Without a Plan, Your Budget is Useless

Nov 11, 2013, Written by Sue Miley

The corporate world is notorious for handing down quotas and budgets without any input from the people who need to achieve them.  Small business owners are guilty of not having any quotas or budgets.

Many small business owners simply gage their business performance on how much money is in their checking account.

This may work when you are small, but do you want to grow?  We have all seen and heard that goals and objectives set the bar higher and help us to achieve more.

And I agree that all businesses need goals and objectives.

Real and sustained growth needs more.

To grow your business on purpose, not just because the economy is better, or a natural disaster occurred for you to capitalize on, you need to have a plan.

THE PLAN DRIVES THE BUDGET.

We sometimes throw a number out that we would like to achieve in sales or profits and then put a plan together to achieve.  This is much, much better than no plan at all.

However, the optimum planning occurs like this:

  1. Prepare a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of your business.
  2. Identify the key initiatives for the coming year.  Many times we can’t do everything, we need to focus.  Pick 3 -5 top initiatives that will make the biggest impact to focus on.
  3. Develop strategies and (detailed) action plans for each key initiative.
  4. List assumptions for sales, expenses and investments required to implement the action plans for each initiative.
  5. Create a budget based on prior year performance with a boost and then add in the key initiatives.
  6. Review and tweak all budgets for affordability, timing, and priority.
  7. Execute, execute, execute!

THE PLAN DRIVES THE ACTIONS.

Now you have a budget that hopefully includes some stretch growth goals in it.  But, more importantly, you and your team have plans already developed before the year begins that you can begin executing day one.

You also have key assumptions you can measure your performance against to see if the plans are working.

If this is a new concept for you, let us help.  We can coach you through a SWOT Analysis for your business and assist you in developing plans for your key initiatives.  You still have 7 weeks until the new year.

Now is the time to get planning!

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Sue Miley

Sue Miley MBA, MA, LPC helps small business owners build successful businesses on a foundation of Christian values. After 20 years in business, and 10 years as a Christian counselor, Sue uses a combination of faith, business and psychology to help clients in business and in life.

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