Business Owners Need Business Plans (plural)
Category: Business Law and Planning
In the summer, the pace slows down, and it can be an excellent time for business owners to look at (1) where they are, (2) where they want to be, and (3) how to get there. In that vein, two relevant articles I just received from James Jimenez, CPA, of Fass and Associates, in Parsippany, New Jersey. The first "A Business Plan: Why you need one to run your business", and the second "Do you have a business survival plan?".
So instead of scooting home early one lazy day, why not sit down and try to see your business from an outsider's perspective, and map out where you want to be and how you want to get there. I raise business planning from time to time, because it is the kind of thing that we all know that we should do, but can't always make the time to do. So I hope this strikes you as an ideal moment to take stock.
A Business Plan: Why You Need One to Run Your Business
If you have an existing business and especially if you are starting a new venture, you need a business plan to guide and direct your future. Here are some tips for creating a plan that your business will actually find useful.
First, own your plan. ItÂs your plan, and you need to own it. ItÂs not something you can completely delegate to a consultant. You must be an active participant in its development even if you have assistance in the process.
It should communicate. Your plan should tell your story, and it should do so in a compelling way. Why does your business exist? What are your marketing, operational, and financial strategies? What are your goals, and how will you measure progress? What are the tasks to be performed, and who will do them?
It should bring focus and alignment. Your plan should spell out the responsibilities of your entire management team. Everyone should know his or her respective role and how it contributes to your plan for business success.
It should guide your business. Execution is the key. Your plan should be more than a means to obtain funding. It should be the tool to run your business. You might need a shorter and tighter version of your plan to make this happen.
It should be evolving. The Âplanning processÂ is as important as the plan itself. Things change quickly so your plan needs to be flexible and adaptive.
It should hold you accountable. Measure and track your progress, and use the plan to hold your management team accountable. Discipline and control need to be part of the process if you expect to achieve the objectives stated in your plan.
Wayne Gretzky, when asked for the reason for his success said, ÂSome people skate to where the puck is; I skate to where the puck is going to be.Â A good plan should help you do the same for your business.Do you have a business survival plan?
A business without a succession plan might be a business without a future. A succession plan allows your business to continue if you leave the business for any reason: your retirement, disability, death, or just your decision to move on. Here are some basic steps you should take to help ensure the survival of your business.
Determine who will succeed you. Will it be family members, your business partners, your employees, or an outside buyer? Each choice requires a different plan. For example, if you are not the sole business owner, a buy-sell agreement may allow a smooth transition when a co-owner leaves.
Prepare a timeline. Barring death or disability, when and how do you plan to exit the business? Well before your planned departure, equip your successors with the skills and experience necessary to take over.
Maintain complete and accurate financial records. Your companyÂs financial history is essential to preparing a fair business valuation. An accurate valuation is important for several reasons:
Create a financing plan. Your plan might include life and disability insurance, an employee stock ownership plan, or a stock redemption plan. Whatever your plan, it should take your future financial needs into account and provide a method for your successors to meet those needs.
- You deserve a fair price for your business.
- A buyer and his backers will want evidence that the purchase price is fair.
- Your companyÂs valuation may have to withstand IRS scrutiny.
Surround yourself with a team of advisors. Your accountant, your attorney, your banker, and your insurance agent can each have an important role to play in completing your plan.
Business succession is a process, not an event. Failure to plan for an orderly transition can result in financial losses or even the loss of your business. A well-designed plan, on the other hand, can protect your family, your employees, your co-owners, and your customers.