Octo­ber is one of my favorite months.  Cool nights, warm days, lit­tle rain.  The crunch of the leaves as I hike the woods makes me hap­py.  The air smells good and the south­ern­ly tilt of the sun makes for inter­est­ing nat­ur­al art as the leaves turn gold­en yel­low or red. I spend as much time as pos­si­ble out­doors tak­ing it all in.

When I speak with fel­low busi­ness own­ers this time of year, they often talk to me about how they are either land­ing or miss­ing their cur­rent annu­al goals. I love those con­ver­sa­tions, but for me per­son­al­ly, my most impor­tant thoughts in Octo­ber are about plan­ning for next year.   There is noth­ing more excit­ing than the cre­ation process of bud­get­ing and planning.

Sounds strange, doesn’t it?  You might think I love it because I am a geek, who just loves data.  No, that isn’t it at all.  What I love about bud­get­ing is that, if done right, it is a cre­ative process that engages your team and sets them on fire for the com­ing year.

But there is one secret to mak­ing it fun and cre­ative. Start with the end in mind.  Start with the 3 num­bers that will ulti­mate­ly define your results.  They are:

  1. Sales in dollars
  2. Gross mar­gin as a % of sales
  3. Net income as a % of sales

Once these 3 goals are set, every­thing else is a fill-in-the blanks exer­cise.  As the CEO, it is up to you to set tar­get 3.  You are the investor in the com­pa­ny. It is your wealth that is at risk in this busi­ness, so there­fore it is your job to define your expect­ed return.

For goals 1 and 2, engage your man­age­ment team and make it a col­lab­o­ra­tive process.  Let them give you their ideas, you give them yours, work­ing your way into a goal every­one can get behind and buy into.

Now that you have these 3 goals defined, engage the appro­pri­ate team mem­bers who man­age the details. Who in your orga­ni­za­tion man­ages cost of goods sold?  Who man­ages over­head?  Who man­ages the com­po­nents of over­head?  To keep things on track, set a tar­get of get­ting your first draft done some­where between Novem­ber 1–15.  This way you have time to tweak and adjust as necessary.

At Mack­ey Advi­sors we love help­ing busi­ness own­ers think dif­fer­ent­ly about pros­per­i­ty, mak­ing it more engag­ing, dynam­ic and fun.  If we can help you and your team turn your bud­get­ing process into a cre­ative and fun process, give us a call.  859–331-7755.

In joy,