Formal business plan or not, here are three planning essentials that all business owners need to do.
You may or may not need a business plan document for your business. Some businesses have what I call a “business plan event” that requires preparing the plan document for outsiders. Common business plan events are applying for commercial credit and looking for investment.
But whether or not you need the plan document for outsiders, if you want to optimize your business and management, or steer strategically, or generate a growth spurt, then you still stand to gain from business planning process. And that’s with or without the formal plan.
One: Manage essential numbers
Technically you can manage cash flow and financial health without forecasting; but it’s a lot harder. Managing without the numbers is like driving blind.
I made this argument in Why Bother with Financial Forecasts on a previous post in this space:
“The goal of business forecasting is not what you might think. It isn’t about accurately guessing the future. It’s about running your business right. With good forecasting you track your business numbers back to the drivers that you need to manage. You watch the connections between sales, costs, and expenses. You watch the ups and downs. If sales are up, you adjust inventory. If sales are down, you adjust expenses.”