Business Forecasting – Page 3

Welcome to this week’s installment planning and forecasting for your small business! Head over to our Youtube channel and take a look at these articles featured on the SBA's website and Growthink to learn more. https://youtu.be/zvwzr-BGjas We're often asked, "Why do i need a business plan? Why can't U just be out in business." Especially when people are are new to business or starting a new business, there are so many things to do, they will think, "Well, I gotta do a business plan to get a loan or to get money." And yeah that's true, but actually investors want to see people who are essentially in the constant state of planning. And as we've said many times, once you're done planning, the plan is useless because the world has already changed, but it is the process of planning that shapes how you think about doing business, and this is why people want to see the plan. It's not that they expect for the plan to actually come about, because frankly, once you document the plan, that's the one scenario that will never come to pass, but by going through the process of planning, you set yourself up to be able to react better to the changes that will come down the pike. We've cited a couple of articles above. The SBA has a nice article about why you need to plan. Growthink also has a nice article with a bullet point list of 20 reasons why you need a business plan, so let's run through those. We think the first one is spot on: to prove that you are serious about your business. If you are a serious business person and going to lead an organization, you have to have a plan for that. You've got to have a plan for staffing. You've got to have a plan about how you're going to go get sales. You've got to have a plan about how you're going to execute your finance and back office information. You've got to have a plan about how you're going to deal with vendors and procure the materials you need to be able to generate the revenue that you plan to. So for every facet of the business. That's either going to be hard or easy, depending on what business you're in. Number two: to establish business milestones. If you don't have any goals, you're likely never going to meet them. And Guy Kawasaki likes to say a milestone is something that you go home and tell your spouse about when you reach it, so it's something to shoot for. It's not the be-all-end-all, because once you pass a milestone, the next day you're up and shooting for the next one. You also need a plan to better understand your competition, because they're out studying you, and if you're not studying them then you're going to fall behind. To better understand your customer--same thing in reverse. Your competition's also studying your customers, but you need to understand your customers so that you can deliver what they want. To enunciate previously unstated assumptions: planning is a process of documenting what you believe and your assumptions about what you believe. To assess the feasibility of your adventure is another one that they list. For many visionaries/entrepreneurs, their businesses exist in their head, and there's nothing wrong with that. Everything begins in the mind, but you really need to go through the process to make sure that your thoughts are actually viable. Not every thought ends up being a viable solution. You need to do it to determine your financial needs. To attract investors. To reduce the risk of pursuing the wrong opportunity. You may get through the planning process, and say, "hey, I think there's a bigger opportunity selling to the people who are doing the business that you're trying to do. To force you to research and really know your market. The process will force you to go through these steps. To attract employees and a management team. If you're going to bring on high quality talent to help you run your venture, they want to see the plan too. Nobody wants to join an organization that's doomed for failure. To plot your course and focus your efforts, because once you do your plan that will boil down into quarterly goals, and monthly goals, and down to essentially daily task lists. You want to attract partners. To position your brand. To judge the success of your business--how do you know after year one if you've had a great year or not, if you don't have anything to compare to? You need the plan to reposition your business. To deal with the changing conditions--which is the point that we've always been making! To document your marketing plan--again, something we've been saying. To understand and forecast your company's staffing needs--staffing is the key in most businesses. In many businesses, like service businesses, your people are your asset, and if you're not looking forward at least six months to a year, as hard as hard as it is to hire people these days, you're going to fall behind. And the last one: to uncover new opportunities. In the discipline of going through the process of planning and forecasting, you will uncover things that you haven't thought of before. Mainly, planning and forecasting is about stepping outside of your business, stepping outside of the daily operations, and going through the process of thinking about your business. As we like to say, it's better to work on your business than in your business. This kind of planning is exactly what we help our clients with at Harvard Grace. If you're interested in our services, just give us a holler!