Do you have a financial Plan?

Helen’s Bake Shop sells gourmet cupcakes.  She has a store, contracts with restaurants and caters for special occasions like birthday parties. 

As Helen’s accountant I felt it important that she have a financial plan, so in my conversation with her one day, I asked Helen, “What is your financial goal?”

Helen looked up at the ceiling and then back at me and said, “I want to be comfortable.”

“OK,” I said, “so, what does that mean?” prying further.

“Well, I want to pay all my bills, save for my retirement, pay for my daughter’s education and,” she pauses for a moment and then says with a big smile, “I want to vacation in Barbados twice a year.”

“That sounds great!” I said. 

I then said, “Helen, I want you to work with me so that we can make this a reality.”

Over the next month, Helen did her research and then we met and put everything together and determined that the Bake shop must earn a minimum of $20,000 monthly.

I could see that Helen was discouraged.

 “What do you think, is it possible?” I said.

Helen’s was silent for a while and said, “let me think about it.”

I started to pry and asked,” Helen, tell me how much the bake shop is making?”

“Well, we were making about $13,000 monthly before COVID19 but now, we are down to $8,000.”

“I see, that is a big drop and far from $20,000,” I said.

“Yes, it is”, she said.  “The restaurant and store sales are down considerably.  However, the sales for special occasions have picked up somewhat.”

“Let’s brainstorm,” I said.  “How can we increase your sales to the level that you want? Do you have any ideas?”  I said.

Helen looked at me with a blank face.

“Have you thought about approaching gas stations and grocery stores,” I said.

“No,” she said.  Helen’s face lit up.  “That’s a good idea,” she said.

I had another idea, but I was hesitant because I knew this idea would require a drastic change.

“Helen,” I paused, “have you thought about closing your store and selling out of a food truck.  In, this way you go to the customers, wherever they are and,” I emphasized, “you save money by not having to pay your rent which is a significant chunk of your expenses.”

Helen grimaced and said, “I don’t know about that,” she paused and said with a big sigh, “I will think about it.”

The following week Helen and I met to finish her financial plan.

We had set a goal.  We had put numbers to it.  Then, we listed the steps that Helen had to take to achieve her goal.  We agreed that each month we would sit down and look at the financial statements to check her progress and tweak the plan if necessary. 

I could see that Helen was excited and that a load had been lifted off her shoulders.  She had goal and she had a plan as to how to achieve her goal.

Over the months to come, Helen met her goal.  She was supplying cupcakes to grocery stores and gas stations.  Although, she still had her shop, she started selling cookies, coffee and tea and created an area where her customers could sit and enjoy free internet service.  

Now, I want you to take this simple quiz.

1.            Have you set a financial goal(s) for your business?

2.            When do you expect to achieve your goals? 

3.            How do you plan to achieve your goals?

4.            Are you checking your progress? 

5.            Do you need to change your plan?

A financial plan answers all these questions.  It can be simple or complex.  It can be for a day, week, month, or a year.  It really is up to you. 

A financial plan is not for the big corporations only, it is for you.