(I brushed this off from the archives of my old blog because it is relevant year after year!)
When you have a small business many times you just do what you have to do on a daily basis. Spending a bunch of time on planning and budgeting seems crazy since “you” are “management” and “the board” in most cases. Even so I believe having an annual plan and budget is valuable for many reasons. They are:
The Benefits of Creating an Annual Plan
- Makes you review your current and past performance providing objective information on the health of your business.
- Taking the time to make projections provides you with insight into what your business will look like if you just keep going day to day.
- Planning done right forces you to think out of the box and look for incremental opportunities.
- Understanding the growth opportunity directs you to what resources you will need to support the growth i.e. people, capital, etc.
- Gain confidence in your ability to achieve when you see that you planned and it happened!
- Your team has an opportunity to provide knowledge and input to the overall direction of the business.
And the Benefits of Having an Annual Plan
- Having a plan provides goals and a bar to achieve for both you and your team.
- Having a plan gives you something to measure your performance against – did we do well this quarter? Compared to what? Last Year and Plan.
- Gives you an objective tool for accountability.
- The plan helps the team understand the direction of the company and improves buy-in.
- By comparing performance to plan it provides ongoing direction for prioritizing time and resources throughout the year.
And It’s Uses with Outsiders
- Vendors see how you plan to promote their business and provide better pricing, support, etc.
- Provides your sources for capital (i.e. banks, investors) with support for their loan or investment.
These are just a few benefits to the planning process especially for small businesses. We are at the end of the year so it is more than time to begin planning for 2011. If you haven’t ever created an annual plan and budget, and want some help, we have templates that can get you started and/or we can guide you through the process. Email me ([email protected]) or call me (225-341-4147) for a complimentary 30-minute call to get you started and/or see how we may be able to help.