Happy new year!

Do your 2016 goals include growing your organization? If so, the first thought that may have entered your mind pertains to money — ‘… money … I will need lots and lots of money!’ While important, you will need more than money for your vision to come to reality, so create a complete plan and think about the big picture.

I advise my clients to start a goal-setting process by choosing a point in time — 1, 2 or 3 years in the future — and visualizing what their organization will look like at that point. Then, work backwards. While the planning can and should get very detailed, start by identifying the obvious milestones that your organization will need to reach in order your vision. Then, drill down from these milestones and determine the actions that you and your stakeholders need to take to get to these points.  Only then should you begin to monetize your plan (meaning: how much will it cost and how much can you realistically expect to raise).

During the financial planning phase it is helpful to perform a “sensitivity analysis,” which is not nearly as scary as it sounds. A sensitivity analysis involves projecting your expected revenues and expenses over the course of a time period, usually, between 1-5 years. Remember that in all likelihood your projections will not be 100% accurate. Account for this variability by running several scenarios — for each changing one important variable. Changes in the values for these variables should be based on underlying assumptions which may, at the time, be very very hard to predict. For example, fee for service revenue will depend on the number of clients you can obtain, or  the number of contracts you can win. In scenario one you may assume 50 new clients; in scenario 2 you may assume only 15 new clients. These assumptions will determine the corresponding values for client revenue. Experiment with various revenue assumptions — one may be weighted more heavily in fee for service, another more reliant on foundation funding or donations. Repeat this exercise with your most important and uncertain  assumptions. Do the same for the expense side. Then,  pick out the 1 or 2 scenarios that seem the most likely (or combination thereof) and base your planning accordingly. But don’t file away your spreadsheets! This is a living document/ planning tool that should be modified with more accurate data as you move forward with your plan.

Click on the image below to see an example of a sensitivity analysis I created for a client — an organic blueberry farm that hired me to assess whether expanding their operation by adding processing facility would be prudent. There are 2 scenarios represented, with various assumptions for crop yield in the first, and crop price in the second. In each case these assumptions drive the financial projections.

Incorporating this type of quantifiable analysis into your decision making is a way to help improve outcomes. Better, more accurate and realistic data will help you to make better decisions.

Once you monetize your goals — strategic plan — or whatever you want to call it — you are ready to move forward with actionable steps to make your vision a reality. Need help with the process? Contact Aaron for a free consult.