If you’re anything like this writer, then you’re the sort of person who likes setting targets for yourself. It can be tasking, especially when it requires you to fit innumerable facts about your life with the never stable, ever-changing world in which you operate. But when it’s about making more money, you’ll probably be smacking your lips with glee as you think of the timelines you scribble on paper unfolding. Oh, the joy at the end of the road you’ve just sketched!
As you know, it’s not always easy to stick with these plans. Most times, they fall by the wayside as life happens and the liberties we allow ourselves snowball into major dents in our predesigned path to achieving our aims. Let’s be honest: when was the last time you hit your profit target for the year?
However, the tendency to fail at executing plans shouldn’t shoo us from creating them, nor should it discourage us from making them work. We’re dealing with setting monthly profit targets for your business here, and we realize that the fear of failure could prevent you from trying it out. Don’t let that happen. There’s a lot you can gain from simply committing yourself to specific growth targets for your enterprise.
Even if your business doesn’t attain the heights you define for it, you’re still more likely to take it much higher than it would have gone if you merely went on without clear cut aims. The clarity that comes with having a measurable goal to attack is something you shouldn’t trade for anything. It can do wonders for your company.
Now that we’ve gotten the hesitation to work with a profit goal out of the way (I hope we have), let’s get to the meat of the matter: setting the actual goal.
Monthly Versus Annual Profit Targets
How about setting a profit target for the year, instead of making it a monthly affair?
First off, this shouldn’t necessarily be a dichotomy. You can have monthly profit targets, which are designed to take you up to an annual aim. For example, you could decide to shoot for a 20% margin or ₦300,000 profit every month. The ultimate aim might be to make a total profit of between 18% and 19% for the year as a whole. Those monthly gains you make should at least add up to the set target for the year.
In fact, it’s better to take on longer-term plans as chunks instead of trying to make them happen in one lengthy go. This lets you deal with the issues that confront you on the way, and affords you the opportunity to celebrate the little victories on the way to hitting the big mark. It’s much easier and more realistic than just going all out to fulfil a large, potentially overwhelming vision.
In summary, you’d be better off working with monthly profit targets, even if you’ve got a grand destination you’ll like to be at by the year’s end.
There are more useful tips for long term planning in our article, How to Work With Long-Term Plans.
It’s better to take on longer-term plans as chunks instead of trying to make them happen in one lengthy go.
Steps to Setting A Monthly Profit Target
Here are a few steps to setting a profit target for your business for this and every other month.
Know Where You’re Currently At
You need to know what your profit levels are at the moment before setting targets to maintain or better it. This might require that you take a look at your accounts to see what they’ve been in recent times. You could come up with an average for, say, the past six months or one year, and use that as a baseline with which you may determine what a reasonable monthly profit target for your business would be.
If you’ve not been keeping tabs on your profits over time as closely as you should, you should start doing so now. You could learn some basic accounting that could help you track the flow of funds in your enterprise the right way. And if your business can afford it, you might want to hire an accountant, whether on a part or full-time basis.
Focus Your Efforts On Boosting Revenue Sources
Feed the goose that lays the golden eggs for you. If it’s possible, get more golden egg laying geese. Just do what needs to be done to raise the quality and (or) quantity of your most sought after products. Cut costs on less profitable aspects of the enterprise- if you can’t make them generate more profit. Efficiency and effectiveness should be the watchwords for your operations going forward. Your plans should be built upon them.
Perhaps you’ll have to adjust the prices you offer for your products and services, a part of your plan to reach your target profit margins. Here’s an article that shows how you can raise prices without losing customers.
What’s the use of a plan if it doesn’t get implemented? And what is implementation, if it’s not making what you’ve drawn up in a document come to life?
As you get on with attaining your profit target, make sure to track the progress you’re making in that direction. This will let you know whether you’re on course to hitting the mark- or if you’ve wandered off the path. This, in turn, makes it possible to course-correct on time.
Even if you fall short of your goal, a review of your accounts and operations at the end of the month should reveal why you weren’t able to strike your target.