more specific, how about 'I want to write articles about sport for newspapers'. Maybe 'I want to work with children of pre-school age in my own home'. Finally, what about 'I want to work as a gardener for people with large gardens and no time'.

Once we have a clear view of what we want to do, we can start planning and setting our objectives.

Who Are My Customers?

We need to know who are potential customers are, so that we can target them effectively. Thanks to the internet, a sports writer can reach any newspaper in the country or even in other countries. However, if we are only going to cover sporting events in our own county or state then our copy will only be of interest to local newspapers and we should be looking to target these. Similarly, if we are going to run a play-school in our own home, the families need to live close enough to do the drop off on the way to work. This will define our potential market. On the other hand, if as gardeners, we are willing to travel long distances for the right job, then we can reach a much bigger market.

Setting Objectives

OK, so we now have a clear idea of what we're going to do and to whom we're going to sell. We can now start setting our SMART objectives. These can be of two types the financial and the non-financial.

Financial Objectives

It is rare that a small business makes lots of money straight away (and many will never achieve more than a reasonable income). However, we need to set our objectives in the expectation that we will make money otherwise why are we bothering.

So, a non-SMART objective would be: we want to not lose money in year 1 and make a profit from year 2 onwards. What does this mean? What constitutes a loss? How will we know when we've made a profit? To turn this into a SMART objective, we need a cash-flow budget. We need to know how much we will charge for our services. We also need to know what it will cost us to provide those services.

Costs can be divided into two types: Fixed and variable. Fixed costs are the ones that are incurred irrespective of the level of business carried out. This would include rent, wages and marketing costs. Variable costs are the ones that relate directly to the level of business. These include materials and mileage.

So to break even in year 1 we need to generate sufficient income to cover all fixed costs plus the variable costs for that level of business.

To make a profit in year 2, we need to

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