In my mind, a business plan is a living, breathing, dynamic part of the structure of any successful venture.
It identifies and documents many areas including our Objectives, Strengths, Weaknesses, Opposition, Price plan, Target market, Costs ,etc.
Quite often, during the early start up days of a business, the emphasis is placed on creating a business plan which is seen as a mechanism for many early day activities.
The bank manger needs to see one before a business account can be opened; the local business support organisation needs to see one before any support can be given.
In 2002 I helped to put a plan together to enable one company to be considered for a grant of £50. I also had to put one together, in a different form to allow me to apply for a bank overdraft facility.
Although they said, more or less the same thing, both of these plans had to be in a form that was acceptable to the organisation concerned.
What I found amazing was the fact that neither plan allowed for ongoing management reporting to be carried out in a simple but effective manner. Simply reporting on a monthly basis of forecast sales and costs against actual sales and costs just did not enter into either proposal.
It identifies and documents many areas including our Objectives, Strengths, Weaknesses, Opposition, Price plan, Target market, Costs ,etc.
Quite often, during the early start up days of a business, the emphasis is placed on creating a business plan which is seen as a mechanism for many early day activities.
The bank manger needs to see one before a business account can be opened; the local business support organisation needs to see one before any support can be given.
In 2002 I helped to put a plan together to enable one company to be considered for a grant of £50. I also had to put one together, in a different form to allow me to apply for a bank overdraft facility.
Although they said, more or less the same thing, both of these plans had to be in a form that was acceptable to the organisation concerned.
What I found amazing was the fact that neither plan allowed for ongoing management reporting to be carried out in a simple but effective manner. Simply reporting on a monthly basis of forecast sales and costs against actual sales and costs just did not enter into either proposal.
The 3 Rs
At school, we were taught, amongst other skills, the three Rs; (R)eading, W(R)iting and A(R)ithmatic.
A good project manager will take the project plan and (R)egularly (R)eview and (R)evise as necessary during the whole life of the project. The ‘Plan’ becomes a living, dynamic part of the programme.
So, why is it that the vast majority of business owners are negligent in this area of planning?
(R)egularly (R)eview and (R)evise your business plan
Imagine having the following information available to you on a monthly basis.
Anytime Company First 4 months of trading
Forecast Month 1 Month 2 Month 3 Month 4
Sales £1,000 £5,000 £8,000 £12,000
Cost of sales £250 £1,250 £2,000 £3,000
Overheads £500 £500 £500 £500
Profit £250 £3,250 £5,500 £8,500
Actual Month 1 Month 2 Month 3 Month 4
Sales £150 £900 £800 £1,500
Cost of sales £38 £225 £200 £375
Overheads £500 £500 £500 £500
Profit -£388 £175 £100 £625
On the face of it, these are very unhealthy results for the first few months, where actual profits are no where near to those forecast in the business plan.
This may be an extreme example but I have put it in to show that this company is heading for serious trouble and needs to be revisiting the whole of its business plan before the trend becomes irreversible. A complete look at sales, marketing, and overheads is needed to see where the plan is falling down and then, if necessary take appropriate action. Note that there may be some plausible reason for the trends.
By using the 3Rs, a potential disaster could be avoided. It would be unthinkable to allow the situation to continue without investigation until the year end accounts are produced.
Remember
A BUSINESS PLAN IS YOUR LIFE, NOT JUST FOR THE BANK MANAGER
At school, we were taught, amongst other skills, the three Rs; (R)eading, W(R)iting and A(R)ithmatic.
A good project manager will take the project plan and (R)egularly (R)eview and (R)evise as necessary during the whole life of the project. The ‘Plan’ becomes a living, dynamic part of the programme.
So, why is it that the vast majority of business owners are negligent in this area of planning?
(R)egularly (R)eview and (R)evise your business plan
Imagine having the following information available to you on a monthly basis.
Anytime Company First 4 months of trading
Forecast Month 1 Month 2 Month 3 Month 4
Sales £1,000 £5,000 £8,000 £12,000
Cost of sales £250 £1,250 £2,000 £3,000
Overheads £500 £500 £500 £500
Profit £250 £3,250 £5,500 £8,500
Actual Month 1 Month 2 Month 3 Month 4
Sales £150 £900 £800 £1,500
Cost of sales £38 £225 £200 £375
Overheads £500 £500 £500 £500
Profit -£388 £175 £100 £625
On the face of it, these are very unhealthy results for the first few months, where actual profits are no where near to those forecast in the business plan.
This may be an extreme example but I have put it in to show that this company is heading for serious trouble and needs to be revisiting the whole of its business plan before the trend becomes irreversible. A complete look at sales, marketing, and overheads is needed to see where the plan is falling down and then, if necessary take appropriate action. Note that there may be some plausible reason for the trends.
By using the 3Rs, a potential disaster could be avoided. It would be unthinkable to allow the situation to continue without investigation until the year end accounts are produced.
Remember
A BUSINESS PLAN IS YOUR LIFE, NOT JUST FOR THE BANK MANAGER
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