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Beyond the Financials of the Business Plan
As a business analyst, I am routinely asked why a company’s profits increase during the first year or so but eventually without changing anything in the way they do business, a struggle begins. Although the reasons can be numerous, business owners can get bogged down in running the business and if precise business development and growth strategies are left to chance, serious problems can arise. New business owners should pay close attention to their company’s strategic planning not only for the present but more importantly, the future.
This has been particularly true with the recent fluctuations in the economy, as we are seeing a number of business owners who have depleted business lines of credit, savings, and other personal assets to keep their business afloat. Since cash flow is vital to business survival and ultimately success, the business owner must have the flexibility to account for changes in their business finances.
Being prepared to deal with issues that arise is critical to the success of the business. The very basis of a sound business plan involves so much more than the financials. In our management consulting business, when we meet with clients early enough, we can assist them in several key areas to ensure their success. Some of these key business essentials include managing cash flow, marketing their product or service, maintaining quality control and ensuring excellent customer service.
New business start ups are not the only ones requiring due diligence of the business plan. Ideally, businesses should complete an analysis at least every five years and be monitoring their key factors monthly or at a minimum quarterly. To ensure that the plan itself stays relevant, business owners must consider factors including the company’s management, culture, competition, and client relations. We too often hear companies say “in forty years we never had to advertise, but we might have to now” or “our senior team is retiring, but we do not have a plan for sustaining the business relationships they have built.”
As a business evolves, dealing with change requires in-depth business analysis. It is never too late to retrain management teams to go beyond the financials. Here are a few recommendations for transforming the business plan into a living document to support business goals and provide the basis for change and growth.
- Focus on having a highly professional and productive management team. Identify how your team is innovative, solves problems, and changes direction quickly and effectively. Ensure that your management structure is designed for success.
- Confirm that you have fully completed due diligence on protected proprietary business technology and concept patent applications.
- Maintain the highest quality control, as this will always be valuable to the majority of customers as well as the long term success of the business itself. Another key component of success is customer service and exceeding their expectations. If business owners only use profit as their driver in starting up and maintaining business viability, their customer satisfaction may be found lacking.
- Ensure that your business stays relevant in your market. How does your business impact society, whether locally, nationally or world-wide? Does your business plan offer new jobs to your city, will it strengthen economic development, or include environmentally-friendly factors?
Business analysis provides owners and management with invaluable new perspectives. The most accurate analysis is acquired through using a combination of a business analyst, an advisory board, current customers, or those from your industry associations. As a business owner, your scope of responsibility may be vast, but the keys to success are to go beyond the financials.
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