Archive for June, 2011

Business Planning… NOW not in six months…

June 2, 2011

So, Why Do a Business Plan? And Why in the Middle of the Year?

You might look at the above and throw up your arms. “I can’t think of everything,” an owner might say. The owner is right. However, it is important to think of as many of the critical items as possible ahead of time. The point is not to create doomsday scenarios, but to plan if the most optimistic situation doesn’t materialize. In fact, the plan should also identify several items that will make a positive impact and lead to the success of the existing products and new products, in existing and new markets.

Most companies that create annual plans and budgets do so at the beginning of the fiscal year. But, if you haven’t created one, there is probably no better time than now to do so-right in the middle of your fiscal year, while the economy is as difficult as it’s ever been. There’s no good reason to wait six months to start.

The objective is to cause management to consider the impact of negative-and positive-occurrences, and then to consider how the company would react to those situations. It is also to determine how that would affect the company’s operations, cash needs, and the impact on the company’s stakeholders (bankers, lenders, equity holders, employees, customers and vendors).

By working through the rigors of a business plan, management will identify issues and opportunities. Putting them in writing will help to crystallize the issues and the resolutions.

And that is the key reason to create a business plan: to help the company plan how to manage its business.

…excerpt from “A Middle of Year Business Plan” by Paul Shackford CPA