​Small ​Business Planning and Strategy


The Importance of a Business Plan

Without a road map, it's nearly impossible to get from point A to point B. The same is true for small business planning and strategy. A business plan is vital for any business, whether it requires a transformation or not. Goals need to be set both for revenue and expenses. Revenue goals must be realistic and related to product and customer forecasts. Depending on the sales channels, this may not be easy to accomplish.

For example, a small business selling directly to consumers cannot forecast by individual customers and, if offering a catalog of thousands of products, cannot forecast by unique products. Compromises in terms of the details have to be made. It's pretty acceptable to predict by product category rather than individual products and by sales channel rather than individual customers when the type of customer and product dictates.

It's always tricky to forecast, and the further out into the future the forecast is established, the less accurate it is likely to be. Nobody can predict with complete accuracy - even in the short term. The important part of forecasting is recognizing that it will never be 100% accurate, BUT simultaneously keeping the plan realistic. A professional business plan should cover a three to four-year forward-looking period. It should be built by month in the first and second years of the planning period and in the second and third years by quarter or even year.

The business plan serves two purposes. Firstly it creates a budget against which future performance can be measured, and secondly forces the planner to think about the strategy required to execute the plan. Anybody can build a small business strategy and plan that projects a glorious future and early retirement. However, it probably won't be possible to execute that plan.

Unless the plan developer is willing to invest in thinking carefully and honestly about the strategy required to execute the plan, the chances of successfully managing will be reduced. 


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