The importance of a business plan for an established business

The importance of a business plan for an established business
February 26, 2018 Editorial Team

Business plans are not only for start-ups.

Established businesses also need a well thought out business plan that aims to minimise risk and help better make decisions that affect their businesses future. A business plan will also help monitor expenses, define your strategy and benchmark your progress.

Besides the usual process of defining your products and services and vision, established businesses should consider the following factors when putting together a business plan.

Look at your key suppliers

Existing businesses that are reliant on the supply of certain materials to deliver a final product/s must ensure they are managing costs from their key suppliers.

Reviewing all contracts annually, conducting spend assessments, aggregating volume buys across the organisation and exploring alternatives, should make up a vital part of your business plan.
Remember, in order for your business to meet its financial goals, it must produce a profit margin. Meeting this goal means obtaining to best possible price on al purchased items.

Manage your cash flow

Cash flow is what keeps businesses running, so it’s imperative that every business understands the importance of having enough in the tank to keep the engine running. When it comes to established businesses, cash is often caught up in illiquid assets such as stock, and sales on credit, which can cause cash flow issues.
Both business planning and cash flow forecasting can help businesses with peace of mind, but also ensure your business finance remains as stable as possible.

Performance is key

Your business needs SMART objectives. SMART is an acronym for the 5 elements of specific, measurable, achievable, relevant, and time-based goals. It helps businesses set an actionable plan for results.
Once you define your SMART goals, you need to identify the personnel responsible for meeting these objectives. Management can then undertake variance analysis plotting actual figures against planned figures.

Managing risks

An established business must look at both internal and external risks to their business. Don’t limit your risk assessment to obvious concerns such as fire, theft and market competition.
Effective business planning can help firms identify such risks and help firms put in place processes to minimise any negative effects. Understanding the scope of possible risks will help you develop realistic, cost-effective strategies for dealing with them.

Have a backup plan

Businesses must have a contingency plan. This means you must look at an array of ‘what if’ scenarios and ensure that you can keep operating in the face of a minor or serious disruption.
Investing time and resources in creating a valuable business plan is one of the most critical activities your business can undertake. Whether you’re a startup or an established business, a business plan will provide you with a roadmap for your business’s future success.

Make sure your business plan is up to date, contact us for advice on financial and business planning.