Does your business have a plan – or are you winging it?
As a self-confessed numbers nerd, it’s no surprise that I believe every business should do an annual budget and forecast to get a better handle on what the year ahead has in store. But there’s another tool that works in concert with budgets and forecasts to give you a roadmap to follow for the year ahead: a business plan.
Navigating the ups and downs of running a business is so much easier if you have defined the goals you want to achieve, then mapped out the key actions you’ll take to get there.
The business planning process forces you to think more proactively and strategically about your business, so you move from pretty much being self-employed to building a thriving business that you run (rather than work for). Just as importantly, by taking the plans out of the owner’s head and putting them on paper, it’s easier to bring others along on the journey with you.
Benefits of business planning:
- Get clarity around where you are, and your goals for the year ahead and beyond
- Make more proactive decisions (rather than continually being reactive)
- Give your team direction, so everyone can pull in the same direction
- Capitalise on your strengths, and minimise your weaknesses
- Identify potential opportunities and threats, and develop plans to address them
- Keep you on track to achieve your goals throughout the year (as it’s so easy to get distracted by the latest ‘crisis’ in your business)
- Think more strategically about your business, and put plans in place to grow the value of your business asset and make it more sellable
- A vital tool for anyone looking to sell their business, get investors, raise capital, secure finance, or apply for government grants
For maximum effect, I recommend doing your budgets and forecasts as part of the business planning process. Your business plan should also be reviewed and updated regularly, so it stays relevant and evolves with the ever-changing business landscape.
How your bookkeeper / BAS agent can help in the business planning process
First and foremost, the primary role of your bookkeeper / BAS agent is to ensure the data in your accounting software is accurate and up-to-date. As the saying goes, ‘garbage in, garbage out’ – so they play a critical role in enabling you to make the right decisions at the right time.
In terms of business planning, as the custodians of your business’ financial data, bookkeepers can play a valuable role. They can be privy to information that you may not have – especially in terms of annual trends or opportunities for greater efficiencies. In this way, they can help you create more accurate budgets and set more meaningful targets.
If your bookkeeper is also a BAS agent, they can add even more value to your planning process. A BAS agent is fully immersed in your business: they know how your business operates, and they understand the effect your operations have on your finances (and vice versa). Armed with this depth of knowledge, a BAS agent can give you ideas for how to improve your cash flow across the entire year, and help you put plans in place to build a cash buffer for unforeseen (or foreseen) challenges.
If you do tax planning with your accountant (usually around April/May each year), this can be the perfect time to do a business plan or review your current one for next financial year. Not only are you setting yourself up for the best tax outcome this year, you can also use the time to plan ahead and maximise the opportunities for the future.