To Business Plan Or Not Business Plan? That Is The Question

INTRODUCTION:

A business plan to many is a great idea but often ignored due to a number of reasons. To some, as the business has not yet commenced projections maybe considered unreliable even if you've sat down with your small business accountant and had them checked for reasonableness. To others, a business plan is time consuming, costly if business advisors get involved and at the end of the day, some do not know how to prepare such a document. This is where small business accountants Sydney should be skilled to offer such services to their clients and prove the value of going through such a process.

The modern day small business accountant Sydney needs to have this offering in their accounting and business advisory services or they will lose the client to somebody else who has.

I'm here to tell you that if you don't go through the business planning process then the risk of the business underperfoming will be much higher. With a little bit of time, planning will go a long way to helping you benchmark your actuals to your goals. If you plan with an eventual sale in mind then it's important to understand what drives value so that you can get your small business valuation as high as you possibly can over time.

So what are some of the key areas that need to be considered when going through the business planning exercise?

Figure 1: Working on strategy will pay massive dividends!

1. Key components

Business plans will have the following as a minimum:

Executive Summary - an overview;

• Description of the business;
• Product/service design and development;
• Industry analysis;
• Marketing plan;
• Management team and business structure;
• Operations plan;
• Legal and risk management plan;
• Financial projections including cash flow budgets and profit and loss forecasts.

Of course there may be other components if they are relevant but these points above are the classic pieces to your business success plan jigsaw.

2. one page strategic Plan or 50 plus pager?

We see many types of strategic plans and it really depends on the client's individual circumstances.

Whilst the detailed documents can be very beneficial, we recommend that the Gazelles One Page Strategic Plan is the most powerful.

This one page plan can be contributed to by owners, your team and any number of small business advisors that can be put together over 1-2 days.

It is a very simple yet powerful document that can fit on an A3 page. You can then have it laminated so you can easily and quickly refer to it on a plane or cafe or almost anywhere.

Figure 2: Sharing ideas and documenting them is always a winner when it comes to the team!

3. cash flow and three way budgets

For regular followers of my blogs you will know that we strongly recommend three way budgets.

The absolute best things about these is doing what-if scenarios and how they affect profitability and how this affects cash flow and your balance sheet.

Perhaps this is one of the most exciting things a small business accountant can do with their clients (if there is such a thing in terms of excitement and accounting!).

Figure 3: Oh the stress at losing a grand final! Planning will help avoid such situations.

4. monitoring system

Once the plan has been set, you need to refer to it monthly and quarterly and check to see how you are travelling.

If you get your accountant to assist you with Business Activity Statements then it is a good idea to go through the actual versus budget and action plans within your plan to see if you are hitting your targets and see whether business improvement is occurring.

CONCLUSION:

Whilst it is tempting to say "I don't need a plan. I know what I am doing!", this is fraught with danger on a number of fronts.

If you don't believe it, please feel free to come in and see us so we can show you why it's so beneficial (for free!).

Failure to plan increases risk of failure and will be the source of much stress which could have been avoided.

Strategic plan/less stress v. No plan/more stress.

Which do you prefer?