Why you MUST have a business plan

Bill Bailey
You have to know what you want to achieve, then make a plan to do it.

Note: This post is about making a plan that business owners will use to guide their daily activities and track progress, NOT a plan for investment, bank loans or other third parties.  

I just met a man who had to close his business and make four people redundant. He told me his biggest regret was not making a business plan. He didn’t know what he needed to turnover every month or how many sales he needed to cover the costs of supplies, premises and wages. He ran out of money.

Sometimes, wonderful things happen by accident, but in business, its best to have a plan!

How to make a plan.

Like the inestimable Bill Bailey, start with the end in mind.
Are you building a business to sell, to pass on to a family member, to provide you with a retirement fund or to give you independence and a good lifestyle?

Knowing that, where do you want your business to be in three years time in terms of profit and turnover?
How will you get from where you are now to where you want to be?
What will you need to spend and what income will you generate?
Do your costs stay the same the more you sell?
Will you need to employ people or outsource work?

List all of the expenses and how many sales you need to make to get the turnover to cover them. Then figure out how much profit you will make when you’ve deducted all of your expenses. Is the business profitable enough? Do you need to raise your prices?

When you know the answers to these questions, make an outline plan for the next three years then a detailed plan for the next 12 months with spaces to add actual numbers against what you forecast.

Follow this with an action plan for every month that details exactly what you need to do to get the sales you need and how much each sale costs you (it’s approximately seven times more expensive to sell to a new customer than to an existing one).

Your action plan should feed into your monthly, weekly and daily schedule so that you never get caught spending so much time delivering work that you neglect to bring in more work.

Decision making will be fast and easy because you’ll know where you’re going, what’s working and what’s not.

You won’t be tempted by cockamanie marketing ideas or pursuing new and shiny business ideas before you’ve got this one established because you’ll be able to see how unplanned expenditure will affect your cash flow and exactly what income it needs to deliver and by when so that you never run out of money.

THAT’s why you need a business plan.

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Managing time.

Stick to the plan

Managing time is all about making a plan and sticking to the plan.

Here’s a process for staying in control:
1. Separate working time from personal time.
2. Decide on the hours you’re going to work in your business each day and mark them on a planner (9-5, 10-2 or whatever, including meal times and breaks – see the Rest Activity Cycle).
3. List the all the most important things that you MUST do in your business, e.g. check the cashflow, make sales calls, send invoices, do client work; whatever your business demands. Ideally, include some thinking time, planning time and learning time.
4. Block out the time for these activities in your schedule. Some of them may not take up much time e.g. checking the cash flow, but in terms of importance they are big rocks and must be included before other, less important items.
5. Look at the time that’s left. If there isn’t any, you either need to increase the hours you work, cut down on the tasks you’ve scheduled or delegate some of the work. If there is time left, plan how you will use it and then:

Stick to the freaking plan!

If a client wants to move deadlines, your computer crashes or you have unexpected demands on your time that you really can’t avoid go back to your planner and make a new plan, taking into account how this will impact all the other commitments you’ve already made.
Change things deliberately, consciously and in full control.
Don’t do anything during working hours that isn’t in your work schedule.

Always running out of time?

If you’re always running out of time is it because:
a) you’ve underestimating the time it takes to do things
b) you’re wasting time with procrastination
c) you’re doing things that aren’t scheduled?
There are fixes for those that are covered in other posts but the most important thing is to identify what you’re doing that needs to be fixed.

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How to make more profit

In this #blab chat, I talk about several easy ways to increase the profits in a small business.

Andy Boothman shares his experience of 15 years of running his own business to add a personal and very practical perspective.

We talk about:

  • Increasing prices
  • Cashflow
  • Niching
  • Outsourcing
  • Using free technology
  • Controlling costs


If you like this #blab, join me on www.blab.im for a different Work Smart topic every Wednesday at 10.00am BST/GMT

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How to become a better presenter

Jon Torrens Communications Coach

The rules for presenting well

Whether its an elevator pitch, a networking breakfast, a proposal to a client, a pitch to an investor or a full blow, on-stage presentation to a big audience, there are things we can all do to make it a better experience.
Jon Torrens, Communications Coach, gave me an interview and answered questions on How to be a Better Presenter.

The video is fun and fast moving and Jon demonstrates his skill in dealing with lots of different questions from a live audience.

If you’ve got any other questions for Jon you can ask them on Twitter @JonTorrens or get free presentation tips on Jon’s website www.jontorrens.co.uk

If you like this interview, join me on www.blab.im for a different expert view every Wednesday at 10.00am BST/GMT

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How to be more productive

A graph showing 90 minute productivity cycles with 20 minute rest periods in between.


When are you at your most productive?

For maximum productivity, work in 90 minute cycles with a 20 minute rest period in between.

We have a basic rest/ activity cycle which is to work for 90 minutes (peak at 45) then rest for 20 minutes before starting again.

Does this work for you?

Professor Nathaniel Kleitman, Professor Emeritus in Physiology at the University of Chicago discovered this while researching sleep patterns.

 Plug this into your time management strategy.

Unplug yourself from everything and work on important (not urgent) tasks for 90 minutes.  After a 20 minute break check your messages, emails etc and deal with those for 90 minutes.

Get regular tips on how to Work Smart, Not Hard when you subscribe to this blog

The more you concentrate on dealing with important tasks before they become urgent, the more in control and satisfied you’ll be with your work!

Try it!

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