1. Profit and Loss (P&L). I won’t bore you about the nitty gritty of knowing your business’ profit and loss but put simply, P&L is all about how much you’re earning, how much you’re projected to earn from an investment, and how much you’ve lost, if any. How it applies to real life: You’ve been meaning to take a class that will enrich your skill as an entrepreneur. While there may be no absolute projected growth, make sure that it capacitates you for future needs. So if you put your money in a financial instrument such as a savings account, or a fund, you should put in as well the P&L of that decision.
2. Business Case. In a survey conducted in 2013 by GfK (Gesellschaft für Konsumforschung), a significant % said their immediate financial/career goal was to start a business. While entrepreneurship is a great aspiration, only a few of us really know how to start one. I, for sure, don’t. But I learned how to build its case, thanks to being in the corporate world. It taught me to really think of why I’d spend x amount of money for a website, how the business will expand in 5, 10 and 20 years, and who will be in charge of various tasks. In the near future when I eventually get down to my own business, this skill will come in handy.
3. Strategy and Measurement. Lately, I’ve abandoned new year’s resolutions in favor of SMART {Specific, Measurable, Achievable, Relevant, Time Bound} plans. Overall, there’s a personal strategy with five priorities and details on how I will achieve this. With each priority is a timeline, execution, and corresponding picture of success. Key months would be December (when I plan what I start doing by January), June (when I conduct a midpoint check), and December (when I sit down to measure my progress). For 2014, I am happy to report that my funds grew by the % I intended it to be and achieved 90% of all priorities. This is a very basic planning technique we learn at work but don’t really apply in real life, even though it’s pretty useful. It helps give shape for our dreams to become goals, such as buying a house and saving for the kids’ education. As what Peter Drucker said, “What can be measured, can be managed,” after all.
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