The Small Business Doer

Overview

April was another great month. I’m getting tired of saying this. And no, I’m not trying to be self-congratulatory. I’m saying that there wasn’t some huge change from month-to-month, so I would describe the month great, just at the months previous were great.

I’m doing a lot better in 2010 than originally planned, which is a nice thing for me. I’ve owned a few businesses, and maybe I’ve been too ambitious in the past, but I’ve always struggled to hit the numbers I’ve wanted to hit. It is refreshing to actually surpass your estimates.

Budgeting

A big part of the financial plan in a business plan is budgeting. You have to make sure you have enough income coming in to support the expenses going out so that your profit will be sound. I was purposely conservative in my budget for 2010. I was trying to go off of history, accounting for some slight growth, as opposed to straight linear or exponential growth curves. And if you don’t know what linear or exponential means, it can be represented by the graph below.

The red is the linear curve.
The green is the exponential curve.
The blue is the cubic curve.

I’ve seen many a plan assume linear growth and other plans assume that there will be a major turning point which will explode growth, making it exponential.

Exponential is realistic only to a few industries, such as technology or entertainment, where a hit web site or album can explode growth. Realistically, for most small businesses that have under 5 employees and remain in business for years, I have seen the logistic curve which is S shaped and looks like the picture below. I also would like to emphasize the fact that this is simply what I have seen, but is in no way based off of any statistics.

Slow start, decent growth in the middle, and it caps out as capacities are met and no more business can be taken in.

What growth am I aiming for? In my paid per job (bread and butter) side of business, I expect the S curve to take effect, where I believe I’m in the middle to above middle end of the curve.

For the passive / residual income side of business, I would hope for something more along of the lines of somewhere between the linear and exponential growth curve.

Since my business history is grounded in my bread and butter work, I’m confident in those numbers. The residual income side, well, that’s an experiment, and you’ll see how it goes by following online.

Conclusion

Now that my charge out rates have been increased for my bread and butter work, it is time to shift to gaining work from off of my own efforts, as opposed to acting as a subcontractor. This will lead to more responsibility, but with more responsibility, comes greater pay. That is not to say that I would be stopping to do subcontract work anytime in the next year, but that I have to start working on my own contracts.

Part of getting my own contracts will be based off of my web work on this site as well as networking. This will tie closely to my work to gain more residual income. The number one goal will be to gain traffic to this site, with the secondary goal of converting that traffic into income.

Profit & Loss Budget vs. Actual – April 2010

Profit & Loss Budget vs. Actual – April 2010

The Next Update

Check out the May 2010 business plan update.