One of the most important aspects of any well-run business is that those in charge have an eye to the future. This is both simply common sense and difficult to achieve - this latter for at least two reasons. Business leaders often fail to plan sufficiently for the future because they become too embroiled in the details of the present to set aside time for setting their goals for the future and for attempting to determine how it is that those goals might be met. The second major reason why businesses fail to plan sufficiently and accurately for the future is that the future is notoriously difficult to forecast: Even when businesses do make sincere and organized attempts to make plans for the future those plans are often informed by faulty logic or problematic assumptions. This paper examines one of the tools that is open to businesses attempting to make the future better defined and more predictable: Target income.
At its basis, target income is simply what the terms implies - an income that is being targeted (or aimed for) for either an individual, a division, or a company. to aim for. The term is often used to apply to small company as well as professional associations: A lawyer or a doctor may well have a targeted income just as well as a department store manager may use the concept. Perhaps the most important element of the concept of target income (and this should of course be true for nearly every aspect of business) is that it is not static. Even if the specific figure of the targeted income remains the same (which in many and indeed probably in most cases it should) the strategy that an individual or firm intends to take in arriving at this targeted income should be flexible (Eldred, 2003, p. 19).
Let us provide a very brief hypothetical example at this point to demonstrate how such flexibility might work. A partner in a law firm (who has significant autonomy over which cases she takes on and how many hours a week she wor...