On January 3rd (2008) I identified the two basic reasons for a business plan; create a map of your business, and preparing for a loan. In that post I briefly discussed the steps to create a business plan ending with keep it simple and well edited. Then I ended with the link to Microsoft’s business start-up kit. Today I’m going to return to return to the business success diagram from January 2nd, and continue the business plan discussion. In this post I’m going to identify and briefly discuss the remaining six reasons to create and follow a business plan.
Analysis – By analyzing the previous year’s plan, a contractor can easily and quickly see if he’s making headway, losing headway, and merely mired somewhere in the middle. Analysis of the previous year’s financial projections against the actual end-of-year results says it all.
Setting Goals – Setting business (and personal) goals is the contractor’s New Year’s Resolution. Goals should realistic and attainable, they should be specific and performance, not outcome related. Guidelines for setting goals:
- Express as a positive statement
- Measurable (include dates)
- Prioritized by importance
- Written (hold your own feet to the fire!)
- Immediate, small and achievable
Prioritize Opportunities and Acknowledge Threats – Perform a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis and develop a separate strategy to deal with each.
Review and Set Budgets – Setting budgets for an upcoming year involves an in-depth review of your last year’s financial successes and failures. Ask your CPA to sit with you and point out the incidentals you may miss in your own analysis . . . you pay him/her for their financial expertise, not just for your taxes at the end of the year.
Reorganize Responsibly – Based on your financial and SWOT analysis identify and reorganize your responsibilities to your clients, employees, trade partners, and yourself.
Establish an “Action Plan” – Do you need more and better marketing? Is it time for an influx in capital for growth? Is your mark-up adequate to maintain profit margins? Are your trade partners and vendors contributing to your success? With these and other conclusions create a plan to make all the elements of your business click.