• Swindon & Wiltshire Experts
• Wednesday July 10 2024
• Author Name: Michael Blaken

Do established businesses need a business plan? – Optimum Professional Services

Just because you have an established business, it doesn’t mean you no longer need a business plan, says Michael Blaken of Optimum Professional Services.

It’s commonly understood that when a new business starts up, an essential element is the drafting of a business plan.

But if you have a business that’s been running for a few years, and is beyond the startup phase, does a business plan lose its relevance?

I would suggest it doesn’t – just because you have an established business, it doesn’t mean you no longer need a business plan.

Your business plan is important because you can refer to it to check you are on course; if you have strayed, you can make adjustments.

But over and above the original business plan, I would suggest that you should make a second tier of smaller business plans – one for each income stream or activity.

Why? Because each plan will help you to review and evaluate the contribution (positive, or negative) that each service brings your business.

A mini plan will enable you to understand what income is generated.

If a service isn’t especially profitable, does it contribute in other ways? For example, does the service lead to opportunities to upsell to premium services?

Is a service a quick win, that takes little time so is worth keeping?

If it absorbs too much time and contributes little, then what is the business case for keeping the service?

And if there is no business case, then take a decision to withdraw it.

Your mini business plans could even drill down to a more granular level, looking at each department, and the staff, suppliers and customers involved.

Creating and implementing a business plan can seem challenging, but establish clear priorities.

Try to include details of your products and services and attach to each, your plans for operation and management, budgeting and finances.

To assess whether you are on track, or not, set KPIs (key performance indicators) and measure your performance against these.

These will bring you insight into areas of the business such as customer enquiries, conversion rates, sales/profits, and business expenses.

A business could look profitable on paper, but if, for example, the price of raw materials is increasing, then margins are being squeezed.

If you are not meeting KPIs, then what adjustments should you make, so you keep in line with your business goals?

A good business plan will identify potential areas of risk – such as bad debts, inflation, or rising interest rates – and enable you to head these off, or take action when issues arise.

You can’t predict everything; there are always unexpected challenges in business, but when these happen a business plan will give you the tools to deal with setbacks and move forward.

At the heart of the plan is sound financial management, and this is where accountants add particular value, helping you understand your numbers, so you can make informed decisions based on fact and not guesswork.

Michael Blaken is accounts director at Optimum Professional Services.