Financial control

Key to any business is how it handles money. Not fully anticipating start-up costs can immediately place impossible pressures on a new business. Inadequate cash flow management can bring down even seemingly thriving business.

As you develop your business plan, make sure you have the information to understand your financial picture on an ongoing basis. What does it take to open your doors each month? Where is your real profit center? How much expansion do you need to maintain growth? What are the hidden costs of marketing your company? What are the consequences of your credit policies?

Build in mechanisms to keep you continually informed as your business develops. It is easier to establish good financial procedures right from the start than to wait until you face a financial crisis. How frequently will you do your billing? What kind of credit policies will your business follow? How will you keep informed on inventory?

Make certain you receive detailed financial statements at least monthly and that you understand them thoroughly. Examine financial reports for any deviations from your plan or any indications of impending cash flow problems.

Controlling and understanding your finances makes decisions easier. And you`ll sleep better at night.

Consistent business focus

An often overlooked but crucial factor for a successful business is the necessity of developing a clear, consistent focus. All too often, businesses fail because management loses sight of the central character of the enterprise.

Understanding the basic goals and nature of your company will enable you to maximize the use of your resources, motivate your employees, and develop a competitive edge. To clarify your company's focus, as part of the business plan process you should define a Statement of Mission (or Mission Statement). This Mission Statement should guide your company’s short-term activities and long-term strategy, position your marketing, and influence your internal policies. Such a Mission Statement, however, cannot be developed until you have conducted your basic industry and market research.

Anticipating change

Change is inevitable, and the rate of change gets ever faster. As you develop your business plan, anticipate that changes will occur affecting your company and consider how you can respond appropriately. A company caught off guard by changing conditions is likely to fail.

In planning for change, keep in mind the kinds of conditions that can affect your business future. They include:

Technological changes. It’s impossible to predict the exact technological developments that will affect your industry, but you can be sure that you will be faced by such changes. Even if you are making old-fashioned, home-baked cookies, advancements in oven design or food storage will place competitive pressures on your business.

Sociological changes. Demographic and lifestyle trends should be evaluated in light of their potential influence on your business. In the cookie business, for example, new information on nutrition may influence the number and kind of cookies you sell. What sociological factors make your company most vulnerable? Don’t build a business dependent on passing fads.

Competitive changes. New businesses start every day. How hard is it for a new competitor to enter the market, and what are the barriers to entry? Can you capture and hold sufficient market share to withstand new competition?

When developing your business plan, consider how your company deals with these outside changes. Also anticipate major internal changes, such as growth, the arrival or departure of key personnel, and new product or service development.

No business is static. Planning a company responsive to change will make the inevitable changes easier.