Business Planning
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5 Steps for Effective Business Planning
Setting up a business is an intricate process with a high likelihood of failure. Without the combination of a sound plan, considerable effort, and a healthy budget, a business venture won’t survive for long. Many new business owners wonder if these plans are really effective because most inevitably end up collecting dust in some drawer. Business owners disregard plans often because these plans are usually too complicated and lengthy to be of any use. This article explains five steps to a thorough and effective business planning before you start working on the project.
#1 Take time away from your regular life
Business planning is a long and time consuming process that requires your complete focus and attention. While it is possible to create a plan and still handle your other personal and professional responsibilities, the process will take longer and be more disorganised. You won’t be able to focus completely on the task at hand and that will cause some problems during the process.
Taking a break from all responsibilities and simply focusing on the planning process can help you focus more and plan better. You can even take a trip away from home and visit some relaxing and quiet location. That will help break the monotony and get your creative juices flowing. You can relax and plan the business strategy at your own pace without any disturbances. It might be a good idea to warn your friends and family to not disturb you unless there’s an emergency.
#2 Keep SMART goals in mind
SMART is an acronym for- Specific, Measurable, Achievable, Results-oriented and Realistic, and Timeframe. These are the goals you need to focus on when you’re creating your business plan. All points must be specific, all relevant actions must be measurable, all business goals and targets must be achievable with reasonable effort. The plan must be results-oriented and realistic, and you need to have a clear timeframe for every goal and action.
Focusing on these aspects will help you keep your business plan organised and on track. Asking these questions will help you streamline the plan and make sure it’s focused. You won’t waste your time on goals and factors that will only consume your resources without providing any concrete results. Focusing on SMART goals will also help you maintain realistic expectations with your business and make you aware of your limitations. This can help in the long run and ensure you have a level-headed approach to your business plan.
#3 Plan for the budget
A business plan is incomplete without a budget. Including a goal or a particular target in your business plan is futile if you don’t have the money for it. This is why it’s also important to create a budget with profitability in mind. Don’t focus on creating a budget for just running a business and keeping your production levels up because you won’t invest enough to generate profit. There are a number of other questions you should be asking yourself while allocating and organising a budget. Some of the questions you should be asking include – “How much profit do I want to make from my business in this given period?” during the business planning process. Once you have a number in mind, ask yourself, “How much do I need to invest in order to get that profit?”
These two questions will help you set a realistic budget for profit rather than just the production cost. As most of the profit is reinvested in the business, you will have a more consistent cash flow and growth. If you budget only for production cost and overhead expenses, you won’t have any breathing room and that can put your business at risk or losses.
#4 Don’t worry if you don’t have all the answers
Lack of information and details are the biggest hindrances in the business planning process. You might not have access to some of the information needed to complete a business plan and make sure all pieces fit together perfectly. Many business owners let the lack of information stop them from completing the plan and that causes delays. Instead of letting the missing pieces of information become hurdles and stop you, seamlessly move on to the next step and complete as much of the plan as you can.
Once you’ve done all you could do, you can hire a professional or a mentor with more experience and knowledge to help fill in the blanks and this becomes a better way to tackle inevitable hiccups along the way. Successful business owners never work alone and always have consultants or mentors to help refine ideas and plans. A good business plan will have input from multiple perspectives. Others will notice problems and obstacles you missed and ensure your business plan is more comprehensive.
#5 Use a template
There are a number of business plan templates available online and they can help you get started with the process. A template acts as a guideline and ensures you don’t miss the most vital aspects of the planning process. A template also helps keep all information and targets organised and easy to follow.
If you follow these five steps and take your time with your planning, you will have a higher likelihood of success. Planning will also help you deal with unexpected problems and delays in a more organised and calm manner, which can be beneficial in the long run.
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