As a new year begins, it’s important to review your business plan. Checking your financials and goals of the previous year will allow you to see how exactly you measured up to these targets while allowing you to set new goals and make adjustments. If you started your business without having a business plan, it is time to set up a meeting with the accountants at the My Accountant Bookkeeping & Tax Service Inc team to create your initial roadmap. Keep in mind accountants can also assist you in your annual update if you need help or guidance.
Importance of a Business Plan
For most business owners, creating a business plan is typically one of the first things you do when starting your own company. This plan should help you focus your concept and really dig to discover what is needed to thrive in a competitive industry. Having a business plan in place will allow you to:
- Plan for Growth: List your potential goals for expansion and how you plan to accomplish them. For example, you may start with offering products or services online only with a goal of opening a store front. In your plan, outline your goals for expansion but more importantly, how you are going to accomplish them and where you will get the funding.
- Make Finance Plans: Layout how your business will get started financially. Look at short and long term financial needs. You may want to consider getting investors to aid you in the startup of your company.
- Having a business plan in place is a useful tool to gain these investors. No one wants to invest money in a company without having evidence that it will succeed. By having the business plan, potential investors can feel confident when reviewing the plan to see how you will execute the business and ensure it thrives.
- Stay on Track and Organized: Having a business plan in place can allow you to stay organized and on track with minimal detours. Rather than making a decision that hasn’t been completely thought out or approved by your investors, you can refer back to the plan and know exactly which course of action you should take. When in doubt, refer to your plan and don’t defer without careful consideration.
Updating Your Business Plan
Because your business plan is such an important tool to get your company started and remain successful year after year, it is important to update it at least annually. Although annual updates are usually a given, you can never update it too much. Consider updating your plan throughout the year if needed. As your business grows, so may your needs and goals. Many people review and update their plan monthly, quarterly, or when a large event happens to the business that may need to be recognized. Some examples of this include:
- Crash or Spike in Economy
- Adding/Changing a Business Partner
- Finding Additional Employees
Now that you understand when you should generally update your business plan, let’s talk adjustments! Some key things to look at when making your annual review are:
- Budget: First, look back at your previous year financially versus your previous goal. Did you do better than expected? Maybe a little shy of expected? Now is the time to consider adjusting your goals appropriately and determining how you can accomplish your business plan for the year. To get a good perspective on your financials, you need to look at all of your bookkeeping and annual tax statements. Review your balance sheets and cashflow statements for the year to see your successes and shortcomings. Do you need to cut back on expenses? Maybe search for cheaper vendors? Perhaps you have big expenses coming up and need to get more money than what you have available. If any adjustments need to be made, now is the time. Rally additional investors and look into financial programs if needed.
- Remember, your accounting team can help you review all of your financial documents and can offer useful guidance when making important budget decisions.
- Marketing Strategy: Marketing can be a huge lifesaver for Phoenix small businesses! Some business owners are hesitant to put money into something like this, but if done correctly, you can greatly boost your sales while gaining new customers (and that means more future sales). If you didn’t have any professional marketing help in the previous years but did your own marketing, determine how that worked out for you. How many sales and new customer acquisitions did it bring you? Is it time to get professional help? If you already work with a marketing team, set up an annual meeting to determine how their services have helped you. They can go over all of the numbers regarding website hits and stats on how many people the advertising has reached. Depending on these results, you can either stay the course or consider a more aggressive marketing approach.
- Competition: Before your business even opens, your plan should touch on industry competitors and how you are going to stand out. It is important to review this annually to see:
- Are you thriving against competitors?
- Have new competitors emerged?
- Do you need to re-strategize or re-market yourself?
Depending on the answers to these questions will determine what/how you should update your business plan.
- Day-to-Day of Business: Take a look at how the day-to-day operations are run. What happens on a daily basis that makes the business run and succeed? This can include staff, inventory, vendors, bookkeeping, payroll, marketing, and so much more. See if the processes and systems you have in place are working for you or if you need to expand in some areas (such as hire additional staff) or make cuts in other areas (such as finding cheaper vendors).
It’s up to you what you wish to focus on and update when reviewing your business plan. What’s important, is that you review your previous year and determine where you can make changes to improve the business. Remember, a business plan is essentially a map to the treasure of success for your business! Update it often and reference it even more.