Make a plan – I’m passionate about seeing our SME clients grow, yet I’m constantly frustrated in my attempts to support and assist these businesses due to the fact that there is no coherent plan in place.
So, my message is simple. Ensure you make a plan before dreaming or hoping for success in business…
What is a plan?
A plan for your business can be in various forms, however I suggest that it contains 2 important components:
- A business plan;
- A financial plan.
I will look at the components in more detail below.
The plan needs to be SMART. By smart, I’m not trying to be clever, I’m referring to the planning methodology referred to as the SMART plan.
Business Plan
The purpose of a business plan is to identify and document the direction you plan to take your business. It is a plan that you can share with employees and other stakeholders to ensure that everyone is on the same page. It is also a document to hold yourself accountable for actions required of you and your team to ensure that you follow the plan.
Your business plan may be initially prepared when you start your business, however I urge you to ensure that you update it annually to prepare for each financial year ahead.
The business plan does not need to be a long protracted document. In fact in most cases a 2 page plan is more then sufficient. Anything more than this tends to lose its value as a planning and measurement tool.
As part of your business plan you need to consider and document:
- Purpose, vision and values;
- What you want to achieve;
- Ideal client;
- Opportunities, vulnerabilities and challenges;
- Budget;
- KPI’s; and
- 90 day and one year goals.
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Financial Plan
The financial plan uses the information documented in your business plan to provide a financial guide for your fiscal year. The intent is to develop an accurate financial plan to assist with identifying potential financial problems and to use as a yardstick to assess your performance and actions which are required.
A business cannot survive without cash flow and the financial plan is used to keep your business on track by providing financial guidelines for the financial performance required to grow or maintain the business in line with the goals and objectives you establish.
I recommend preparing budgets and cash flow projections for the forthcoming financial year, and breaking these projections into monthly figures taking into account seasonal and other fluctuations or events.
You can then use the monthly budgets to compare with your actual results to identify issues, opportunities, or confirm your planning is working as designed. This is the true benefit of putting the effort into preparing a financial plan, as you and others involved in your business can make business decisions based on live data and the overall plan.
Trying to manage a business's finance without a budget is a little bit like playing darts without a dartboard... No one has a clue what the score is meant to be!
Greg Jewell Tweet
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smart plan
SMART stands for:
Specific
A specific goal has a much greater chance of being accomplished than a general goal. To set a specific goal you must answer the six “W” questions:
Who: Who is involved?
What: What do I want to accomplish?
Where: Identify a location.
When: Establish a time frame.
Which: Identify requirements and constraints.
Why: Specific reasons, purpose or benefits of accomplishing the goal.
Example: A general goal would be, “Get in shape.” But a specific goal would say, “Join a health club and workout 3 days a week.”
Measurable
Establish concrete criteria for measuring progress toward the attainment of each goal you set.
When you measure your progress, you stay on track, reach your target dates, and experience the exhilaration of achievement that spurs you on to continued effort required to reach your goal.
To determine if your goal is measurable, ask questions such as……
How much? How many?
How will I know when it is accomplished?
Achievable
When you identify goals that are most important to you, you begin to figure out ways you can make them come true. You develop the attitudes, abilities, skills, and financial capacity to reach them. You begin seeing previously overlooked opportunities to bring yourself closer to the achievement of your goals.
You can attain most any goal you set when you plan your steps wisely and establish a time frame that allows you to carry out those steps. Goals that may have seemed far away and out of reach eventually move closer and become attainable, not because your goals shrink, but because you grow and expand to match them. When you list your goals you build your self image. You see yourself as worthy of these goals, and develop the traits and personality that allow you to possess them.
Realistic
To be realistic, a goal must represent an objective toward which you are both willing and able to work. A goal can be both high and realistic; you are the only one who can decide just how high your goal should be. But be sure that every goal represents substantial progress.
A high goal is frequently easier to reach than a low one because a low goal exerts low motivational force. Some of the hardest jobs you ever accomplished actually seem easy simply because they were a labour of love.
Timely
A goal should be grounded within a time frame. With no time frame tied to it there’s no sense of urgency. If you want to lose 10 lbs, when do you want to lose it by? “Someday” won’t work. But if you anchor it within a timeframe, “by May 1st”, then you’ve set your unconscious mind into motion to begin working on the goal.
Your goal is probably realistic if you truly believe that it can be accomplished. Additional ways to know if your goal is realistic is to determine if you have accomplished anything similar in the past or ask yourself what conditions would have to exist to accomplish this goal.