05-17-2010 08:39 AM - edited 05-17-2010 08:42 AM
Although we're clearly in a recovery, the recent turmoil in markets make it more important than ever that you keep a eye on your business plan, and make sure it will enable your company to weather whatever is ahead. We've experienced a different kind of market than most of us have ever been in before, and the first thing most entrepreneurs have to do is plan for contingencies. If things aren’t going the way you thought they would when you drew up your business plan, you must have a "Plan B.' Flexibility is the key to survival.
When a business doesn’t grow as anticipated, or suffers an off-year in terms of revenue, it may mean that everyone has to take a second or third look at the business plan to say, "This isn’t working right now; where do we go from here?" But, it doesn’t mean the plan goes out the window. If you have a good business plan, it will survive some contingencies, and you can come back to it when the situation changes.
Other things to look at when you examine your business plan:
* Are you getting all the revenue you can out of your "
* Include infrastructure updates. Make sure your business plan includes the cost of making the upgrades necessary to sustain and grow your company in a competitive environment.
* Think short-, medium-, and long-term. If a business owner knows where they want their company to be in five years, that will drive what they need to accomplish this year, which in turn drives what they need to accomplish in the next 90 days. Too often in the small business environment, long-range planning consists of how to make payroll at the end of the month.
* Find an accountability partner. Share your business’ goals with someone outside your business, such as a trusted friend in another industry, or your CPA or lawyer. Let them monitor your progress as you work toward your 90-day, one-year, and five-year goals.
* Review your plan’s exit strategy. Most people don’t want to keep working until the day they die. You’d better have something in place, whether it’s selling the business or turning it over to a family member or trusted employee. And, make sure the person you have in mind is on board with your plan.
Another key to a good business plan is constantly monitoring your environment. Keep your finger on the pulse of your local market in addition to what’s happening at state and national levels. You must be prepared to modify when your market and economy changes.
Review the following benchmarks on a monthly basis. While these are based on a service organization, the concepts apply to reviewing the entire company’s business plan:
* Review each line item on your financial statement. A good financial report should include the actual sales and/or expense dollars, and also a percentage for each sales or expense item. It’s sometimes easier to see a deviation in the percentage than the dollars. Examples might be shop labor increasing from 1 to 3%, or a similar increase in inventory.
* Review the number of employees in the office as compared to the field. In a pure service operation, this ratio should be one person in the office (administration, sales, and management) for every 2.5 technicians/implementors in the field. This ratio might be as low as one-in to three-out in a small company. The hiring of office personnel should be somewhat based on this formula. Office growth should lag behind field growth.
Finally, here's an excellent article called "Write Your Business Plan in Pencil" on Entrepreneur.com by Bob Reiss in which the two main points to think about are: