Monday, August 3rd, 2009
A business plan helps you achieve your goals. It also helps discipline the way you think about what you’re doing. But business plans have another important purpose.
Companies need business plans to apply for loans, grants, or other forms of funding to start or expand the business. Lenders and financial managers like to see something in writing that shows a firm is committed to its objectives and knows how it’s going to accomplish those objectives. Without a plan, serious outside funding—or any funding, for that matter— might not be available. After all, if you were in the business of investing money, how would you select the companies that would be the best risks?
But that means you need to write your business plan in different ways for different financial participants:
Plans used to attract equity investors—financial partners who will prosper as the business prospers—must be written to show how investors will gain from the company’s success. Investors expect a high rate of return, so they will be looking at growth and profit projections. Plans that project a successful profile are what equity investors are seeking.
Plans designed to appeal to lenders must demonstrate methodologies for repaying loans. At the risk of being simplistic, lenders have little financial stake in the success or failure of the company. They’re interested in how the company plans to repay the principle and its interest. And lenders are more likely than equity investors to be
concerned about cash flow. Your business plan should provide a timetable with repayment amounts the lenders believe your company will be able to make.
Tags: benchmark, business plans, marketing schedule, methodology, sales
Posted in developers, equity, expenses, innovative marketing, loans, online bank | Comments Off
Monday, August 3rd, 2009
The business plan offers general and specific guidance on reaching company goals. It outlines actions. It also separates the dreamers from the doers. It is often the great equalizer between the enthusiastic idea generators and the serious business people who will accomplish their dreams.
Business plans are usually annual, based on the fiscal year. But there also are multiple-year plans—the most common of which is the five-year plan.
An annual plan is operational and necessary to manage the company’s economic needs for the coming year. A five-year plan is more strategic and designed to chart the firm’s direction. In addition, five-year plans should be rolling plans.
The thinking behind a rolling five-year plan can be applied to other cyclical planning, such as the annual budget process or the marketing schedule. When May ends, for example, the managers can study the forecasts for that month and the results, determine the reasons behind the variances, then use their findings to shape a budget for the following May. Rolling plans allow managers to make the most of their budget analyses, provide greater continuity, and ease the burden of annual planning.
Tags: benchmark, business plans, economy, marketing schedule, sales
Posted in attitude, banking, budget analysis, business goals, business patterns | Comments Off
Monday, August 3rd, 2009
A wiling plan is a perpetual motion engine for your business vehicle. Once you finish the first year in your plan, you add another year to the end of the plan, so the company always is looking five years ahead. Not only does this ensure greater continuity of vision, but it also spares managers the enormous task of creating subsequent five-year plans.
Defining a sound strategy is vital preparation for success. But even the best strategy will fail without a good business plan to put it to work. The strategy is the idea behind the business, but the business plan is the first of many tools by which that idea will turn into actions.
The business plan is the where, when, how, and why of what a company must do to implement its strategy. It’s just that simple—and that difficult.
Tags: benchmark, business plans, economy, sales
Posted in attitude, business goals, business publications, innovative marketing | Comments Off
Monday, August 3rd, 2009
That’s good—as a beginning. Now, you need to get into details, by asking a few questions and coining up with solid answers:
Of course, you may want to set ancillary goals in each of these areas. But beware of goals that set department against department, worker against worker. For example, goals for marketing, which are measured in terms of sales, might cause resentment if there are other factors that could affect sales—just as sales goals might not be met because an improvement in efficiency caused a drop in the quality of the products the sales reps are trying to sell.
Tags: benchmark, CEO, economy, sales
Posted in customer demand, employee, expenses, funds, payments, profitability | Comments Off
Sunday, August 2nd, 2009
Except in the movies, nobody has ever made the leap from start-up to success in one jump. The company needs a well-thought out plan built on steps, strategies, and benchmarks to reach its financial goal.
If your financial goal, for example, is a profit of $12 million, you might decide on the following steps:
Tags: benchmark, CEO, company, economy
Posted in attitude, innovative marketing, payments, profitability, strategy elements | Comments Off