I need to prepare a 3 years loss and profit projection for my formal business plan.

I have a couple of clients - but my challenge with this project is I don't know exactly how many clients I will have within next 3 years, or how often my clients will need me work with them on monthly basis therefore I'm unsure how to do this if I couldn't know ahead of time my work schedule and the pay.

It could be next month I'd be fully booked with clients, or it could be 2 years frrom now. My business could be very busy one month then very slow the following month. Am I making sense? So how can I prepare a loss/profit forecast if we don't know how things will be in the future?

Perhaps it's best if I just put down my "goals" of having certain # of clients and income during the next few years?

I am wondering if having done a profit and loss project for VA industry? Had been helpful for you guys? Any tips would be appreciated.

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Brenda A. Jones
www.brevos.com

Think if it more in terms of goal planning.

Would you like to be part time or full time? How many hours do you plan to work? How much income do you want to be making?

What expenses will your business have? Phone, Fax, insurance, memberships, marketing, contract labor, taxes, etc. Some of these items you should already have a good idea of the cost, things like insurance, utilities, etc. should be estimated to increase each year, the industry standard is 10%.

When you estimate what you need to live on to pay your mortgage, car payment, etc. you should base it on your "Net Business Income".

One of the easiest ways to come up with an income number is to do it in reverse. For instance, you know (or estimate) your business expenses are $5,000 per year, you want/need to make $30,000 per year to live on and pay personal household expenses, so your gross business income needs to be $35,000 per year.

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Rebecka Melson ~ Virtual Business Services

As always great advice Rebecka. Doing it reverse is what worked for me.

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Dawn Riley
A Virtual Assistant in Paradise
Our business is about making yours better

Thank you so much! It was very helpful.

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Brenda A. Jones
www.brevos.com

>> "Think if it more in terms of goal planning."

To Rebecka:

"Goal Planning" sounds so much more nicer and less stressful than "profit & loss projection", great of you to put a positive spin on what can seem like a daunting task!

Wonderful and very helpful information you replied with as well! I'm definitely adding it to my notes... which are growing at an alarming rate and threatening to take over my entire remaining harddrive space.. =)

It is truly great to see so many people freely helping each other on this site rather than behaving in a defensive "sabotage the competition" manner. I look forward to one day being able to give back to the community with advice of my own.

Best wishes to all!

~Kim

Originally Posted by Rebecka Melson

One of the easiest ways to come up with an income number is to do it in reverse. For instance, you know (or estimate) your business expenses are $5,000 per year, you want/need to make $30,000 per year to live on and pay personal household expenses, so your gross business income needs to be $35,000 per year.

This is a similar version to how I calculated my income needs, as well. I also included taxes and added an annual deposit into a 'retirement fund' in my calculations. Once I had this number, I was also able to determine what my billing rate should be based on my needs and how many hours I wanted to work (billable, anyway ). I was happily surprised that this hourly rate came out very similarly to what other VAs charge in my niche!

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Lily Chambers, The Virtual Office Goddess, LLC
Author "How to Do Your Own Small Business Bookkeeping"