Planning is very important in life. Everybody should do planning at individual or family level. As an individual, you should plan for the day well in advance in order to accomplish what is to be done in that day. At family level, a family plan helps to focus on supporting the entire family in its growth and development. Planning is also done at business and organizational level.
But your fixed expenses don't do this. They remain the same no matter what sales does. That's why it's call fixed. These are expenses like rent, taxes, utilities, phone, salaries, insurance, etc. A lot of business owners never consider this. They just lump all their expenses together. But you could never make an accurate plan if you combine all your expenses together. If you project your sales higher and want to know what your expenses will be, you have to separate your fixed and variable. So, thinking about this principle, let me ask you a question. If your sales grew 10% and nothing else changed, would your profit margin be higher, the same, or less? Profit margin is % of profit against sales