Why you need a business plan and why you should stick to it

We spend a lot of time talking about and managing numbers at MWM Advisory, but numbers are only part of the story of your business. What they are is a trailing indicator; they tell you what’s happened in the past.

Imagine walking backwards through life only looking at what’s happened in the past. You’re going to trip over, and you’re going to get hurt. You’ll miss opportunities, you’ll miss out on seeing much or the present and you’ll miss out on the excitement of looking at what’s ahead.

I don’t want to trivialise the fundamental value of your financial statements, though, because considering past performance is essential. But too much navel gazing is counterproductive.

If you’re not happy with the numbers you are seeing on your statements, look ahead and consider what you could be doing to improve them.


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Business planning to achieve your vision

The place to do this is your business plan. It’s a forward looking document that puts into writing the vision for your business and goes some way to planning to achieve that vision.

It’s a platform to think strategically about the threats and opportunities that lay in wait for your business and make plans for how you will take them on.

Those issues can include:

  • Technological disruption
  • Staffing requirements
  • New competitors
  • Production bottlenecks
  • The loss, or acquisition, of clients
  • The potential need to change your business structure
  • And much more

The plan will tie your numbers together with your business’ operations in areas such as human resources and marketing, and in doing so it guides your decision making on all aspects of your enterprise.

And as you’ve probably heard, by failing to plan, you’re planning to fail.

To get an idea of whether a business plan is worth your effort, consider that 94 per cent of finalists in the Telstra Business Awards of 2017 had one. Of those, 99 per cent had a review process for the plan.

That second statistic is worth remembering, because your business plan is a living document, and I’ll explain why later. But first, let’s look at what’s included in a business plan.

There are the four key sections:

  1. Your business;
  2. its market;
  3. its future; and
  4. its finances.

Each of these sections has several sub headings, but we won’t go into them too deeply. There is a great business plan template available at business.gov.au to get your head around what they are.

Right now, I want to get across to you how important this planning is. As we can see from the winners of the Telstra Business Awards – perhaps the most prestigious business recognition in Australia today – successful businesses plan for the future.


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Understanding the bigger picture

At this point, you might be wondering why, as an accountant, I am highlighting that your numbers are just one part of a bigger picture. I’m certainly an evangelist for the value of astute management and analysis of your numbers, an accountant’s responsibilities cannot be divorced from future planning.

That notion is central to our value proposition at MWM Advisory, where we take a holistic approach we take to working our clients to help them establish, maintain and grow profitable businesses.

You’ve probably completed a business plan in the past to access a grant, or to secure finance from a bank or private investor. If you put it together in a rush to meet your deadline, and have never looked at it again, dig it out of your filing cabinet and take another look.


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Following through with your business plan

From my perspective (and I’ve seen this so many times), the biggest failing of business plans is that people who create them just don’t follow them. That’s a big mistake.

If you, as a leader at your organisation, set out a plan for the future to your staff, bank, investor, or any other stakeholders, and then don’t follow through, that is a failure of leadership and they will lose faith.

I’m not saying that you can’t change your mind, but there should be a process for a change of direction. As George Bernard Shaw once said, ‘Progress is impossible without change; and those who cannot change their minds cannot change anything.

As we saw in the stats from the Telstra Business Awards, those successful finalists who had plans also has a process for changing them. And if you do, you should be able to explain to your staff the reason for the decision.

So, if you’ve worked on a plan before, dust it off and talk to us at MWM Advisory, because we’re not only experts in numbers, we’re also skilled in looking at the bigger picture and helping your plan for the future.

If you’ve not considered a business plan before, now is the time to do so, because it’s the key to guiding your enterprise to success.

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