Successful businesses plan ahead. It’s as simple as that. If you want to get a five or ten-year plan in place for your business, don’t worry – it’s not as complicated as some people make it sound.
In my years as an accountant, including a seven-year stint as Finance Director for a national company, I’ve learned the real, practical value of business planning.
Without it, it’s all too easy to coast along hoping growth will happen by magic, or through good luck. Assumptions go unchallenged. People end up beavering away without common purpose. You end up pouring time, energy and money into the wrong things. And you’ll struggle to adapt as the market or commercial landscape changes around you.
Get it right, though, and you’ll feel more in control, will operate more efficiently and, as a result, your business will be more profitable.
What is business planning?
A business plan is that nicely bound collateral you take with you when you go to talk to your bank – the one with all the graphs with lines pointing upward.
Business planning, on the other hand, goes a bit deeper. It’s all the thinking and calculations that are behind that document, and which bring many other benefits, too.
Business planning is about setting goals for your business, breaking them down into specific objectives, setting targets and laying out a plan for getting where you want to be. It should all be backed up by reliable numbers, both historic and forecast.
It’s best done with the management team together round a table, and a facilitator who can ask the right questions at the right time. Over the years, I’ve been on both sides of the process, and always find it challenging but stimulating.
Planning should be an ongoing process, too – something you constantly revisit with new data, updated intelligence and fresh assumptions. In fact, every management or board meeting should revolve around the plan:
- Are you on track to meet targets?
- What’s going wrong?
- What’s going right?
- Where is a course correction necessary?
How will business planning help me?
When I’m explaining the benefits of business planning to my clients, what often wins them over is the long-term vision.
Specifically, it’s the idea that the end point of a five-year plan might be a big pay day, through outside investment, merger or acquisition; the chance for an early retirement; or both.
But it could be anything. What matters is that it really chimes with you.
Once you’ve worked out where you want to be in 2027, and start making decisions with that in mind, everything else starts to fall into line.
For example, thinking about what might make your company more saleable, you might decide to invest in your brand and marketing. At the same time, you might want to wind up or sell spin-offs or passion projects that aren’t contributing to your goals.
From a financial perspective, planning enables you to think through what kind of funding you’ll need, when. If your long-term goals require new premises or specialist equipment, for example, how will you find the capital you need?
That’s where the document, the business plan, is important. It’s what shows investors and lenders that you’ve thought everything through and have a roadmap. It inspires confidence and makes them more likely to say, “Yes.”
As experienced business advisers we can provide practical support with the business planning process – get in touch to find out more.