Tips

A Word on Profit and Savings Goals

Set your revenue goal for the current year. Write it down and post it where you can see it daily.

  • Strategy 1: You can create a projection by merely taking the previous year’s revenue and increasing it by a certain percentage. It could be conservative, like 10% or more aggressive such as 20%, or even higher.
  • Strategy 2: You can look specifically at what your estimated expenses are for the coming year. Create a goal for how much profit you would like to have. If you want $70,000 in profit and your costs are $35,000 (including business taxes), then you would set your revenue goal at $105,000.

Now, there are two major parts to your net income. The money you live off of or put back into your business and the amount you want to put into savings (assuming you have already included your taxes into your business expenses number). Set a savings goal, so that you can travel to an industry event, buy another piece of equipment, get a larger space, or increase your pay or payroll.

Using the example above, you may decide that you want to keep profits of $40,000 and put $30,000 into savings. Then, your net income or profit goal would be $70,000.

Keep in mind that I’ve greatly oversimplified things here, and your numbers will look very different in your financial reports. Use the information above as a framework to help get an understanding of the numbers that form the backbone of your business, your revenue, expenses, profits, and savings.

Sometimes the hardest part is just opening your financial reports and wrapping your mind around the actual numbers. I’m also a big fan of the buddy system. Work with a bookkeeper or an accountant to help you get this done, even if you just hire them to help you create a plan based on your past numbers for the upcoming year. Sometimes having a person outside your business to help is just what you need.

jennifer cox

Jennifer Cox

Jennifer Cox is one of the founders and serves as president of the National Network of Embroidery Professionals (NNEP), an organization that supports embroidery and apparel decoration professionals with programs and services designed to increase profitability and production.

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