Now that we have the timeline laid out, it’s time to start setting the goals. We’re going to start off real simple and then we’ll make it more complicated as we go. In this week’s video I show you how to set up a very simple 2-year model with a single goal in year one, and a second goal in year two. We start off assuming our income is flat from month to month and then we jump up in year two to the second year goal. We will smooth out the curve later. For now, we just want to get the goal in place and do one simple calculation. Using the example of an engineering or any professional services firm, we look at this and break it down in terms of projects. What is our average revenue per project and, based on that, how many projects need to be completed to reach our goal?
I know you can lay out this math in your head. That isn’t the point. The point is to get it laid out here so that we can begin to massage the data and smooth out that curve to get a realistic picture of how we can reach our financial goal. We start with an assumptions tab so we can look at some of the constants that we will want to be able to change in order to see the impact on our financial model.
Make sure you stay with me on this each week because I am going to start off very slow and simple, but we’re going to ramp up really fast.
