Every action has a reaction. What goes up must come down. There is no better way of determining the consequences of certain actions than predicting the consequences beforehand. For instance, let’s say your competitor provides a service for $50 and you provide that same service for $70. To match your competitor’s price you drop your price to $50. However, you failed to examine what the impact of reducing your price to $50 will be on your profit. In fact, the only time you ever look at your financials is when it is time to file your income tax returns. At tax time, your tax accountant tells you, you had a loss of $20,000 for the year. You are dumb founded by this information because by increasing your price, you doubled the number of customers you served and it seemed that business was going well. However, deep down you knew you were struggling to pay your bills but you thought having more customers will be the solution to that. What you did not realize is the more customers you had, the more money you lost.

While you cannot predict or prevent every circumstance in business, instances like that just described above can be avoided with proper planning and budgeting. Planning in your business does not have to be complicated. By planning, you can predetermine the impact of certain actions on your business. Besides, to successfully grow your business you will need to do some planning. Without planning you cannot focus, without focus you are guaranteed to waste the scare resources in your business. With waste, the efforts and resources cannot be directed to the activities that can accelerate your success. Writing your goals is the first phase of planning. But don’t stop there, you should strive to achieve them!