover the activity required to achieve your revenue
target (Turnover).

The Following ‘Activity’ is required to achieve Present Breakeven

Activity is the business functions from which income (revenue) is the result, and in our Business Plan we
want to know the number of Sales required (based on your Average Sale Value), the number of Leads
(people interested in your product or service) and the number of Quotes/Proposals submitted to obtain
sales. By knowing this data, you can them plan your Activity to achieve your Sales and Turnover goals.

The Activity numbers below are based on the following:

You have a Sales Conversion Rate from Quotes/Proposals submitted of
20.0%, and you have an Average Sale Value of
$400

The Activity required is provided below:

• You require the following (average) number of sales per month =
  315.4

To achieve your monthly sales goal (individual sales) you require;

• Number of Leads = 2,627.9
• Number of Quotes/Proposals = 1,576.8

You now have the information required to achieve Present Breakeven for the next 12 months. This is based
on your present Activity and business functions.

To help you evaluate the impact of setting goals to increase Turnover Drivers, we have also provided a
comparison between Present Breakeven and Breakeven with your Turnover Driver Goals having been achieved.

Let’s take this one step further … And include changes to Turnover Driver Goals

By making small changes to your Turnover Drivers, will have a significant impact on your
Turnover (revenue) and the Activity required to achieve your Breakeven Goal. In the
Questioning phase you made some Turnover Driver Goals, so let’s look at the impact these goals would
have on the Turnover required to achieve Breakeven (Status Quo) and on the Activity required to achieve
the new Turnover Goal. But first, here are your Turnover Driver Goals.

Gross Profit Goal

You stated you wanted to Increase your Gross Profit by
5%, this will increase your Gross Profit to
47.25%

Sales Conversion Goal

You have stated you wish to increase your Sales Conversion Ratio from Quotes/Proposals submitted by
1, which is winning
3 sales from 10 Quotes/Proposals
submitted, which equals a new Sales Conversion Goal of
30.0%

Average Sales Value Goal

You have stated you want to Increase the Average Sales Value by
5%, additional to a price increase due to an
increase in Gross Profit (if any), the Average Sale Value Goal has increased to
$437, a total percentage increase of
9.27%

First, the impact on the Turnover Required:

	New Breakeven	Compared to Present Breakeven
Annual Turnover =	$1,321,481	Decreased by	$66,074
Franchise Fees Included =	$0	Decreased by	$0
Monthly Turnover =	$120,135	Decreased by	$6,007

Now, let’ s look at the impact on the Activity required to achieve the new Turnover Goal:

	New Breakeven	Compared to Present Breakeven
Sales Per Month =	274.9	Decreased by	40.5

To achieve your monthly sales goal (individual sales) you require:

	New Breakeven	Compared to Present Breakeven	Net Result
Number of Leads =	1,527.0	Decreased by	1,101.0
Quotes/Proposals =	916.2	Decreased by	660.6

As you can see, Small Changes = Massive Results.

By achieving the goal of making small increases to Turnover Drivers will decrease the Turnover and
Activity required to achieve Breakeven.

Section 2 -‘Next Year ‘s Goal’

You are now aware what is required to achieve Breakeven (Status Quo) with and without changes to your
Turnover Drivers. However, as a business person your goal is to grow the business to increase your
income, and develop a valuable asset which later can be sold for a good sum of money (Exit Strategy),
during the Questioning process you were asked to set an Owner Income Goal and an Operating Profit Goal.

Setting Income Goals are self-explanatory, after all we all like to increase our personal income each
year, however, some people do not necessarily understand the reasoning behind setting Operating Profit
Goals, I have provided an explanation to stress the importance of achieving an Operating Profit.

When a person looks to buy a business, they are looking for a business which will provide a return on
their investment. Some people will argue that having a reasonable income within the business is a
compelling reason why a person would buy the business, but this is false reasoning. Purchasing a
business on the basis of obtaining a good income when working the business is akin to buying a job with
overheads.

A business in general will have 2x factors under which it is valued, 1) The asset value, that is the
value of any assets the business may have, and 2) The Operating Profit, which will become a dividend to
the owner (or shareholders) of the business. It is the Operating Profit which provides the ‘Return on
Investment’ to a purchaser. This is one of the reasons why it is important for a business to have an
Operating Profit, the larger the profit the more valuable the business will be when it is sold. And in
general terms, depending on the type of business a multiplying factor of between 2-4x the Operating
Profit will be applied to provide an Intangible, also known as a Good-Will, value.

There can also be a Future Opportunity Value when selling a business, but this is another matter.

Building a successful business requires goal setting and planning, and it should be a yearly process.
Each year, you build upon the success of the previous year, set new financial goals, increase Owners
Income, increase Operating Profit and you will create a valuable asset, your business (wealth creation),
which one day you will sell.

From a goal setting perspective, aiming to increase Operating Profit will also increase Owner Income (end
of year owner dividend), and increase the value of your business, which will provide a valuable asset to
be sold at some time in the future. By providing you with an indicative business value, may be
subjective, but knowing you will gain Hundreds of Thousands of dollars, or even more, in personal wealth
is a strong motivator for you to achieve your goals.

Another good reason for having an Operating Profit Goal, is to develop a financial buffer, should it be
required.

Next Year’s Goal

Our first task is to look at the Turnover required to achieve Owner Income, and Operating Profit Goals,
plus any additional expenses to increase Spare Capacity and additional Marketing (if selected), followed
by the Activity required without an increase in Turnover Drivers. Then I will provide the Turnover and
Activity required with Turnover Driving Goals having been applied. Both sets of numbers have been
compared to the Present Breakeven numbers (without changes to Turnover Drivers). You may be pleasantly
surprised to discover the additional Turnover and required Activity will not be significantly more than
your present Breakeven numbers, and easily obtainable.

But first, below are your stated Personal Income and Operating Profit Goals, and additional budget (if
required) to increase Spare Capacity within your business, and any additional Market budget you may have
provided in the Questionnaire section.

Below are YOUR financial goals:

• Increase Owner Income from $180,000 to
  $250,000 increasing Owner Income by
  $70,000
• Increase business Operating Profit from
  $70,000 to
  $140,000, increasing Operating Profit by
  $70,000

Spare Capacity – You have indicated you have ample ‘Spare Capacity’ .

Additional Marketing Budget

An additional monthly Marketing Budget of
$0 has also been set aside to increase
Leads if required.

Increase in Gross Profit required to achieve Financial Goal

Increasing Owner Income, Operating Profit, budget to increase Spare Capacity and Marketing will also
increase the Gross Profit required to achieve your Financial Goal , see below:

• Total Gross Profit required to achieve your Financial Goal including Franchise Fees is $764,400 which is an increase of
  $140,000 when compared to your Present Breakeven without any changes to Turnover Drivers.

Note: The following numbers have been compared against your Present Breakeven (Status Quo) results (excluding any changes to your Turnover Drivers).

To achieve Next Year’s Goal – Excluding any changes to Turnover Drivers

	Next Year’s Goal	Present Breakeven
Annual Turnover =	$1,698,667	$1,387,556	Increased by	$311,111
Franchise Fees Included =	$0	$0	Decreased by	$0
Monthly Turnover =	$154,424	$126,141	Increased by	$28,283

The following ‘Activity’ is required to Achieve Next Year ‘s
Goal

	Next Year ‘s Goal	Present Breakeven
Sales Per Month =	386.1	315.4	Increased by	70.7

To achieve your monthly sales goal (individual sales) you require:

	Next Year’s Goal	Present Breakeven
Number of Leads =	3,217.2	2,627.9	Increased by	589.3
Quotes/Proposals =	1,930.3	1,576.8	Increased by	353.5

Let’ s take this one step further … And include changes to Turnover Driver Goals

Setting goals to increase Turnover Drivers should be included in your next year’s business plan. Small changes to increase your Turnover Drivers will have a significant impact in lowering the Turnover and required Activity to achieve your Next Year’s Financial Goals.

First, the impact on the Turnover Required:

	Next Year‘s Goal	Present Breakeven
Annual Turnover =	$1,617,778	$1,387,556	Increased by	$230,222
Franchise Fees Included =	$0	$0	Decreased by	$0
Monthly Turnover =	$147,071	$126,141	Increased by	$20,930

Now, let‘s look at the impact on the Activity required to achieve the new Turnover Goal:

	Next Year‘s Goal	Present Breakeven
Sales Per Month =	336.5	315.4	Increased by	21.1

To achieve your monthly sales goal (individual sales) you require:

	Next Year‘s Goal	Present Breakeven
Number of Leads =	1,869.4	2,627.9	Decreased by	1.0
Quotes/Proposals =