A Simple Formula For Business Planning

Mike CJ
4 min readJan 23, 2021

Speak to any business coach or senior manager, and they will tell you that one of the secrets of success is having a clear picture of your objectives and a detailed business plan which shows how you will get there. I’m sure any reader who is in business will agree.

But how do you get there? There are any numbers of strategies that gurus will share with you, so I thought I’d simply add my process to the pile out there, and if it suits your style and personality, feel free to use it. We’ve done this for at least the last ten years and so far, so good.

Step One — Visualise Five Years Ahead

Each year, we start by discussing how our life will be in five year’s time. We’re very specific about it:

  • What do we look like? Health, weight, fitness etc
  • How hard do we work?
  • How many vacations are we having?
  • What does our house look like in detail?
  • What cars are we driving?
  • What’s does our social life look like?
  • How much do we have in savings?

We go into real detail on this, using the present tense to describe each section. For example, in our case, we’ll be in our present property, but we’ll have added a hot tub, pathways through the garden, the driveway will be sealed and more.

But this is about business, so I’m going to leave those personal objectives out of it. However, going through this exercise informs us how much we need to earn five years hence. If I really want to have done all that work on the house, had two luxury holidays and drive a Bentley, then it gives me a salary expectation for 2026.

And from that, we can establish how much profit our business needs to make it 2026 in order to meet our salary expectations:

Step Two — Write A Broad Brush Business Plan Five Years Ahead

This doesn’t need to be detailed to the extent that it could be scrutinised by an accountant, but it needs the key points:

  • How much overall income does the business need?
  • How much is the business overhead going to be?
  • Therefore, what’s the gross profit needed to…
Mike CJ

Owner of Lanzarote’s best destination website, Lanzarote Information and Camel Travel, offering worldwide luxury holidays at affordable prices.