To build your Production Plan, you'll need six numbers. You need to know your desired personal income. What do you personally want to earn? You need to know your direct costs. What will you pay licensed support staff? You need to know your overheads or the expenses of your business. Fourth, you need to have an expense buffer amount to handle unexpected expenses or opportunities. Typically, 10 to 20% of expenses. Five, you need to know the average income the firm earns per average client. And six, you need to know your closing ratio. How many sales meetings turn into clients?
So how does this work? Like this. First, you want to calculate your production target. To do that, you're going to add some numbers. You're going to add your personal income goal, plus your direct costs, plus your overheads, plus your buffer. That number is the production target. That's a number that you need to produce for yourself and for the business to hit your goals.
Take the production target and divide it by the average income you earn per average client. That gives you your new client target. Take your new client target and divide it by your closing ratio, and that will tell you the number of new Approach Talks™ you need to do to hit your production target. Now you have a Production Plan. You know how many people you need to talk to, to meet the needs of your business and your personal income target.
As we said earlier, this is simplified. There are lots of other factors you could build into this, including defection or persistency rates, timing of income, underwriting time lag, all kinds of other factors and feel free to build those in, but this will give you the baseline you need to know so that you know how many new approach talks need to happen for you to hit your goal. Action Task: use the Production Plan Builder and create your Production Plan.
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