The importance of business planning
The work of business is fast paced, when you’re just setting out or are a seasoned professional without a clear plan and direction its easy to get distracted from your end goal. Proper business planning keeps you focused on the important goals that are crucial for success and provides guidelines for day-to-day operations and decisions.
Why do I need a business plan?
Turning your ideas into written plans helps sharpen your focus , can help flush out potential problems and identify your priorities. It can also act as a benchmark to help track your progress throughout the year to see if you are on your way to meeting your goals.
Who will read your business plan?
The main purpose of your business plan is to map out a strategy and action plan for your business, however it’s also a reference document for external parties interested in your business.
Since your business plan contains your strategy and action plan for your business, your staff can refer to it to ensure the decisions they make match the overall plans and objectives of your business.
Bank managers or other lenders would need to look at your plan if you wanted to raise finance or investment capital. Similarly, if you’re looking to employ a new senior staff member, a professional business plan could help clinch the deal.
Potential business partners or buyers will use your business plan to assess the viability and profitability of your business.
Setting your goals
Your business will operate more efficiently with specific clearly defined goals. Business planning is a good time to outline your goals. Here are just some you may want to include;
- Financial objectives
- Strategic objectives
- Operational objectives
- Marketing objectives
- Social/Environmental objectives
Keep your goals realistic and relevant to current economic and industry conditions.
Identify your strategy
Your business plan will also include your business strategy and will outline the steps you will take to achieve your goals and objectives. This in turn will direct the day-to-day operations of your business. Each of your business goals will need a plan of action that needs to be followed.
As a rule of thumb your strategy will outline the most practical and cost-effective way to achieve each objective. It will detail any extra equipment or personnel that might be required to achieve this.
Forecast the financial implications
Most business plans will include a 12-month cash flow forecast, a profit and loss forecast and a two- or three-year projection.
Your cash flow forecasts will identify whether you have enough resources to implement your plans immediately or whether you will need to explore other financing options.
Monitoring your actual expenses against your projections ensures that the cost of new projects fit the budget.
Review your business plan
Your business plan is a living document that grows and changes over the lifespan of your business. Its objective is to identify your key goals and how to achieve them while taking market and technological trends into account.
The effectiveness of your business plan as a management tool depends on you referring back to it as a reminder of your plans and objectives and updating your plans to keep them relevant taking account of changing market trends and operating practices. It is a good idea to review and update your business plan once a year. Try to set aside a few days every year to do this.
To learn more about developing a business plan, download our free guide “Preparing a business plan.” You can also sit down with one of Omnis Group’s friendly team of business advisers and accountants for a FREE no obligation meeting and discuss the best way to plan and improve your business, simply call us today at 9380 3555.