BUSINESS PLANNING – PLANNING YOUR COMPANY’S GROWTH
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Preparing business plans may be essential to your firm’s financial well-being and future success. A business plan reflects the goals of a company and the action steps necessary to accomplish them. For example, it states:
- WHERE THE COMPANY IS TODAY.
- WHERE IT WOULD LIKE TO BE TOMORROW.
- HOW IT PLANS TO GET THERE.
Certified public accountants (CPAs) can help you identify strengths and weaknesses and prepare a plan which addresses problems, as well as opportunities, so your business— whether it’s a start-up or an established one can reach its full potential.
HOW YOUR BUSINESS BENEFITS
Formalizing your company’s objectives in a written document can help you initiate activities that will result in increased profitability. Setting carefully conceived business goals and plans also can result in the following:
A LEARNING EXPERIENCE.
An in-depth study of your organization provides a better understanding of its strengths and weaknesses.
IMPROVED RESOURCE UTILIZATION.
An evaluation of your company’s resources helps determine capabilities and limitations.
INCREASED EMPLOYEE MOTIVATION.
Clearly stated goals and individual roles in achieving them provide an increased sense of employees’ involvement in the organization’s future.
A better understanding of the business stimulates ideas and programs for strengthening your organization.
GREATER ORGANIZATIONAL CONTROL.
A formal plan encourages adherence to project completion dates and standards of performance.
SOURCE OF INFORMATION FOR THIRD PARTIES.
Stated goals and plans may be useful in seeking financing, negotiating mergers or promoting sales.
THE PLANNING PROCESS
There are five basic stages involved in developing a business plan for your company’s growth. CPAs are equipped with the knowledge and experience to guide you through each stage of the planning process.
- Developing a statement of purpose.
A clear statement of your business’ purpose and reason for being will guide the formulation of the plan.
- Determining strengths, weaknesses, opportunities and threats (SWOT analysis).
In order to set realistic goals, valid decisions based on extensive analysis must be made on what programs to implement to achieve your goals. A CPA can be an important resource. Specifically, the following items need to be examined:
- Size of the potential market
- Description of customer needs
- Industry statistics and projections
- Competitive market data
- Promotion and advertising strategies
- Description of product line
- Patents, trademarks and trade secrets
- Manufacturing and operations requirements and costs
- Laws and regulations affecting the business
- Historical financial results
- Projected financial data
- Cash management data
3. Defining goals.
When defining goals, determine what the plan should accomplish and the feasibility of these accomplishments. Consider the compatibility of personal goals and company goals. Document selected goals so they can be clearly understood, consistently applied and periodically evaluated. CPAs recommend that you set a time frame of three to five years, with enough flexibility to modify your goals.
4. Writing the plan.
The actual plan states what actions you need to take to achieve your goals, taking into consideration the current economic and competitive environment. The plan also should identify who is responsible for completing specific action steps and when.
5. Revising the plan.
Once developed, the plan should be reviewed and revised on a regular basis to ensure that it is consistent with the goals of the business.
A CPA can help you create an effective monitoring program designed to keep your business on track. Begin the planning process now by contacting your CPA.
DEVELOPING A BUSINESS PLAN
Developing a business plan requires an analysis of various data on operations, finances and organization. CPAs are particularly qualified to help businesses in every stage of the planning process. Because of their broad background and expertise in financial and business matters, they can offer you valuable advice and assistance in devising a first-rate business plan.
A CPA CAN HELP YOU
Review historical documentation such as:
- Organizational chart
- Financial statements and income tax returns
- Personnel manuals
- Budget and other internal management plans and reports
COMPARE YOUR BUSINESS’ ACTIVITY TO INDUSTRY DATA.
Analyzing your business’ financial ratios and comparing them with ratios of similar businesses can provide useful planning data.
DEVELOP PROJECTIONS OF SALES AND OTHER FINANCIAL AND OPERATIONS DATA.
Projections of possible future results, based on alternative future actions or events, are extremely useful in determining which plans might lead to the best results.
An objective review of your operations will provide information about employment conditions, expansion potential, inventory, conditions, storage requirements, equipment condition and usage, etc.
FACILITATE THE PLANNING PROCESS.
The CPA can serve as an informed facilitator to manage the planning process. Whether you use the business plan to guide your future decisions or to convince others that your business has a sound future, you will benefit from the assistance of a CPA in developing and documenting your plan.