In the world of business, setting clear, obtainable goals and working toward them consistently until they are achieved is indispensable to success. Without a plan of action, the tendency is for your actions to become one of two things: rote and unmovable or random and spur-of-the-moment. Without a 12-month business plan, it will be nearly impossible to focus on your goals in the midst of a hectic business environment. You will inadvertently end up hurting your business for lack of a plan.
Why Is a Written Business Plan Necessary?
Committing your vision for your business over the next 12 months to writing will benefit you in a number of important ways, including the following:
- Putting your ideas down on paper and/or into a PC will help you to focus on your goals and identify your highest priorities.
- The finished plan will serve as a point of reference to give you direction as you strive to achieve your stated goals.
- It will be a starting point from which you can adjust to the changing circumstances (update the plan), and insightful year-on-year comparisons will ultimately be possible.
- A secondary reason to have an annual business plan is that investors/bankers who may be interested in loaning you some capital will want to see on paper how you plan to manage your business.
How Do I Set Business Goals?
Without clearly defend, specific goals, your larger goals will not likely materialize. Part of your business plan should spell out these goals, covering such areas as:
- Marketing Goals: Increase sales to existing clients by 15% and increase retention of new customers by 30%.
- Production Goals: Boost output by 5% within 6 months and by 10% within 12 months.
- Financial Goals: Reduce overhead costs by 5% while raising the profit margin from 12% to 15%.
- Environmental Goals: Increase the energy efficiency of my facility by 20% and install solar panels on the building’s roof.
How Do I Strategize and Forecast?
Not only goals but also a step-by-step plan of action to accomplish each goal should form a part of your annual business plan. These steps will then, in turn, guide your daily operations. These steps might, fore example, include things like buying new equipment or holding worker training meetings.
A final section of your plan should be a forecast of the “financial implications” you expect will result from the plan’s implementation. This should include a 12-month cash flow forecast and a profit/loss forecast that extends across two or three years. Monitoring actual expenditures against these projections will help you to keep to goal as much as possible.
As a final note, realize that your 12-month business plan is a tool and not a “straight jacket.” If you need to change it to adjust to a new situation, it is better to update the plan than to miss an opportunity. At minimal, you will “update” your business plan once a year, when you sit down to formulate your goals and strategies for the next 12 months.