How can you get your business off to a good start in 2016? There are no guarantees, but it certainly helps to plan ahead. Specifically, you should draw up a business plan before year-end to put into motion on January 1. If you have developed a plan in prior years, you can refer to it when developing a new one, but you do not necessarily have to be wedded to what you have done in the past.
Essentially, a business plan is a blueprint for running the company, but a comprehensive plan can do much more than that. Here are several typical benefits you might realize from a business plan:
- The plan can provide a needed sense of direction. It will show you where you are now, where you are going and how to get there. Of course, the plan does not have to be set in stone. For instance, new developments may require some slight deviations from your original plan. However, your business decisions probably will be more solid if they are made within the framework of the original plan. If something is way off base, it should raise suspicion.
- It forces management to be proactive instead of reactive. Frequently, business managers in small companies tend to put out the fires as problems arise. Committing a business plan to writing requires a great deal of discipline, but going through the process is worth it. For example, it’s easier to find the flaws in a hastily conceived plan once you have seen it in black and white.
- Advance planning usually leads to better communication. For one thing, the process will force you to crystallize your vision of the company. For another, it encourages input from the personnel who are involved with the planning. This kind of dialogue may be particularly vital, especially in small firms. Reason: The employees have the opportunity for some valuable give and take with management.
- A business plan can give you instant credibility in your industry or profession. It can be especially impressive to the creditors and bank lending officers you deal with. And it may satisfy a psychological need for you and your company to be taken seriously.
- The plan may be used to help raise capital for the company. By focusing on accounts receivable in your business plan, you may be able to free up additional funds. Furthermore, it is likely that a lender will require you to present a business plan plus cash projections to obtain a loan.
- What should you put into a business plan? Generally, the document will include a statement of objectives, strengths and weaknesses, position in the marketplace, future direction, critical issues and so forth. However, there is no magic formula. The important thing is to touch all the bases essential to your particular line of work.
Finally, use your business plan as a guideline, but do not treat it as a bible. Feel free to modify the plan during the course of the year as needed. Machen McChesney can provide assistance with both the development of the plan and its modifications.
