Business Planning [Feb 25, 2018]

Business planning is probably the best tool available for running a successful business, and although designing one can be time-consuming, it is an important step in ensuring success over the long haul. Many businesses are successful because they are in the right place at the right time, but as trends and populations change, those without well-defined business plans often begin to falter.

A business plan does two basic things: It defines your company’s goals and objectives, and it sets out a system for achieving them. It’s a bit like a road map, and if well-designed, a business plan should provide you with specific directions for the fastest and most effective route to your destination. Without a goal to shoot for, a company can easily lose direction, particularly in bad economic times. As the old saying goes, if you don’t know where you’re going, how do you intend to get there?

Establishing goals is not as simple as just knowing where you eventually want to end up. When designing a business plan, it’s important to look at one, three and five year goals, with each one a step towards the ultimate destination. In difficult times, the ultimate goal, which may be to double or triple your sales, can seem insurmountable, and it’s important to be able to see the progress you have made. By establishing yearly objectives, you see the success along the way, and are more likely to stick to the plan through short-term set backs.

It’s also important to continually review your business plan, and make adjustments where needed. In telling you how to reach your objectives, a business plan should lay out your marketing strategy, your financial requirements for added inventory, equipment or staffing, any training and development that will be required, your plans for financing, etc. It should include financial projections based upon realistic cost estimates and expected revenue, and realistic is the key word here. A business plan is no place for pie-in-the sky dreams. To be successful, your plan must be based upon numbers that are as realistic and accurate as possible. Projected revenues are not what you want to achieve, they are what you are likely to achieve, and this number is determined through comparisons, demographic studies, and market research. Projected costs should also be as complete as possible.

Finally, a business plan is only effective if it is used. Far too many business owners have someone prepare a business plan in order to get bank financing or grants, or to satisfy investors, and they never look at it again. If you have a business plan, keep it close at hand and refer to it regularly. Just like any other map, it won’t do you much good if you never take it out of the glove compartment.

Lindsey Cox, MBA can be reached at  lindseycox [at] coxandcompany {dot} ca