You Don’t Know Where You’re Goin’ if You Don’t Know Where You’ve Been  
One of the best things I ever did for my interiorscape company was to develop a Budget for each coming year.  It was amazing.  After a while, I discovered I could predict so many things by doing this and, at the same time,  keep small glitches from turning into bottomless pits.  Keep in mind that I am not nor ever was a Math freak.  In fact, I still haven’t mastered the 7 and 8 Multiplication Tables(my teacher was absent that week back in the 5th grade). 

It all started when at Something Different Interior Plantscaping we finally were able to put numbers into the right "baskets" and print out numbers for the month and for the Year to date.  These "baskets" broke down Income and Expenditures.  For example, I could look and see how much income we received from One time Sales broken down into Plants, Planters, Holiday income, Exterior Sales, Contracted Blooming Programs, Recurring Revenue for Maintenance, Income for the Guarantee portion, Installation and Misc.  Conversely, I could compare the income against the expenditures for each of these categories.  Note that I didn’t lump a bunch of stuff into one category like the dollars we spent for New Plant Material we Sold and Plant Material we purchased for Replacements. just because they were the same type of product and to the same vendors.  This way I was able to see if I was within Budget, over, under and so on.  I was also able to predict how much more I would be spending over the rest of the year and so on. 

It’s All in the History  
If you already have Operating Statements and Financial data from last year or this one to date, you are ready to develop the Budget for 2008. 
Think of the Budget as a road map.  Break it down by month and year to date.  Will you make errors?  Of course.  It is all part of the learning process but you need to start somewhere.

Predicting Growth  
The most important number to track is the dollars you add each month, net to your Recurring Revenue.  For example, let’s say you start the year at $10,000 per month recurring revenue (the $$ you bill for guaranteed maintenance).  And let’s say that in reviewing last year you started out at $7,000/month income from guaranteed maintenance.  That means that after new jobs minus any loss of clients or cutbacks, that between new jobs and additions, you sold on average, $250 per month to add to your recurring revenue base.  OK.  Now given that this is your past history, what would you anticipate you would add to the $10,000 base this coming year?  If all things stay the same and you do not add any new Sales staff, then you can anticipate adding a net of $250  per month this coming year.as well. That means that at the end of the coming year you should be at about $13,000 recurring revenue per month.  In addition, I’ve found that you can probably add 15% to your Holiday Income for each new year and estimate the same gross dollars of Income for Plants and Planter Sales.  See how once you have some "formulas" you can predict the Future?

 But I want to Grow More than That  
Ok.  But by running the numbers it is pretty obvious that unless a new huge job drops on your head, your past performance pretty much spells out your future.  Nope, if you want to grow more than that, a lot more, you will have to take other measures, say hire another Sales Person.  Not a bad plan if your market is large enough etc., but, at the very least, having a Budget, looking at Past Numbers, and formulating a Game Plan, handed you a Map with several options to choose from.

Works to Find Money Pits, Too. 
Here’s one of those AH-Ha moments.  Years ago I didn’t separate the dollars spent for replacement plants and those spent for Plants I bought for New Jobs.  I just lumped them all together under the heading, "Plants".  Without separating the income and comparing it to the costs, I had no clue if I was spending too much on Replacements.  Once I separated out both Income and Costs, I was able to manage ever so much better.  I discovered that we were spending more than we should be on replacement plants and after we set up replacement guidelines, had Linnaea Newman come in and train our techs how to get plants to look better so they could stay on jobs longer, identified several wrong plants in the wrong places, and instituted  a realistic Quality Control Program, we were able to cut our Plant replacements by 37%, a huge savings.  This didn’t happen overnight but without a realistic budget and an ability to compare costs and income, we would never have been pointed in the right direction.

Its A Journey  
Start now, this month to set up your Budget for ‘08.  Keep in mind this is not the be all and final set of numbers.  As you go through the coming months you’ll find that one "basket" is not the best and that some numbers or formulas need to be worked.  That’s OK.  You certainly didn’t know everything you needed to know when you first started in this business, did you?  Of course not, so don’t beat yourself up, just keep refining and adjusting.  Then, one day, you’ll whip out your Budget and it will be everything you need and want it to be. 

Now go out there and get ‘em, Tiger