Any competent financial executive will say “a business needs a sound financial plan” to tie the numbers to a business owner’s strategy. But what does that really mean? It’s time to demystify this statement.
- Define your objective. Why do you run your business? Your reason could be any of the following or something else, but it’s important to start with the end in mind:
- “I want a good, stable life style maintaining business.”
- “I want to increase my net worth so I can retire early and enjoy the good life.”
- “I’ll start a ground breaking business, grow it quickly and sell it so I can move on to the next adventure. I don’t want to get bored!”
- “I want to create a legacy for my family.”
- Create a business plan.
- Now that you have your objective in mind, the plan is simply the day-to-day activities that will help you achieve it. This can be as simple as determining how many new clients you will need at X dollars per month, or more detailed with specific key performance indicators for all areas of the business (finance, operations, sales and marketing, HR, etc.)
- It is easy to think of the plan as the tool. And it is – a well developed plan helps you manage to your expectations. It provides business measures to keep things on track. (And as we all know, if you don’t measure it you can’t manage it.) But often overlooked is the value gained in going through the planning process – whether it’s a simple two-page plan or a full-blown book with multiple chapters. The business idea will be refined and honed, and valuable insights achieved during planning.
- Execute.
- Now it’s time to put the plan into action. Without this step, a plan is just a piece of paper. Start acting on your plan, find someone to keep you accountable to sticking with it, and celebrate your progress along the way.
Let me know how I can help you build your blueprint.
Here’s to planning a successful year!
Mike