Why planning is key for owner managed businesses

Planning is vital for everyone, no matter what industry you are in or how old the business is.  When you are your own boss, planning is even more important and it can determine the overall success of the business. With a clear vision and strategy on how to achieve this, you can reach your business goals faster and also allow you to be a more fortunate position if any unforeseen challenges arise. Here we discuss in further detail why planning is key for owner-managed businesses.

Plan for uncertainty

Whilst creating a plan doesn’t make you invulnerable, it allows you to consider potential factors that could impact your business and provide you invaluable time to put things in place. If you have not got a business plan, there is a higher chance of something unforeseen happening, which could harm your business. Some things will be out of your control, but by creating a plan you will automatically understand your business better, can detail alternative scenarios for the future and be prepared for all kinds of eventualities. This, in itself, can provide you with peace of mind.

Cash flow management

Cash flow management is a vital part of a business as without it, you run the risk of getting into debt and possibly becoming insolvent. A well-created plan can help you keep on track and make you more aware of the amount you are spending. It helps you see where you are at a glance, financially.

Valuing a business

Valuing a business is not always easy and can be rather subjective. However, having a detailed business plan is one way to help back up +the value you are placing on your business and can be used to show others how much your business is worth. A solid, comprehensive plan can highlight potential opportunities for investors and therefore can help secure investment and funding. Having an accurate value of your business is also important for when it comes to forming a successful exit strategy for when you eventually want to leave the business.

Growing your businesses

A goal for many companies is to thrive and grow. However, this can be challenging, especially if you don’t have efficient planning in place. Once you have set your goals you need to consider anything that could get in the way of completing these goals. For example if the issue is capacity, you will need to plan ways to increase this. This could be through delegation or outsourcing.  So, ensure you have the team in place to enable you to grow and identify any gaps in expertise that you are missing.

How to get started with planning

It can seem like a daunting task to write a business plan. However, it all starts with a goal. You may have one ultimate goal or several business goals. Start by writing these down and then evaluate how you are going to achieve them. Make sure you are realistic with timings and what you can achieve. Business plans can quickly become unrealistic and unachievable if they are not based on logic and reason. Once you have evaluated how you are going to achieve your goals, create yourself milestones to aim for. These are the stepping stones towards the ultimate end goal. For example, you could currently be a coffee shop owner, but your ultimate goal is to have a chain of 10 shops. You should split this down and have opening your second coffee shop as a milestone. Breaking it down automatically makes the task more achievable and will provide a more comprehensive guide on your journey to achieving your business goals.

Review

Once you have written your business plan, unfortunately the job doesn’t stop there. Successful business plans are not static documents. They will continually need to be reviewed and adjusted accordingly. Your goals or milestones may change or the timeframes may need amending. By reviewing consistently, the plans remain up to date, realistic, in line with your current goals and ultimately should be more achievable.

Having a strong plan is not just a box ticking exercise and it can make all the difference to your business. Business planning, especially when it is your own company provides you with a holistic analysis of your business as well as the industry you are in. It lays out stepping stones and provides a map to help you achieve the goals you have in mind. Planning ensures you are one step ahead at all times and help you continue to successfully run your business but also to grow at the rate you want.

Business plans are great to have in place, but they can be challenging, and it is important your business plan is realistic. If you need advice about business and financial planning, then please contact a member of the Wright Vigar team.