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Your company's business plan: Scorecard to success

It's a common misconception that a company needs a business plan only if it is looking for investors or trying to secure a loan. For any small business owner, a well-thought out business plan can be a valuable tool for growth and the Scorecard to success.

Like most small business owners, you probably don't have the time to develop a detailed, 25-page business plan. However, you should be able to find the time to put together a 3-5-page plan that will provide a strategic Scorecard for you to follow in your everyday operations. In fact, operating without a coherent plan can be hazardous to the health of your growing business.

Once you have determined that a business plan would be useful for your company, following these four steps will help you get the most out of the process and should result in a usable plan of action:

Plan. Before you sit down to the task of writing your business plan, you should consider how you want your plan to look, and what purpose you need it to serve (e.g., is it for internal and/or external use?). In addition, there are a few important decisions you will need to make upfront, such as:

• Timeline. What length of time will your plan cover? A good rule of thumb is to take your plan out 3-5 years. Start-ups with little or no established revenue history or in new markets (such as the Internet) should lean more towards a 3-year timeline while older, more experienced companies in an established line of business should plan out 5 or more years.

• Information. What information will you need to prepare your plan? The more relevant business data you have, the more accurate and useful your plan will be. Past & current business records, industry market analyses, and employee compensation guidelines are all good sources of data that can be integrated into your plan.

• Assumptions. What assumptions will you make and what are the sources of those assumptions? Invalid or unrealistic assumptions may result in a business plan that, if followed, may cause you to make unwise decisions that could be detrimental to your business. Be realistic, if not conservative, about your assumptions and make sure the source of the data you use is reliable.

Prepare. Once you have gathered all of the data you will need and have made some of the more critical decisions, it's time to get down to actually writing your business plan. Keep in mind that if business writing and/or financial forecasting are beyond your abilities, you may want to consider seeking out assistance from qualified professionals in those areas.

Your business plan should include these key elements:

• Executive summary. The Executive Summary is an overview of the plan and includes a summary of the goals and strategies of the company.

• Market Analysis & Strategy. In this section of your business plan, you will need to define your market and the strategies that you need to implement to achieve the revenue projections set forth in the plan.

• Action plan. Once the goals & strategies have been identified and the market has been defined, the action plan must be formulated to provide guidance to implement these strategies. The action plan should provide quantitative data regarding the resources, financial and human, that will be needed in order to achieve the goals outlined.

• Financial projections. The financial projections pull together the expected results of the actions discussed in the plan, based upon certain assumptions made.

Implement. Once you've developed a coherent plan, it's critical that you don't simply file it away unused. If, once you have your plan completed, you are unsure how to implement the plan's actions, do not hesitate to seek assistance from a qualified professional or a trusted advisor familiar with your company's industry.

Maintain. Following a business plan with invalid or out-of-date assumptions and data could do your business more harm than good. Revisiting the business strategies and financial projections in your plan on a periodic basis is essential if you want to continue using the plan as a tool for growing your business. At a minimum, your business plan should be reviewed and updated on an annual basis.

Developing an effective business plan can pay long-term dividends and is certainly worth the effort. However, keep in mind that implementation and maintenance are just as important as development in order for your plan to be effective.

If you would like to discuss how your business could benefit from a business plan, please contact the office for a consultation.

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