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Avoid Surprises by Reviewing Revenues, Projecting for 2010

Now is the time to prepare projections for your small business for 2010. If you are the owner of a small business, please don’t put it off or assume you don’t need a plan. At the Small Business Development Center (SBDC) – a local business consulting practice housed in the University Center at College of the Canyons – we are convinced from experience with thousands of businesses just like yours that a well thought out and prepared plan for the coming year is a vital component of owning and running a successful business. It doesn’t matter what you call it (projection, plan or budget), but the time invested in reviewing past income and expenses and projecting ahead is well worth the effort. Surprises are fun at birthday parties, but not when owning, operating, managing and driving the success of a small business. We recommend you begin by recapping actual revenue by each product or service category you sell in dollars and as a percent of total revenue for the past two years by the year, quarter and month. Then recap actual expenses by category, separating cost of goods or direct costs of sales from overhead, again in dollars and as a percent of total revenue. Lastly, recap profits or losses. If you use QuickBooks or a similar financial software program, this should be quick and easy to compile and export into an Excel spreadsheet. Now the fun begins as you make your projections for the year, each quarter and month while factoring in seasonality. Start by projecting revenue by the product or service types you offered in the past and then project revenue from any new products or services you plan to offer next year. Separately create sales projections to each of your customers. The two sets of revenue projections should match. Next review expenses and project your costs. Then calculate your profit or loss. If the results are not what you want, adjust your revenue and expenses so long as the changes are realistic. If you would like help preparing your projection for 2010 and creating a plan of action to help make your plan come true, contact the SBDC. We provide free one-on-one professional customized business advisory services and a series of low cost training workshops to the small business community of the Santa Clarita, San Fernando and Antelope Valleys. Steve Tannehill is the Director of the Small Business Development Center hosted by College of the Canyons. To sign up for no-cost business advisory services or to learn more call (661) 362 5900 or visit www.cocsbdc.com .

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