Goldman Sachs 10000 Small Businesses program released a survey of its participants which revealed the top four things small business owners worry about. We have already discussed finding and retaining good employees and financing the business so this week we will talk about developing and updating business strategy.
Every business should have a business plan completed before it starts up. Even if bank funding isn't needed, a successful business owner will want the blueprint a plan provides. There are software programs that can help with the preparation of a plan, there are service providers who can help with the preparation and in some areas (the Fox Valley area of Wisconsin http://www.fvtc.edu/training-services/business-industry-services/seminars/service/small-business-entrepreneurship/e-seed-entrepreneurship-training), there is a class you can take which walks you through the preparation of a business plan.
Starting with a strong business plan will help a small business owner get off on the right foot. The next challenge is to keep the plan relevant by updating it as needed. A business plan should be reviewed at least once a year and more often during the first few years. The plan was the owner and advisors best estimation as to what would happen and will never be 100% accurate. The key is to compare the actual results to the forecasted results (the pro-forma financials which were part of the business plan) and determine what caused the difference. Using that information will allow the owner to create the budget for the next period and also determine if the underlying strategy of the company is working. Was the actual customer base what the marketing plan forecast? Did the sales come in as quickly as anticipated? Were the expenses what the business expected?
Small business owners are often challenged to find enough time in the day to get all their tasks done. Reviewing the business plan and updating it is crucial to the success of the company so we recommend setting a date on the calendar for this task to insure that it gets completed.