3 Ways Business Planning Can Help Your Business
Business planning is used by successful companies to expand their business, be more competitive in their industry and to achieve corporate objectives.
Whether you’ve just started out or you’ve been running your business for years, business planning plays an important role in developing greater success for your business.
1. Business Planning Helps You Gain Control Over Your Business
Developing a business plan with the support of outside help gives you the ability to step back and look at what’s working in your business and what you can improve.
If you’re just starting your business (operating less than one year) the process of business planning helps you to learn more about the different factors affecting your ability to gain success.
If you’ve been in business for a while now, business planning helps you to step back and look at what’s working and what you can improve on. The process of creating a financial model for your business also helps you focus on how to predict the financial future of your business and to adjust that future in your favor.
Business planning and the support of a professional business consulting company also helps to clarify assumptions with a third party who will ask the hard questions.
The process of business planning gives you the chance to:
- Learn more about your industry, your market place, and its competitors
- Formulate where you are positioned in the market place and where its more lucrative
- Identify potential challenges and work out strategies to avoid or overcome them
- Predicting your business finances, including managing profits, cash-flow, and break-even
- Set specific goals, timeframes for achieving them and how you’ll measure performance
- Make better business decisions aligned with goals so you can maximize your resources and give you a competitive edge.
2. Helps Your Business Get Finance
Some banks will require you to provide the last two years business tax returns and if the loan, line of credit or overdraft is greater than they expect to lend then a business plan will be an important aspect of the loan.
Banks will be looking for a professional style of plan that reflects the depth of research, depth of financial understanding of your proposed changes, and have a real-world outcome. The financial structure of your business plan will need to have 5 years of projections in the following:
- Break Even
- Profit & Loss
- Balance Sheet
- Cash Inflows and Outflows. With Annualised Cash at Bank
- Monthly Cash Flow (Minimum 12 Months)
- Marginal Cash Analysis
- Business Ratios
You need to know your business can produce positive cash flow in order to pay for the financial investment the bank or lender is going to provide.
3. Business Planning Can Help You To Prioritise
A comprehensive, and well throughout business plan is one of the most valuable tools in helping you reach the long-term goals for you and your business. It gives your business direction, defines your objectives, maps out strategies to achieve your goals, predicts future revenue, profits, cash flow, and direction of growth. A robust plan will help you to manage possible obstacles.
The process of business planning will help you to define critical goals, and the strategies to achieve them. This means you can focus your resources and energy on what you need to do, rather than taking up random opportunities (shiny objects) which lead you and your business in the wrong direction.
If business growth is important to you and you want to make sure you grow your revenue, profits, business value, and cash flow at the same time … plus keep your business out of financial stress, then talk with us about the different ways we support business to plan its future.