In building your business, do you ever:
- Feel out of control – you’re getting by, dealing with one crisis after another, but just barely hanging on?
- Find that your longstanding products and services just aren’t selling like they used to, but you can’t find time to develop new offerings?
- Think about retiring after selling out to a group of your employees, but you know that they (and you) are nowhere near to making that possible? (see our post on exiting your business for more on that)
A big step towards resolving these issues, and many others, is to have a business plan – an effective business plan.
Many businesses get by without one. “It’s in my head,” you might say. Or, it could be a document you put together years ago, maybe because your bank required it to extend financing, and you haven’t looked at it since.
According to a survey by business and finance software provider Exact, companies that have a business plan in place were more than twice as successful at achieving their goals than those that did not (a 69% success rate versus 31%).
What’s wrong with many business plans?
If having a business plan is so important, how can your company get the best possible benefit out of the work that goes into preparing one?
Our work here at the CFO Centre has found that while having a business plan helps, there are some important elements to success (many of these are presented in more detail in the e-book).
One is that the plan must be a living document – it needs to be something that you review frequently, updating it as circumstances change, and using it to provide guidance on what your daily, monthly and yearly priorities should be.
Another aspect of success, believe it or not, involves packaging. You may be aware that a business plan that is used as a finance-obtaining tool will succeed more if it features attractive layout and design. But having a document that’s pleasant to look at – not just text on a page – will work better even if it’s just used internally. That’s because the people who read it, including you, will have a greater sense of confidence that the ideas in it can be made to happen.
How a timeline helps make it all happen
But the one important aspect, that many business plans miss, is the element of time. Without a clear picture of what is to happen by what time, a business plan is just a wish-list.
The best way to help make sure that the business plan stays alive – and more importantly so that what’s in it comes to pass – is through including a timeline.
A timeline (or timetable, if you prefer) sets out the milestones of your business plan – the number of employees, number of locations, sales targets, net revenue expected and other targets – and indicates what date they are expected to be reached.
For example, let’s say you have a winning retail concept that you want to turn into a franchise. Maybe even a national franchise.
To do that, you need to determine what processes need to be implemented in order to manage a store like yours effectively. That, in turn, leads to a set of written procedures – such as the steps to be taken upon opening the store or on closing, how to make each of the products that are sold, and other aspects of success. Maybe then you need to establish a time by which you expect to have that first satellite operation running, maybe as a corporate-owned location, just to see what happens when you’re not on site to trouble-shoot all the time.
It could be that this sounds so complicated and intimidating that you never actually get your franchising idea off the ground.
Here’s how a timeline helps make your business plan happen:
- It breaks down big, scary projects into smaller, bite-sized chunks you can actually do
- It reassures you by pointing out that you don’t need to do everything right now
- It moves you along because you see a deadline for one of those “chunks” coming up, so you can get working on it
Start with the end in mind, then work backward
This involves a 5 step process.
- Get a firm image of your goal. Established business wisdom says to consider first where you want to be (say, 20 franchise outlets across the country, ten years from now) and then spell out in detail what that will look like. Going into detail gives you a more clear idea of what needs to be in place for that to happen. Set a date for that to happen.
- Determine the big milestones along the way. This might include writing out the elements of success in your current business, creating written procedures, testing those procedures to see if they cover all reasonable contingencies, opening a second outlet to further test those procedures, selling your first franchise to someone you know already, and onwards.
- Think of the resources you’ll need. For example, at some point, you’ll need to engage a franchise lawyer to consult and help in the preparation of a franchise agreement. Think of the finance you’ll need to have in place, maybe from a bank or friend-or-family source, to make the rest happen (to learn more about how to avoid cash-flow problems that might drag you down, see our post here).
- Write out your timeline. It might be on paper, on a computerized document, on a calendar program that will remind you about deadlines, or whatever works for you. Maybe multiple formats will be a good way to keep you on track.
- Implement. The rest is up to you and your team. Delegate tasks, outsource, do it yourself – but be sure to stay with your timeline.
Hire a superstar part-time CFO
To help you increase cash, profit and valuation and free you up from the burden of day-to-day opperations.