Why you need a business plan

Toronto Sun Newspaper

Toronto Sun NewspaperBy SHERRY HINMAN Special to Sun Media

“The key to a growing a small business? Have a plan! For a business of any size, it’s important to know what you’re about and where you’re going,” says Mark Drager, president of Phanta Media, a corporate video production company in Markham, Ont. He sees his company’s plan as being like something a general would use before a war, to rally the troops.

A traditional business plan begins with an executive summary to allow the reader a quick look without delving into details. The company overview follows, outlining the mission statement, goals and objectives, corporate values or philosophy and vision statement. Following is a description of the business environment, which looks at the market trends for the particular industry, as well as the company’s competition; then, a description of the company and company strategy, which outlines strategies about the industry, markets and competition.

Finally is the financial plan, which covers the position at the start of business and where the financial position is expected to be in the future. It includes an income statement (revenues less costs to show profits), balance sheet (record of the financial position at a given time) and cash-flow statement (cash in and out as it’s received and spent). A good business plan also includes an action plan, showing how the business plan will be carried out.

A business plan doesn’t have to fit the traditional model to be valuable, though. Drager says he would write a full plan if he needed it for bank financing, but instead he develops what he calls an annual vision statement. “This concentrates mostly on what the company will be like in the future. Where will we be in one year? Three years? Five years? It’s a two-page document that outlines aspects like the company’s vision, mission, positioning in the market, objectives and corporate values.”

It also gives staff and prospective employees a sense of the culture of the company, something that Drager feels is critical. “We use it as a recruitment tool.” Once they’re close to hiring someone, they share the document with prospective employees. “This is what we’re about. And this is where we’re going. If the person is not on board with it, then they’re not a good fit with the company culture.”

It can be difficult to write a business plan as you launch your business, because there’s a lot you still don’t know about where you’re heading. But it’s worthwhile. “If you don’t write it down, you can’t articulate what you’re doing as a company,” Drager says. “And you need to articulate your plan for staff, investors and clients. That gives you the confidence and allows other people to buy into your plan.”

Once the plan is up and running, it needs to be maintained. Sue Sutcliffe, owner/manager of aWEBthatWORKS, an Internet marketing company, feels one of the most important aspects of working with a business plan is a system to track your goals and objectives. “I look at my plan once a month and update it two or three times a year. I do this whenever we have a new project or new product, to see what’s working, and tweak it. Action items have to have a date associated with them, for example, achieving this much in revenue by a certain time. But we track a lot of other aspects, too, such as where customers come from.”

Drager does the same. “I do quarterly goal-setting, and the action items are specific, for example, to systems, marketing or accounting. Our quarterly goals are only for one or two of those, so that they’re achievable.” Goals may be related to revenue or about next steps for growth, for example hiring staff or opening a new office.

The process of updating the business plan is one Drager does himself, as president. “You’re driving it,” he says. “But you’re not in it alone.” So he shares the plan with staff and gets feedback. “Then everyone will make sure it happens.”

Drager’s advice about business plans is to “just do it. You won’t see the benefits if you don’t do it. And, unless you’re taking it to the bank, don’t struggle to make it perfect.”

Sherry Hinman is a freelance writer/editor and owner of The Write Angle.

Toronto Sun