It's Time to Make Plans
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Planning for Success!
In one of my past businesses the beginning of every year, in my case January, I would think in terms of what the next 12 months had in store. I know, ideally your business planning should be completed and ready to implement by the beginning of a new year, so in theory you can hit the ground running staying in front of competitors, maybe that’s why it is a previous business. However, the last quarter was a mad rush leaving no time for thinking about the future. So I would use the beginning of the new year to write a one-year business plan.
This was actually an ideal time for a number of reasons. The old year numbers were in, still fresh and vivid. The marketing plan was current and could be accessed and tweaked, customer account reviews provided great data but most important I had time to actually think; keeping the old and new years in perspective, divining the future. If you don’t have a current business plan now is the best time to begin writing one. The attached business plan outline covers the critical areas of your plan with prompts to stimulate and focus your thinking.
My suggestion is to write a five year business plan keeping in mind that it will be updated annually. Much of the information in your plan shouldn’t change from year to year i.e. objectives, mission statement, business concept, management team etc. The key areas for updating, your market analysis and financial projections. These areas define your business model which should be to “buy low, sell high, and keep the difference”. If your business model is not working properly then the business planning process is not an option but vital for your survival.
There is a lot of business planning software available. This software is very good at keeping your plan on task by asking great questions designed to stimulate your thinking, guiding you through the process. Business Plan Pro from PaloAlto Software®, www.businessplanpro.com is one that I have used and would recommend. This is a great product, at a reasonable price containing some really great questions and includes hundreds of sample business plans that can really get you going, keeping you and your team focused and on task.
Whether you use software my outline or develop your own format keep your business model in mind, understand your market data, and most importantly accurately convert market data into dollars, cash flow and then pro forma financial statements. These critical steps are the area that I find most people have difficulty with. It my be difficult to objectively quantify your market deciding whether to use a top-down or bottom-up approach then developing accurate financial numbers. The goal is to develop market data that will produce realistic short-term financial projections where accuracy is measured in a plus or minus 5% range.
From my experience converting market data to dollars and meaningful projections is the area were you may need to hire an outside consultant. Let them develop your market analysis, projections and produce the pro forma financial statements. Once this has been completed you and your team can simple use the formula developed by the consultant updating your business plan annually refining the projection process staying inside the 5% range. The goal, see how accurate your projections become from year to year.
The basis for your decision to seek outside help with writing your business plan is based on the value of your time and the ability of you and your team to develop reasonable market data accurately converting it to meaningful projections and finally pro forma financial statements. In a previous article entitled “The Nine Essential Personality Traits of a Business Plan Consultant Superhero” provides a list of some of the essential qualities to look for in a business planning consultant. Writing of a business plan is an important investment in the continued successof your business and is definitely worth the effort.
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Library of Congress Cataloging-in-Publication
Business/News & Views® / by David. W. Weatherholt
ISBN: 978-0-9823041-1-2 (electronic format)
Published in the United States of America through www.waconsult.com
Published in an electronic format by Weatherholt & Associates, LLC
First Trade Publishing: October 2008
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