Goals, Planning intent

Exists a school of thought that says that you have to build up your plans from an appreciation of markets a resource as described below.

If a man wants to achieve something in life, he should clearly define his goal. And for an entrepreneur, this is doubly true because:

"One who does not know where he is going, any road will take him there."

Any plan, to be successful must contain the clear goal.

Compare the whole situation to planning – you must:choose where you want to go

  • ow to go there (by plane, boat, car, walk)
  • when you want to go back, how many suitcases you take with you
  • know what time you need to be at what place
  • how many money you probably need
  • etc.

By other words, you must have your’ s clear intend.

And the business plan? Before you start planning business processes and subsequently creating a financial plan, it is necessary to define the intentions and objectives in each of these two areas.

Business goals – mission.

We can also call them "Trade Missions", "Business Mission". Already the name suggests that this is a completely different statement than – "what products or services" I want to sell.

The trade missions must clearly describe the market I am about to enter and also the way I want to achieve my goal. Some products or services come and go, but the market still remains.

Take, for example, IT. Huge mainframe computing systems were the only machines capable of delivering performance in their time, which was usable in practice. Gradually, personal desktops appeared (PCs), which at once were able to do the work, for which often had to stay in a row for large computers. As the PC market grew, large mainframe computers were losing sense for ordinary life and the number of requirements for their use decreased. Demand for PC grew radically. Even here, there has been a decrease in interest over time, when well-powerful laptops were occurred.  The demand for classic PC rapidly decreased. And followed tablets, and now mobile phones (and that's not just in computer technology, mobile phone  – it's a multifunctional device, which suddenly came,  so in your phone you have a computer, flashlight, wallet, bank, etc.)  Although all systems exist at the same time today, it is still unclear what will follow in this sector.

It is clear from the indication that the Business Mission cannot focus on a particular product, but on "the needs and ways of satisfying them.


You are a small and medium-sized company and your business activities are in the construction industry. What a huge market! Construction of roads and highways, construction of apartment buildings, construction of industrial infrastructure, bridges, dams, etc. Each of these markets is very specific and different. So, if you don't define your "mission," you can't start planning.

You want to concentrate on the construction of family houses and cottages, and the reconstruction of apartments in buildings and family houses.

Then your mission might look like this: "Our mission is to improve housing for families with children and leisure facilities by building family houses and holiday buildings and refurbishing individual apartment units in apartment buildings."

This declaration contains two criteria, which definition of the mission must contain:

  1. There's a well-defined area of company activity. It's clear to everyone what you're dealing with. In addition, as a small and medium-sized company, you are also different from large construction corporations, of your competitors. You also clearly define "your products" here.  It is the main killer of a start-up entrepreneur, or a small and medium-sized company, trying to do very different things in the field quickly. But in above mentioned mission you well-define market that you can deal with.
  2. In addition, the mission thus defined opens a large market that can continuously grow, and you can continuously realize your potential.

By the way, to the most failure of medium-sized companies, happens in the field of building houses. 

Finally, you need to prepare something unique for your business. Something that will force customers to buy from you and make you different from your competitors.

It is also necessary to define how big a market you want to address. You're definitely not alone in the market. You have to share it with your competitors. And that's another difficulty in how you plan your sales. Especially if you're just starting a business. But if you do not clearly set your goals right at the beginning, and you just wait "how the situation will develop", you immediately have one of the 2 problems that will then surely occur (return to articles about Cash flow on this sites ):

  • You won't sell enough to cover your fixed costs and you'll probably get into financial trouble and probably go bankrupt.
  • On the contrary, you sell too much, and you start to miss cash. Cash flow will be disrupted, and your business will so called "overheat". You will get beyond your financial possibilities, and the result can also be a your bankruptcy.

However, before you start thinking about your market share and your business goals, you should know the size of that market . However, if you are in business a longer time, you have a sales history, you can also utilize them for planning. If you have a unique business and you sell only to a select group of customers, the plan should probably focus on each one. If your sales are flat, simple use for planning a mathematical technique which you can have available, now certainly with using an available computing technic.

Profit targets

The profit targets for any business must be set in such a way to be able cover the capital invested and to bring an appropriate profit rate. This may not be as simple (see analysis of financial statements). Even if you're getting good financial ratio as ROCE , you may not be able to get additional external resources, especially from the bank. It may turn out that in order to obtain a long-term loan from the bank, you need to improve this indicator even further, as it is below the normal value of the market. And it can also be a simple comparison of the results which your competitors achieve in the same business.

And yet, even after you've improved your ROCE indicator, your business and profits are growing, you may not be able to renew your devices or develop and introduce a new product. It may it be too much of a financial burden for you. And without adequate equipment and an assortment of new products, you cannot face competition, and your business begins to lose contact with the competitors and gradually begins to "die".

Let's say you have an initial start-up capital of € 96 000 and you want to double it over a period of 4 years, a little more than the market is growing, achieve a healthy and growing ROCE and furthermore improve the profit margin a little bit. Your basic reasoning and plan look like this:  


If you don't have a well-defined strategy and clearly defined goals, you'll leave your end result to chance and improvisation. (which represents a chance of going bankrupt within three years, as the experience of SMEs shows).

So, if you have defined the basic objectives of your business well enough, set a budget and prepared plan, you have a great chance of achieving your goals. And it is precisely defining goals that clearly shows you the way to achieve them.

For example, it is clear from the table that we need to spend additional capital of € 403 680 (€ 103 680 – 600 000) during the planning period to generate additional revenue growth.

This thought structure tells us that you will need to build your plans based on the valuation of markets and available resources as described below. The final result will then be a summary of the partial achievable objectives. But this, of course, raises the question,"What if it turns out that the sum of these sub-goals does not guarantee to achieve of the desired result?"  Should I leave my opportunity untapped? So, even if it's not a very satisfactory finding, your procedure should be clear, first define your goals and then try to properly evaluate the market.