Marrying Reality with Imagination in Your Business Planning

It’s all about the numbers… until it’s not.

Knowing your numbers is an important piece to knowing (and growing) your business. That’s why large corporations spend millions of dollars each year analyzing their data to plot their next move.

But next to every successful CFO scrutinizing every number is a visionary CEO who is throwing the financial reports off the table saying “but what if we…”

And that, ladies and gents, is where the magic happens.

To run a successful business, it’s pivotal that you marry realistic data with your big imagination and build the business of your dreams.

Why do we need realistic data?

We start with what has happened in order to know what can happen. Without past numbers, we are driving blind.

Without the data, we don’t know what works, what doesn’t work, what costs us more money or what makes us more money.

I always tell my clients to start here when making a business plan: start with what the numbers say will happen.

How To Gather Historical Data for Business Planning

Here’s the process I walk through with my clients to gather financial data for making business decisions:

1. Plot out your expected income for each stream of revenue and incorporate growth goals like new clients and new offers.
   
   (For example a digital marketing agency may have streams of income like: Social Media Management, Website Builds, PR, Marketing Courses, and Consulting Income to name a few).

2. Record expenses directly related to the services or products you provide. These expenses usually increase when your number of clients increase.
   
   (In our digital marketing agency example, they may have: subcontractors, hosting costs, design asset costs, digital course software cost or other similar costs).

3. Finally, plan out any ‘operating expenses’ or expenses you need to run the business.
   
   (Our digital marketing agency probably has admin software, a CRM, their own marketing costs, legal and accounting fees, utilities, continuing education, and employees running the business)

To come up with these numbers, always look at what your numbers have previously looked like. You want a solid base of historical data to help plan what could happen in the future. 

Why do we need imagination?

I believe it’s always important to incorporate imagination when planning business moves because it helps your business grow and expand in new ways.

Without dreaming big, you might limit yourself to only “realistic” goals. If you only rely on historical data, you’re missing out on bigger growth.

I always encourage my clients to incorporate imagination into their business planning session.

How to Incorporate Imagination into Your Business Planning

Now that we have a good idea of what will happen if we stay on our current path, let’s throw a little imagination in here.

Time to dream up what could happen.

Instead of taking the “top > bottom” approach, let’s take the “bottom > top” approach.

Ask yourself, how much money do you want to be making each month? Dream big, you can include the best case scenario, not just the “realistic” one.

Whether it’s $1,000, $10,000, or $100,000 per month, the process will be the same: start with how much money you want to make and then determine how you need to increase your income and/or decrease your expenses to get to that final profit.

How to Combine Imagination with Reality

Now we have a good idea of what is happening in our business, what could happen, and what we want to happen.

If you miss any of these three pieces, your business goals will suffer.

Spend too much time on the historical data, you’ll stunt your own growth.

Spend too much energy on manifesting what you want to happen without the data behind it, you’ll miss all the action steps that go into making that dream a reality.

And I see clients fall into both of these traps on a daily basis.

My best advice for business owners making financial goals for their business?

Use your numbers, use your imagination, and chart a course to reach those business goals using both at every important business juncture. 

Happy business building!

Read Next