Without a profit plan, businesses lack direction and risk financial instability due to poor decision-making and inefficient resource management.

Primary Implication

You either have a plan for earning profits, or you don’t.  Without a plan to direct and control your business, “How will you know if you’re earning enough to be worthy of your valuable time and investment?”

Overview

Never lose sight of the hard truth that business profitability in past years is no guarantee of profitability this year or next. Without a profit plan, your decision quality is always at risk, because it isn’t framed in by what success and failure look like. This exposes your business to the following cardiac arrest risks:

1. The overwhelmed owner is always fighting daily fires because they lack a well-developed profit plan that prevents them from decisively executing their monthly money-making plan.
2. Low probability of being awarded higher cash quality sales, because your sales efforts aren’t targeted where you have the best chance to make the most money.
3. There are no monthly targets to be realized. As a result, you and those in your employ never know whether you are accomplishing your goals or not.
4. You have poor cash quality because you aren’t efficient in your material purchases and direct labor management. After all, no one is clear on who is accountable for what.
5. Your business is worth less today than it was last year or the year before because there is no plan stating what you plan to do differently to improve the coming year’s results.

A business either makes the money it should or it doesn’t.  Whenever a business falls short of earning what it should, it is often grounded in poor profit management of the activities of a business to achieve defined business objectives at a profit because there are no defined business objectives to guide management decision-making and action.