Reverse Engineering your business to take it forward

Have you tried Reverse Planning?

As the name suggests, Reverse Planning begins with the end in mind that is a particular goal and works backwards from there to determine what actions are required in order to achieve the goal. It is a useful tool to determine whether your goals are realistic and whether the level of action that you need to achieve the goal is possible.

Let me explain by way of example. In the first year of my financial planning business, I wanted to achieve a $100,000 revenue. To achieve that, I wanted to determine how much action would be required. I assumed that the average client would represent about $2000 revenue and therefore I needed about 50 clients. To get to 50 clients I needed to implement 50 financial plans. To get to 50 implemented financial plans, I needed to write at least 60 plans, as I worked on the assumption that not everyone would proceed with my advice. To get 60 written financial plans, I needed at least 60 people to proceed with my proposal for the completion of a financial plan. I assumed therefore that I would need to send out at least 90 proposals as not everyone would want to proceed with a financial plan for a variety of reasons, be it cost, not feeling a big enough need and a variety of other factors. To get to 90 proposals, I needed to have at least 120 initial meetings, as some people in the initial meetings would not make suitable clients and therefore there would be no point sending them a proposal. To get 120 initial meetings I would need to do a certain number of seminars, build up referral sources that would send business and a variety of other prospecting activities.

What did this achieve?

It showed me that while the revenue goal was reasonable, the level of activity to get there was massive and therefore made it unrealistic to achieve. Rather than reducing the goal, I adjusted the type of client I needed to get. I aimed to get clients who were willing to pay a minimum of $4400 per annum.

When I sold my business the average client was paying nearly $8,000 per annum. In short, reverse planning challenged the way I thought about the business and forced me to reflect on my ideal customer and how much I charged.

Reverse planning will give you a sense of the required activity to achieve your goals and whether your business model is appropriate. You may need to charge more than you thought to create your dream business.

Enjoyed this article? For more like it, sign up to receive our newsletter.

  • This field is for validation purposes and should be left unchanged.

Before you go

I'd like to teach you how to apply Biblical wisdom to your finances.

I’ll send it right to your inbox.