It's never too late to start business planning but where do you start before jumping in. Here are 4 quick key tips you should be thinking about before you sit down with your business advisor to go through the process.
Step 1: Think Big
- Do the same you always have and you will end up with the same you've got.
- Businesses that aim to grow invariably last longer than those who don't because in order to grow you need to keep innovating and improving.
- Never aim for worst case scenario. Chances are if you do not only might you get there but you may even fall short.
- In terms of numbers do not just take last year and add 10% (that old chestnut!).
Step 2: Plan The Numbers Carefully
- Before you start work out what numbers you would like to see;
- Once you've worked what your profit should be, work backwards to determine what revenue levels you need to achieve;
- Adjust expenditure to cope with increased revenue planned;
- Do a cash flow forecast which takes into account more than just profit. Allow for loans, drawings and time to get paid as well as the time taken to turn inventory over (three way budgeting);
- Develop KPIs (key performance indicators) such as debtors days, inventory days, supplier days, gross profit percentages, profit before interest and tax (EBIT) as a percentage of revenue.
- Find out what your business valuation might be now and what it could be if you hit your targets;
- Work with your accountant or business advisors to make sure they all make sense.
Step 3: When & How Will You Implement?
- Have you allocated time to work ON the business?
- Work out what you need to change to make the numbers happen;
- Develop an action plan of who, what & when actions will need to happen;
- Meet regularly to ensure accountability so that things get done.
Step 4: Monitor & Adapt!
- Consider how you are going to stay on track;
- Compare plan to actual at least monthly;
- Explain why actual to plan is different;
- Adjust as required with fine tuning;
- Test & measure.
The above is a quick summary of some of the key issues you need to consider before starting the business plan in detail. If you have considered these 4 areas prior, you are well on the way to success!