Existing Companies Need Planning, Too Business plans aren't just for startups. Get on the fast track to growth with an annual strategic plan.
Opinions expressed by Entrepreneur contributors are their own.
Does your company develop an annual plan to polish its strategy, focus on main priorities and manage its cash?
Every business needs a plan. Unfortunately, there's a myth that only startups need planning. That's particularly common in the United States. Because of that myth, a lot of businesses miss out on the opportunity to manage themselves a bit better.
As an owner or manager of a small or medium business, can you afford not to plan? Do you leave the annual planning to the large businesses, and let your business depend on reacting to events? Or do you want to plan for priorities and manage your growth proactively? That's a leading question, of course; the answer is obvious.
You could call it a strategic plan, annual plan or operational plan--the name doesn't matter as much as the management of it. While these kinds of plans are common in larger enterprises, they're surprisingly rare in small and medium businesses.
The Benefits of an Annual Plan
There are many benefits of having a business plan in place for an existing company. With a business plan you can:
- Guide your growth. Your business will grow or not depending on a lot of different factors, including overall economic trends, location, specific market needs, hard work and other elements. Businesses that plan do it to guide and influence their growth so they move proactively toward defined objectives rather than just reacting to business events.
- Manage priorities. Strategy is focus. Allocate resources where they'll do the most good. Work toward your strengths and away from your weaknesses. Develop the company by doing the most important things according to your long-term objectives.
- Assign responsibilities. A plan gives you a place to develop organizational responsibilities.
- Track progress. Think of a plan as a business-positioning device. With a plan you can track your progress toward goals, measure results and manage the business. Without a plan, how do you tell whether or not you're moving in the right direction? What do you measure against?
- Plan for cash. Profits aren't cash, and cash isn't intuitive. You spend cash--you don't spend profits. However, businesses don't plan well for cash, and they need to. That may not sound strategic, but it is. It's also the core of an operations plan and an annual plan. Whatever else, you have to plan for cash.
The Main Elements of Your Plan
Regardless of the name you use--strategic plan, annual plan or operational plan--the vast majority of these plans include some or all of the following main points:
- High-level strategy: Strategy is focus and guides your growth by assigning priorities. Of the whole range of possible market segments, and the whole range of services and possible sales-and-marketing activities, which are your main priorities? Strategy is often a matter of understanding when and how to say "no" and selecting opportunities.
- Specific responsibilities, activities, deadlines and budgets: We call these milestones. They're the bricks and mortar of business planning and are critical to business success.
- Financial plan: One of the most important gains from an annual plan is the financial plan, which of course hinges on cash flow. A business needs to stress its priorities by making sure they get the right amount of money. Growth costs money.
Don't be fooled by the myth that only startups need a business plan. Whether you plan on growing your business--or even just maintaining its current level of success--a smart business plan will help guide you on your path.
