Developing a business plan for the upcoming year is a laborious task, but it is often critical to the continued success of the operation. Although the details will vary from company to company, the best approach is to confront the challenges expected for the year and address the strengths and weaknesses within the organization. Conversely, if a business has a merely rudimentary plan—or even worse, no plan at all—the likelihood of real progress is diminished.
Generally, a business plan will include a statement of objectives, assets, and liabilities, position in the market, future direction, critical issues, and so on. It may be helpful to seek insights from your professional advisers, but there is no “magic formula” for a plan’s creation. It can take whatever form you want.
Keeping that in mind, here are five practical ideas for developing a business plan for 2018:
- Chart the path. Start by examining where the business is right now, where you expect it to go and how you intend to get there. Of course, the plan should remain flexible enough to be modified when needed. For instance, new developments may require that you deviate from your initial course, but most business decisions will be fundamentally sound when made within the context of the basic plan.
- Focus on strategic action. Rather than confronting problems as they arise, be proactive. Although documenting tactics ahead of time requires in-depth analysis, it’s usually time well spent. In contrast, a hastily conceived plan will likely be of little use. Some experts have argued that the process of developing the plan is actually as beneficial as—if not more beneficial than—having the plan itself.
- Encourage communication. Writing out a business plan will force you to crystallize your vision for the company. At the same time, you should seek input from other key members of your business, such as your top-level managers. A back-and-forth dialogue may be especially useful in a small firm where a strong owner usually takes the lead and rarely heeds the advice of others.
- Build up a cushion of working capital. First, examine your revenue stream and expenditures. Emphasize ways to increase accounts receivable and reduce accounts payable. If you need to borrow money, know that a lender will likely want to refer to your business plan, featuring key projections, before approving a loan.
- Establish greater credibility. A comprehensive business plan may convince customers or clients to use your services or purchase your goods—and persuade lenders to provide you with the capital you need. It creates a legitimacy that also may satisfy a psychological need to have the company taken seriously.
As mentioned previously, the written document does not have to be final and absolute. Put it in a computer file. This will enable you to tinker with it and make modifications throughout the year when necessary. Again, your business advisers can provide guidance in areas where you are not experienced.
For more business advisory services, contact Michael D. Machen, CPA, CVA at (334) 887-7022 or by leaving us a message below.