Is there a basis for that numerical plan?
When creating a company's numerical plan,
there are so many people who just go by gut feeling.
(We used to call it 'licking the pencil' back in the day, but
nowadays we don't even use pencils, and we certainly don't lick them,
so what would you call it now?? Let's set that aside for a moment lol)
Numbers without a basis lack confidence,
so you can't put any real effort into your actions.
When you look back, you might wonder if this was really the right way...
It's boring to go through it without feeling any sense of accomplishment, isn't it?
How do you provide a basis for numbers?
Target figures are the conclusion.
What is the basis that leads to that conclusion?
In other words, expressing the components of a numerical target through causal relationships,
expressing them as a formula, is what is necessary to show the basis.
Break down the numbers.
For example,
Profit = Sales - Expenses
Sales = Unit Price × Quantity
Expenses = Variable Costs + Fixed Costs
Knowing these formulas is not enough;
it is important to use them whenever you break down numbers in your daily work.
So that they naturally come to mind,
to the point where it becomes a habit of thought,
using them regularly and making it a habit is important.
Assemble the numbers.
If you can't get a real sense of your sales target,
what about the unit price and quantity?
The unit price is fixed, so it's clear, but
if you feel like the quantity is just a result of aggregation and it's someone else's problem,
try breaking it down by customer, product, or service, for example.
Use the numbers you've broken down to a level you can personally relate to, and build your formula.
This is what it means to take ownership and provide a basis for your numbers.
If you build your plan with numbers that feel real, you can have confidence.
If you break down the numbers and build them back up until you can see your own intuition and the numbers working in tandem, they should become numbers you can explain with confidence.
Numbers with a basis are those you can explain in your own words with confidence.
If you don't understand,
try breaking it down until you do.
That was the point.
The principle is simple, but
perhaps it's just a hassle to actually do it.
While thinking,
you really should just do it properly...
This article was written by
Shigeki Kawahara, a "Future Realization Partner" who helps increase revenue pillars
https://mousoubiz.com/
https://twitter.com/mousoubiz