The following report is prepared for: 6 Jan 23
From: Calc Test Retail RI BR
Dated: 06-01-2024
Congratulations on completing the BGA-Calculator Questionnaire, below is your Business Development Report.
Based on the answers you have provided in the questionnaire, this Report will provide you with your Turnover and Activity goals for the coming year.
Note: The term ‘Activity’ means the steps required to achieve your turnover (revenue) goal, this includes the number of Sales and ‘Opportunities’ (people interested in your product or service) you need to obtain each month.
Note: Throughout the Report we use the term ‘Opportunities’, whenever this term is used it relates to opportunities where a sale can be made, such as a person who walks in to a store, or go onto a website, and become a potential sale.
The first step in developing a Business Plan is to establish your financial goals for the business, the next step is the ‘how to’, which is how you are going to achieve those goals.
To complete the ‘how to’ part of your plan, you need to know the number of ‘Opportunities’ required to make the required number of Sales to achieve your Turnover (revenue) targets.
In this report the ‘how to’ is referred to as your ‘Action Plan’.
We have divided the report into 3 sections as follows;
- “Next Year’s Goal”.
- A Summary of Next Year’s Goals.
- A Pathway to Achieve Your Goals.
Report Explanation.
Turnover is the total value of sales or revenue required to achieve the desired financial goals. This includes all sales revenue. If One-off Sales are at a different Gross Profit Margin to Recurring Income, this will impact on the total Turnover amount. For example, if the Gross Profit Margin for One-off Sales is lower than the Recurring Income Gross Profit Margin, then the annual Turnover required to achieve financial goals will increase and conversely, if the Gross Profit Margin is higher, then the Turnover required will decrease.
Recurring Income is divided into 2x areas. 1) Existing business – This is included in the total revenue but is excluded in the calculation as to sales required to achieve financial goals. 2) New revenue for Recurring Income Business – The BGA-Calculator works out the Turnover you require to achieve financial goals, then projected Recurring Income is deducted, this then provides you with the revenue (sales target) for the next 12 months.
One-off Sales– This is straightforward as the BGA-Calculator will provide One-off sales as a monthly goal.
How does the BGA-Calculator Work?
Recurring Income Payments– In the discovery (questions) process we have allowed for multiple Recurring Payment Periods, these are – Monthly, Bi-monthly, Quarterly, Half-yearly, and Yearly. The Report will provide totals, such as Total Revenue, Total Sales required, etc., however, the Summary of Next Year’s Goal will provide a breakdown of each Recurring Payment goal.
Why use Average Sale Value (ASV) for Recurring Income? – The best way to calculate the sales required to achieve financial goals is to use ASV. However, Recurring Income is a payment paid on a regular basis, e.g. monthly, quarterly, etc. Over a 12-month period, the amount paid has accumulated to an annual value. For example $100 per month over 12 months = $1,200.00.
It is likely not all payments are of equal value, hence the reason for asking you to provide a total dollar value all the payments combined for the Recurring Income period (e.g. Quarterly), and the total number of payments. The calculator will calculate the ASV.
Retention – Losing clients is inevitable, this occurs for many reasons, such as no longer requiring your service or maybe going to a competitor. Therefore when estimating next year’s revenue from Recurring Income it is important to factor in a percentage for a loss of clients (Retention Value). Should you have provided a percentage, then the estimated Recurring Income percentage lost has been deducted from the projected revenue for next year, and all calculations have been based on the new Recurring Income projection.
How does the BGA-Calculator provide sales targets for Recurring Income sales when the value of the sale reduces depending on when in the year the sale has been made?
The BGA-Calculator works out the sales required each month to ensure the correct financial goal, and sales targets have been provided. This increases the sales required to compensate for the reduced revenue effect based on the ASV. For example, a Recurring Income sale has been made which has an annual value of $1,000.00. However, if there are only 10 months of the year remaining, their will only be quarterly 3 payments totalling $750.00, the 4th payment will be attributed to the following year.
However, having to compensate for sales revenue dropping as explained in ‘Why use Average Sale Value (ASV) for Recurring Income?’, by having to increase sales targets to compensate, we have also provided the following years projected Recurring Income revenue should you achieve the sales targets, less the Retention Loss percentage. By providing this information you may decide to set a longer term goal in regards to Recurring Income.
How does the BGA-Calculator breakdown the activity required?
- Sales – Sales numbers provided are for the actual NEW sales required to achieve your financial goals. This is based on the Turnover required, less projected Recurring Income. If you have indicated a percentage of revenue between Recurring Income and One-off Sales, the BGA-Calculator will provide the number of sales required for both.
- ‘Opportunities’ required – This is based on the (monthly) total sales target.
Section 1 – Next Year’s Goal
Next Year’s Goal (or Breakeven) is based on the following information:
- You pay the following Franchise Free on turnover … 8.00%
- Your Average Gross Profit for Recurring Income is … 60.00%
- Your Average Gross Profit for One-off Sales is … 45.00%
- Annual Expenses – Includes a Flat Franchise fee, if any (excluding Owners Income and a Percentage Franchise Fee, if any) … $1,704,000.00
- You have annual Recurring Income Retention Loss of … 17.00%
- Owners combined annual Income Goal … $400,000.00
- Operating Profit Goal … $300,000.00
- Months of selling activity per year … 12
Note: Annual Expenses include an annual inflation adjustment of … 5.00%
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 12 months of the year.
Note: Activity (Sales, and ‘Opportunities’) numbers are for 12 selling months of the year.
- Recurring Sales – Percentage of Turnover … 57.00%
- You have also stated the following percentages of Recurring Income account for all Recurring Income revenue;
- Monthly payments make up 20.17%
- Bi-monthly payments make up 15.13%
- Quarterly payments make up 26.89%
- Half Yearly payments make up 21.01%
- Yearly payments make up 16.81%
- You have also stated the following percentages of Recurring Income account for all Recurring Income revenue;
- One-off Sales – Percentage of Turnover … 43.00%
Total Gross Profit required to achieve Financial Goal Including Franchise Fees … $2,836,356.64
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 Next Year’s Goal;
The items below provide the total annual Turnover (revenue) required which includes projected renewal income from Recurring Income Sales.
- Annual Turnover required to achieve Present Breakeven/Next Year’s Goal = $5,404,835.15
- Franchise Fees included = $435,356.64
- Monthly Turnover = $450,402.93 (Weekly $112,600.73 Daily = $18,766.79)
However, the actual new sales (revenue) target is provided below after the projected Recurring Income revenue has been deducted.
- Projected Recurring Income – Annual Total (less Retention Loss) = $1,975,400.00
- Additional Revenue required to achieve Breakeven = $3,429,435.15
- New average monthly Sales Revenue target (12 months) = $285,786.26 (Weekly = $71,446.57 Daily =
$11,907.76)
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
As mentioned earlier, Activity are the business functions from which income (revenue) is the result, and to develop your ‘Action Plan’ you need to know the number of ‘Opportunities’ (people interested in your product or service) required to obtain the required number of sales to achieve your Turnover targets.
Note: The Activity targets are to achieve the actual new sales (revenue) target NOT the total Turnover target which incorporates projected Recurring Income from existing clients.
Also, the Activity targets are based on a selling year of 12 months.
The Activity numbers below are based on the following;
You have a Sales Conversion Rate from ‘Opportunities’ of 91.00%
Your Average Sale Value is as stated below;
Recurring income
- Monthly Payments – Average Sale Value of $1,200.00
- Bi-monthly Payments – Average Sale Value of $1,200.00
- Quarterly Payments – Average Sale Value of $1,600.00
- Half-yearly Payments – Average Sale Value of $1,000.00
- Yearly Payments – Average Sale Value of $1,000.00
One-off Sales – Average Sale Value of $996.00
The Activity required is provided below:
- You require the following (average) number of sales per month – Recurring Sales = 202.6
- You require the following (average) number of sales per month – One-off Sales = 123.4
- Combined (Recurring and One-off) = 325.9 (Weekly = 81.5 Daily = 13.6)
- Number of ‘Opportunities’ = 222.6
- Number of ‘Opportunities’ = 135.6
- Total number of ‘Opportunities’ = 358.2 (Weekly = 89.5 Daily = 14.9)
Note: Based on a Recurring Income sales target of 202.6,the Recurring Sales for the next 12 months will provide an income of $1,954,778.04. However, the following year the additional Recurring Income, less Retention Loss, is projected to be $2,450,034.68
To achieve your monthly sales goal (individual sales) you require;
Recurring Income Sales
One-off Sales
Recurring Income and One-off Sales Combined.
You now have the information required to develop a plan to achieve your Turnover targets for the coming year.
Following is a summary of your Goals.
Section 2 – Summary of your Goals
Business Income Goals
- An Annual Turnover of $5,404,835.15
- Monthly average Turnover of $450,402.93 for 12 months
- Weekly $112,600.73
- Daily $18,766.79
- Annual Gross Profit of $2,836,356.64
- New Sales Revenue Goal of $3,429,435.15
- Monthly average of $285,786.26 for 12 months
- Weekly $71,446.57
- Daily $11,907.76
New Sales Revenue Required
Sales targets for new income after deducting Projected Recurring Income – Annual Total (less Retention Loss) of $1,975,400.00 to achieve Annual Turnover Goal.
Owner Income Goals
- Annual Income Goal $400,000.00
- Operating Profit Goal $300,000.00
Monthly Activity Goals – 12 (selling) months.
- Monthly Total Sales Target of 325.9
- Weekly 81.48
- Daily 13.58
Made-up as follows
- Recurring Sales = 202.6
- One-off Sales = 123.4
- Number of Total ‘Opportunities’ required per month is 358.2 (Weekly 89.5 Daily 14.9). This includes all sales for both Recurring Income and One-off Sales.
You now have a list of Goals for the new year ahead, the next Section will hopefully provide you with some ideas from which you can develop your ‘Action Plan’ to achieve your goals.
Section 3 – A Pathway to Achieve Your Goals.
Better Business Group can help you develop and implement an ‘Action Plan’ to help you achieve Next Year’s
Goal, plus we can provide a practical and easy monitoring system to help you measure your progress.
Your Financial Goals are dependent on making the required number of sales, however, in order to achieve
your sales goals you must obtain ‘Opportunities’ to make a sale.
On this basis, you may wish to evaluate your Marketing program and make changes if required (see
‘Marketing – ‘Opportunities’ required from which to make additional Sales’ below).
BUT ….
What if you could obtain more sales from the same number of ‘Opportunities’ ? That is increase Sales
(from ‘Opportunities’) Conversion Rate, in other words your Sales Success Ratio.
By increasing your Sales Success Ratio you will require less ’‘Opportunities’ to achieve your sales goal.
Consider the following.
Increasing Sales Success Ratios
Improving your Selling Process is a key component in making it easier to achieve your ‘Activity Goals’
which is converting more ‘Opportunities’ into sales.
Many business owners are not aware that ‘selling’ is like any other business function, it can be done
well, or not so well. We are all aware a business which does not have ‘systems’ will not do as well as a
business who has ‘systems’, the same applies to ‘selling’, yet very few businesses have a system for ‘selling’.
I developed a system of selling which increased my sales success rates from winning just 3 from 10, to
winning 8 from 10 ‘Opportunities’ submitted when I first developed the system. My clients who follow the
system have reported huge increases in sales without any extra effort.
Below I have shown the impact of making just 1 extra sale from 10 ‘Opportunities’.
| Sales From 10 ‘Opportunities’ | By making just 1 extra sale from 10 ‘Opportunities’ will have the following result |
|---|---|
| 3 Sales | 33% Increase in Revenue |
| 4 Sales | 25% Increase in Revenue |
| 5 Sales | 20% Increase in Revenue |
| 6 Sales | 17% Increase in Revenue |
| 7 Sales | 14% Increase in Revenue |
| 8 Sales | 13% Increase in Revenue |
I suggest you evaluate the way in which you ‘sell’ to a prospective customer, what is your process? Do
you have one? And, does your method engender the ‘Know, Like and Trust Factor’ with your prospective
customers? Or, is your system just a case of meet, greet and provide a quote, or maybe a show and tell
process? If it is, then the opportunity to significantly increase sales, the value of the sale, and sell
more per sale, cannot be over stated.
Increasing your Sales Success Ratios can also impact on the following;
- Increase Gross Profit Margin.
- Increase the Average Sale Value.
Quotes/Proposals required from which to achieve the desired number of sales.
There are retail operations which provide quotes to potential customers, and if this applies to your
business then this may apply to you, but first, I will explain the difference between a Quote and a
Proposal.
Quote – A quote is a simple document which outlines the job, product or service to be provided and provides a Price.
Proposal – Is a selling document which provides details such as the features and benefits of a product or service to be provided (plus more) and it contains the quote.
Depending on the industry you are in will depend on which of the two you should use in your selling
process. Some industries use both, for example, a business who sell kitchen renovations would use a
Proposal to ‘sell’ the kitchen, as it would be of significant value, but if a person simply wishes to
purchase a benchtop, and then a quote would suffice.
We can help you to evaluate which is the best solution for you and why we recommend our solution.
Marketing – ‘Opportunities’ required from which to make additional Sales.
Earlier I mentioned in order to make Sales you must have ‘Opportunities’, and this is where Marketing
comes into play.
Marketing is what brings people to you, and Selling is what converts them to a customer, this applies to
any business including retail. Acquisition of ‘Opportunities’ is marketing, and you will see from the
‘Activity’ goals you have a monthly ‘Opportunities’ target. If you require additional ‘Opportunities’,
the question becomes ‘How do I obtain extra ‘Opportunities’?’.
We suggest you evaluate your Marketing, ask yourself – Where do my ‘Opportunities’ come from? ‘How many
Marketing Pillars do I have to acquire ‘Opportunities’? How do I know which marketing mediums provide
the majority of my ‘Opportunities’? Knowing where your ‘Opportunities’ came from is covered in the
heading titled Monitoring.
Note: Marketing Pillars, these are the number of ways in which you
market your business, e.g. Website, Google Ad Words, Social Media are examples of Marketing Pillars.
Monitoring
Monitoring your business, including KPI’s (Key Performance Indicators) is a key to success. If you don’t
know where you are at, then how can you plan on where you want to go?
A number of business owners look at their Profit & Loss (P & L) statements provided by their accountancy
programs, provided the P & L statement is correctly presented, it will give you good historical data as
to the financial progress of the business. P & L’s should be an important part of monitoring the
progress of your business, but it should not be the only measuring tool.
Measuring KPI’s is critical to business success, they tell you what is happening in real-time, and
provide a warning of potential issues, both in the present and in the future. The question is ‘How do we
measure our business KPI’s?’
The measurement of KPI’s can be achieved with CRM Systems, but unfortunately for many SME business
owners, the process is not so easy to follow, and as a result KPI’s are not monitored.
Better Business Group has simple KPI Monitoring Systems to help to keep a closer eye on business
performance, which in turn will lead to greater business success, you can see what is happening in
real-time as to the acquisition of ‘Opportunities’, Sales Activity and more. If this is of interest, let
us know and we will be happy to discuss KPI Monitoring with you.
Where To From Here
Hopefully I have provided some insights as to what to look for in order to help you achieve your goals,
the next question is, ‘Where to from here?’
You now have the first part of a Business Plan, I suggest the next step is to develop an ‘Action Plan’.
The plan will provide the steps to follow to implement the changes required to achieve your Financial
Goals.
If you would like help to develop an ‘Action Plan’, please contact us for a free discussion of
possibility, and we will be in touch.
Thank you for using our BGA-Calculator, and wish you all the best for the future.
Better Business Group
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Better Business Group , the Author and all persons associated with the preparation and distribution of this publication do not accept any contractual, tortuous or other liability whatsoever in respect of its contents or for any consequences arising from its use or representations made in relation to it. Readers and users are advised therefore that this publication is not a substitute for professional, legal and accounting advice in appropriate circumstances and situations.