Do you have a plan for your business? I do not mean an annual financial budget although having trained initially as an accountant I cannot deny that a budget is essential to the efficient management of any business. I cannot help feeling however that a budget alone will not take you where you wish to go. I have been involved in the preparation of many budgets and seen the same scenario played out a number of times.

I feel sure you know what I mean. The budget is made far too ambitious. Profits start to fall behind budget and steps have to be taken to correct the situation. The easy thing to do is to cut costs and the easy costs to cut are always training and marketing. I must confess that I have always considered this to be strange behaviour because training and marketing are required to move the business forward.

I think that marketing is an easy cut because companies do not measure the effectiveness of marketing. If management realised exactly how much new business was obtained from their marketing effort they would know what marketing to cut and what to increase. But I digress from the main point of today's newsletter.

Apart from a budget three other plans are necessary. Yes I know it takes long enough to do the budget without having to do three more plans but please bear with me on this. In order to move your business forward you need three plans that tell you:

WHERE, HOW and the IMPACT. The three plans are:

A Business Plan

This plan should deal with where you are going and why. This plan provides the overall direction for the business. Where are you going over the next three, five and ten years. If no one in your business knows where you are going how are you going to get there? Do not keep this information to yourself, let your management team know what they are supposed to be achieving. Try sharing it with management and staff key customers and suppliers.

An Operating Plan

How are you going to get to where ever it is you wish to go? What do you have to do? Do you need new staff, new equipment, new offices? If you do not know what has to be done in order to reach your goals then you are very unlikely to succeed. Once again involve others in this plan. The preparation of this plan will be far more effective if more, rather than fewer minds input ideas into it.

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A Change Plan

As your business develops it will inevitably have to change. If it is not changing then you are not going anywhere. How are you going to manage that change? Someone has to manage the change and smooth the path. That someone is you.