Business plans are not just appropriate for start-ups or those looking to raise finance, nor do they need to be a large and formal document.
The business plan process can help management or proprietors “step back” from the day to day running of the business and think more strategically about its priorities, goals, progress and direction.
The plan can be used to refine your assumptions about market potential for the business and its key drivers. The plan is not designed to predict the future; rather it is aimed at considering possible scenarios, setting expectations and action plans to deal with different outcomes.
An effective plan develops expectations for the business, its management, and helps deal with any changes that may be needed in response to market forces. It also helps ensure your business tactics are aligned with your image, milestones and long-term goals.
A good plan, effectively implemented, may also make you a better delegator by crafting a framework of responsibilities and targets for the management team (which will include you). Performance reviews and measurement against target are made easier – important if management incentive schemes are in place.
Key performance indicators and dashboards are an effective tool for management to quickly assess performance and pinpoint problems. Developing these is a key benefit of the planning process.
Cash flow is critical to the success of a business and can be more important than profitability, particularly where bank covenants are in place, debt is being repaid, or there are significant fluctuations in customer payments, purchase of capital assets or stock changes.
Business planning links profitability to cash flow in order to identify, plan for and deal with periods of tightness.
Meridian can assist in the business planning process in many ways:
- Looking objectively at your business and its market
- Helping formulate the business plan and chart your direction towards your long-term goals
- Challenging your assumptions and illustrating the effect of deviation from plan (sensitivity analysis)
- Helping formulate your business’ limitations and capabilities
- Assisting with the development of your marketing plan
- Assess your funding structure and finances – are they appropriate and can they be simplified?
- Compiling forecasts
- Developing performance dashboards