Why should a small business develop a business plan?
A business plan helps reflect the past performance and projecting the future growth of the business. It’s a guiding force that helps business owner run the business within the broad framework stated in the plan.
A good business plan should cover the points below:
Forecasting Sales – A consistent and predictable sales pipeline allows the business owner to channelize his efforts in diversifying into newer geographies and products thereby expanding the business.
Marketing Strategy – Marketing and other promotional activities should be strategized well in advance. Along with the traditional sources of marketing, a small business should also have a well developed digital marketing strategy.
Equipment upgrades – The plan should focus on any plant & machinery or office infrastructure upgradation that needs to be undertaken during the year.
Expenses management – Expense management becomes very important to effectively run the day to day affairs of a business.
Risk Management – The business should have a contingency plan in place to meet the challenges of any unfortunate events which may arise in the future. Example – Prolonged illness of the Business Owner, Breakdown of a machinery, Sudden working capital crunch, Key employee leaving the organisation, etc.
Balance Sheet and Financial Statements – Balance Sheet & Income Statement is a reflection of a financial health of a a business. This is perhaps the most important section of a financial plan. Healthy financial numbers will ensure business longevity.
Employee, Vendor & Client List - A good business plan should have a list of employees along with their compensation benefits and skill set and market knowledge. Along with this a list of important Vendors and Clients should be included too.
Competition – It’s a good idea to periodically check the business performance against businesses operating in the same industry.
Cash Flow – Cash flow management is numero uno priority for any business owner to run the business effectively. A lot of small businesses depends on cash for running day to day business activities.
Break Even Point - For a small business its very important to understand what is the break even point is. A business will break even when the total sales is equal to the total cost and profit is the amount generated over and above the total business cost.
Employee, Vendor & Client List - A good business plan should have a list of employees along with their compensation benefits and skill set and market knowledge. Along with this a list of important Vendors and Clients should be included too.
