Whether or not you have a formal business plan, here are three essential planning steps that all business owners should take.
First, you might not need an official business plan document. Some businesses do require it for certain occasions like applying for loans or seeking investment. However, even if you don’t need a formal plan for external use, engaging in the planning process can still greatly benefit your business management and growth.
### Manage Essential Numbers
While you technically can manage cash flow and financial health without forecasting, it’s much more challenging. Managing without numbers is like driving blind. Forecasting isn’t about precisely predicting the future but about effectively running your business. Effective forecasting helps you understand the relationship between sales, costs, and expenses, allowing you to adjust inventory and expenses as sales fluctuate. The most critical aspect is cash flow, as no business can survive without maintaining healthy cash flow.
To manage cash flow, keep track of sales, revenue, expenses, debt repayment, and asset purchases. If you try to keep all this in your head, it’s easy to get overwhelmed. Instead, forecast key business indicators, such as sales, costs, expenses, and cash flow. Each month, review your results, comparing them to your expectations and to previous time periods. This helps you understand what’s driving your business and identify areas for improvement.
### Manage Milestones
Every business has key dates, deadlines, and specific tasks that need to be accomplished. These are your milestones, such as launching a new product, opening a new store, starting a marketing campaign, or hiring important new team members. While you might be able to keep these in your head, writing them down will provide clarity and accountability for both you and your team.
Document your milestones and review them regularly, just like your forecasts. Regular reviews, whether monthly or quarterly, will help you track progress, celebrate achievements, and make necessary adjustments when things don’t go as planned.
### Manage Strategic Alignment
Don’t get lost in complex strategic jargon. Focus on understanding what you sell, who your target market is, and what makes you different. Strategic alignment is about ensuring your tactics match your strategy. For instance, a high-end restaurant shouldn’t have a discount drive-through or a playground for kids. Your pricing, messaging, and overall approach should align with your core strategy.
Write down the key points of your strategy in simple bullet points and review them regularly, either monthly or quarterly. This written record makes it easier to manage your strategy than trying to keep it all in your head.
### Bonus Thought: Redefine Business Planning
If you regularly forecast your essential numbers, document and review your milestones, and keep your strategy clear and aligned, then you are effectively planning for your business. You might call this a lean plan, adaptable to modern business realities, and it’s a strategy worth maintaining.
