Don’t coast. Use a business plan to keep your company on track for reaching all your ambitious objectives. Matthew Moore from business website thehub.tips tells you how.
If business is ticking over nicely, purring like a mid-range Mondeo, it’s all too easy to take your foot off the gas and coast along perfectly pleasantly.
Doing so isn’t without peril, however, and at risk of stretching my car analogy, the only way to deal with unexpected bumps on the road – and to have your company roaring like a Lamborghini – is through spending time working on your business, not just in it.
A business plan should be much more than a document used to navigate the initial stages of starting up, before being filed away.
Instead, it should be a clear and concise working document, allowing you to take a diversion if necessary, but always pointing you in the direction of travel.
It’s also not something to draw up simply when you need to borrow money. In fact, whether you need finance or not, revisiting your plan can be the smartest move you make.
Refining, tweaking and challenging the details can keep your team focused and heading in the right direction. And – crucially – it will make sure you’re all going there together.
Whether launching a new product line, or exploring whether to expand into a different market, it’s important to keep referring to a business plan.
Do your new ideas meet the business’ long-term objectives? For example, if you specialise in parts and components for classic cars, how will your customers react to you branching out into caravan cleaning products?
Will reassigning resources damage existing business? Don’t take your best salesman off the forecourt and turn him into a backroom boy. Do the figures stack up?
Update your plan whenever your business encounters change, so your goals and strategies remain relevant.
If nothing major crops up, diarise at least an annual review to help you keep in touch with your over-riding objectives.
When you do dig it out from that filing cabinet and dust it off, remember it’s the finance section that rules the roost.
Have a look at the forecast you set out – are the figures as expected? Replace projections with actual figures and examine how this affects your cashflow and profit forecasts.
Map out cashflow in absolute detail for a year ahead and outline forecasts as well as you can for years two and three. A quick Google search should bring up plenty of pre-populated spreadsheets that will do all the hard sums for you – and highlight potential weakspots in a flash, months or even years ahead.
This will give you the chance to react quickly rather than being blindsided a couple of months down the line by a sudden cash crisis.
Advance warning of a financial avalanche means you can start trimming the fat and exploring ways to make your cash go further – before it’s too late.
If you’re the cautious type, consider running three sets of projections – the best-case scenario, a middle ground and a tricky year.
Broadly, expect the best, but plan for the worst. Get the numbers down on paper (or screen), and you’ll have a clear target to aim for. And if you have no goal, how do you know where you’re going?
Before you embark on revisiting your business plan, be aware that this exercise will cause change and inspire action. You would have originally created a plan based on a set of predictions and assumptions, thrown together to make all the edges fit. Now, in the future that you guessed your way to, it’s time to make sure the big picture make sense. So be prepared to be flexible and adapt to whatever is thrown your way.
Once you’ve worked your way through it, filling it full of fresh facts, time-sensitive figures and a renewed sense of direction, you need to infect all the relevant people with your enthusiasm.
Whether it’s your board of directors, the bank, your management team or your whole staff, you need them on-board and raring to get going.
If you think of the business plan as a roadmap, show them how far you’ve come, outline what great news the direction means for them and make sure everyone has clear signposts to follow. You’ve checked your bearings, now it’s time to carry on marching forward.
For more business advice go to thehub.tips. The Hub was created to strengthen relationships between Johnston Press and local businesses and offers advice, resources and inspiration to SMEs.