Spontaneity is fun. But in the profit-driven world of big business, thorough planning just makes more sense. The Small Business Administration says 70% of start-ups are likely to fail within their first two years, and the reasons are too numerous to mention. One of the most significant factors of failure is a poorly constructed business plan -- or no plan at all.
While these documents are central to a business' success, many entrepreneurs are left scratching their heads, wondering what actually makes a good business plan.
So much has been said about business plans, but they still remain widely misunderstood, often with unwelcome consequences. So, if you're just getting started, setting clear objectives is always the clearest path to a solid plan.
Perhaps the most overarching objective of a business plan is to provide a focus for your business. Write down product information, manpower requirements, financial projections and other details that characterize and set direction.
The Small Business Administration advises checking in with your business plan from time to time, and updating it whenever you make any changes. This can highlight how any adjustments can affect your business as a whole. Overall, the plan should remind you of your original goals for starting the business, any new goals you've established along the way and how these two influence your initial vision.
To get an accurate picture of strategy, you can compare actual and planned outcomes, and draw insights that help you make more confident business decisions moving forward. If some parts of the strategy have been unsuccessful, you might scrap them or modify them to perform better.
If a new product is currently underperforming, management may decide to improve it or repackage it. With a business plan, different theories can be tested, from financials and marketing to customer relations. Without the trail of a business plan, executives might make decisions based on speculations and assumptions, increasing their chances of failure.
One of the most important objectives of a business plan is to set the consensus on everything about the business -- vision and mission, goals, projections, strategies, processes, target markets, etc. Unless everyone is on the same page, the proper allocation of resources becomes difficult, thus stunting growth.
With a clear business plan, decision-makers can work in harmony without having to consult or check in with one another, saving everyone time while working toward mutual goals.
One very practical objective of a business plan is to build a case for financing. It's no secret that banks and other lenders ask for this vital document as part of their due diligence prior to granting loans.
With a plan in place, banks are able to explore a business' goals, ideals and methods of operation. All of these give clues to the company's comparative financial value. Needless to say, business plans form most of the foundation for loan providers to decide on approving or rejecting an application.
Starting a business can be intimidating, especially for first-time entrepreneurs. By breaking it down to something concrete, aspiring business owners can get a clearer and more reliable view of how they can materialize their goals.
The tangibility and objective nature of a business plan can help increase your confidence and motivation in growing your company. Yes, you can always discuss your plans verbally during meetings or conversations, but a black and white approach offers a stronger grasp of the direction you want to go and how to get there.
Another objective of a business plan is to entice potential investors. Before people put their money into a company, they'll naturally want to review plans for performance, and a business plan couldn't be more perfect for this. The document will provide a crystal clear picture of the business' current financial performance, anticipated profit streams, marketing research for the target demographic, growth and expansion plans, and so on.
In other words, a business plan gives potential investors a bird's eye view of what they can expect from a certain company. It's a good vehicle for you to show off your business and get those investors on board.
As a company grows, you'll probably add executives to your team to help steer your business on the right path. A business plan gives these new decision-makers a wider scope of the business and how their skills can play an important role.
The absence of a business plan can also give rise to wrong expectations, disappointments and frustration, which can ultimately undermine the interests of both sides.
Just looking at a clear outline of a business plan with objectives will make it easier for you to see how it plays a pivotal role in success. But, aside from creating this plan, you also need to keep it from being static, letting it evolve with the dynamic needs and demands of the industry. A safe rule of thumb is to update this document annually.
A business plan is a good way to go back in time and appraise the business for what it's achieved so far, what needs more work and attention and, most importantly, how existing processes can be improved to produce competitive results.
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5 reasons why critical decisions should be made with a business plan .
Making critical decisions without a solid framework can be a recipe for disaster when you are starting or growing your business. A well-crafted business plan serves as that essential framework, guiding companies through complex choices and ensuring they stay aligned with their long-term objectives. Whether you are a startup entrepreneur or a seasoned executive, understanding the importance of a business plan is crucial for sustainable growth and success.
Before delving into the reasons, it’s essential to address a fundamental question: what is the purpose of a business plan? A business plan is a strategic document that outlines an organization’s goals, strategies, market analysis, financial forecasts, and operational plans. It acts as a roadmap, helping businesses navigate the uncertainties of the market and make informed decisions.
Here are five compelling reasons why critical decisions should always be made with a business plan:
A business plan provides a clear articulation of your business’s vision and goals. When faced with a critical decision, having a well-defined set of objectives helps ensure that your choices align with your long-term vision. This alignment is crucial for maintaining focus and direction, preventing the business from veering off course. It also aids in prioritizing tasks and resources, ensuring that every decision supports the broader objectives of the organization.
Making informed decisions requires a deep understanding of the market landscape. A business plan includes a thorough market analysis, covering aspects such as target audience, competitors, market trends, and potential challenges. This analysis equips you with the knowledge needed to make decisions that are not only timely but also strategically sound. Understanding where your business stands in the market allows for more precise and effective decision-making, reducing the risk of costly mistakes.
Financial health is the backbone of any business, and a business plan provides detailed financial projections and budgets. These projections help in evaluating the financial implications of critical decisions. Whether it’s launching a new product, entering a new market, or scaling operations, having a clear financial plan allows you to assess risks and opportunities accurately. It also helps in securing funding from investors or lenders, who often require a robust business plan to gauge the viability of your business.
Effective resource management is essential for business success. A business plan outlines the necessary resources, including human capital, technology, and materials, required to achieve your goals. When making critical decisions, this detailed planning helps in allocating resources efficiently and avoiding wastage. It ensures that you have the right people, processes, and tools in place to execute your strategies effectively, leading to improved operational efficiency and productivity.
A business plan sets specific milestones and key performance indicators (KPIs) that serve as benchmarks for measuring progress. When making critical decisions, these benchmarks provide a reference point for evaluating potential outcomes. This ability to measure performance against predefined goals helps in making data-driven decisions that enhance business performance. It also allows for timely adjustments to strategies, ensuring that the business remains agile and responsive to changing market conditions.
Beyond the five core reasons, there are several additional benefits that highlight the importance of a business plan in critical decision-making. Firstly, a business plan fosters better communication within the organization. It provides a common language and framework for discussing goals, strategies, and performance metrics, ensuring that everyone is on the same page. This unified approach enhances teamwork and collaboration, which are essential for effective decision-making.
Secondly, a business plan helps in building credibility with external stakeholders, such as investors, partners, and customers. When you present a well-thought-out plan, it demonstrates your commitment to structured growth and your ability to foresee and manage challenges. This credibility can lead to stronger partnerships, better funding opportunities, and increased customer trust, all of which are vital for business success.
Additionally, a business plan encourages continuous learning and improvement. By regularly reviewing and updating the plan, businesses can learn from past experiences, adapt to new market conditions, and innovate more effectively. This iterative process of planning, acting, reviewing, and adjusting helps in maintaining a competitive edge in the market.
In conclusion, a business plan is not just a document but a vital tool for strategic decision-making. It brings clarity, insights, and structure to the decision-making process, enabling businesses to navigate challenges and seize opportunities with confidence. By integrating a business plan into your decision-making framework, you can ensure that every critical decision contributes to the sustainable growth and success of your business.
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When it comes to business transition planning many private businesses fail to achieve business transition success due to a failure to plan.
Business transition is a high-stakes decision that requires beginning the planning process early. Taking a long-term approach allows for optimally designed transition strategy.
Advanced planning also provides time for owners to define their financial objectives and control the how, when and to whom aspects of the transition.
In the face of uncertain economic conditions, many owners take a “wait-and-see” approach to business transition planning. This could lead to missed opportunities. However, shaky economic times can present potential opportunities for transition.
Early development of transition strategy in partnership business transition advisors like the team at Comerica Wealth Management can best position owners to achieve financial goals and business transition success. Our knowledgeable advisors can help you lay out a robust business transition plan and avoid future headaches.
Contact your Comerica Relationship Manager for an introduction to the Comerica Business Transition Planning Team or contact directly at www.comerica.com/businesstransition .
Read the Full Article: Planning for Business Ownership Transition: The Time is Now
NOTE: IMPORTANT INFORMATION
Comerica Wealth Management consists of various divisions and affiliates of Comerica Bank, including Comerica Bank & Trust, N.A. and Comerica Insurance Services, Inc. and its affiliated insurance agencies. Comerica Bank and its affiliates do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your specific situation.
This is not a complete analysis of every material fact regarding any company, industry or security. The information and materials herein have been obtained from sources we consider to be reliable, but Comerica Wealth Management does not warrant, or guarantee, its completeness or accuracy. Materials prepared by Comerica Wealth Management personnel are based on public information. Facts and views presented in this material have not been reviewed by, and may not reflect information known to, professionals in other business areas of Comerica Wealth Management, including investment banking personnel.
The views expressed are those of the author at the time of writing and are subject to change without notice. We do not assume any liability for losses that may result from the reliance by any person upon any such information or opinions. This material has been distributed for general educational/informational purposes only and should not be considered as investment advice or a recommendation for any particular security, strategy or investment product, or as personalized investment advice.
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Robert Buchanan, SVP ASA, CFP® National Practice Leader Business Transition Planning Comerica Wealth Management
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What is benefits administration, benefits of benefits administration, steps in benefits administration, benefits administration technology, frequently asked questions (faqs).
Companies that offer benefits attract and retain better and more loyal employees. This is because benefits show your employees that you care about them and their goals and well-being on top of their performance. If you have a benefits package for employees, you’ll need benefits administration to ensure that it is maintained properly and used appropriately.
Benefits administration is how a company manages and implements the employee benefits program. Benefits administration usually falls under the responsibility of the human resources (HR) department or a hired professional employer organization (PEO) company . Benefits include things, such as health insurance, retirement plans, vacation time and paid time off (PTO).
The benefits administrator will roll out benefits to employees, often during hiring periods and enrollment periods. Additionally, the benefits administrator manages these programs. For example, the benefits administrator will track vacation time accumulated and used by employees. A benefits administrator must have a good eye for details and be extremely organized, too, especially for larger companies with more than 50 employees.
United Insurance reports that 78% of employees are more likely to remain with their employers because of their benefits plan. This is a critical benefit of having an employee benefits plan. Less turnover means fewer interruptions to business operations, fewer costs of hiring, onboarding and training new people and a consistent staff for consumers.
On top of loyalty, employers are able to find better employees because they offer a benefits program. Prospective employees consider the benefits package to see if it meets their needs. In some cases, prospects will take a position with a slightly lower wage if it has a better benefits package compared to other companies.
Because health insurance is fundamental to most benefits programs, employers also benefit from healthier employees. Employees will go to the doctor more frequently and be able to better care for themselves, reducing the number of sick days taken that can disrupt operations.
Benefits administrators spend their time getting employees enrolled in benefits packages, shopping for better plans and managing the accounts. Here’s what you need to know about the steps involved in benefits administration:
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Benefits administration software can significantly assist a benefits administrator in the daily tasks required to manage the benefits program. This is especially true if the benefits plan is for more than 25 employees. There are different ways to access software. Administrators may get solutions from major software companies, such as Oracle or SAP, or they may have platforms offered by the benefits technology companies, such as Benefitfocus or Zenefits.
The benefits software platform provides a benefits administrator with a resource that tracks each employee and where they are at with enrollment, contribution and use of benefits. Some solutions actually help to match employees with certain benefits selections by assessing their usage of benefits. This is a powerful tool to help benefits administrators help employees get the most out of their benefits packages and keep employees happy.
The four major types of benefits are medical, life, disability and retirement packages.
A benefits specialist is a person who handles compensation benefits packages, such as health and retirement accounts. Though paying attention to details is essential, this is not considered a difficult position.
The top three employee benefits are healthcare, PTO and a retirement savings plan.
Kimberlee Leonard has 22 years of experience as a freelance writer. Her work has been featured on US News and World Report, Business.com and Fit Small Business. She brings practical experience as a business owner and insurance agent to her role as a small business writer.
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A business goal is a broad, long-term outcome that a company works toward.Goals usually inform which strategies that department leaders will implement. A business objective, however, is a specific, short-term outcome or action that helps the company achieve long-term goals.. Although the terms are often used interchangeably, goals and objectives are not the same.
Describe Your Services or Products. The business plan should have a section that explains the services or products that you're offering. This is the part where you can also describe how they fit ...
Business Plan: A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals. A business plan lays out a written plan from a ...
Step one: Identify what you want to achieve and why. For each business objective that you set in your business plan, it's important to begin with a brainstorming session to identify what it is that you want your company to accomplish. During this process, remember that there's a difference between goals and objectives.
8. Critical success factors: Clarify the high-level goals you need to achieve in order to achieve your strategic goals. 9. Strategic management: Execute against your strategic plan in order to achieve your company goals. 10. Business goals: Set predetermined targets to achieve in a set period of time. 11.
Business objectives vs. goals. Where a business objective is an actionable step taken to make improvements toward growth, a business goal is the specific high-level growth an objective helps a company reach. Business objectives are often used interchangeably with business goals, but an objective is in service of a goal.
Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. A good business plan is much more than just a document that you write once and forget about. It's also a guide that helps you outline and achieve your goals. After completing your plan, you can ...
4. Learning and Growth Opportunities. Another consideration while setting business goals and objectives is learning and growth opportunities for your team. These are designed to increase employee satisfaction and productivity. According to Strategy Execution, learning and growth opportunities touch on three types of capital: Human: Your ...
A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success. Here are some of the many benefits of having a thorough business plan. Helps to define the business goals and objectives. A business plan encourages you to think critically about your goals and objectives.
1. Create Your Executive Summary. The executive summary is a snapshot of your business or a high-level overview of your business purposes and plans. Although the executive summary is the first section in your business plan, most people write it last. The length of the executive summary is not more than two pages.
Writing a business plan is an essential process for any forward-thinking entrepreneur or business owner. A business plan requires a lot of up-front research, planning, and attention to detail, but it's worthwhile. Creating a comprehensive business plan can help you achieve your business goals and secure the funding you need.
Social objectives. For example, a sample of business goals and objectives for a business plan for a bakery could be: To increase its annual revenue by 20% in the next year. To reduce its production costs by 10% in the next six months. To launch a new product line of gluten-free cakes in the next quarter.
A business plan is a document that contains the operational and financial plan of a business, and details how its objectives will be achieved. It serves as a road map for the business and can be used when pitching investors or financial institutions for debt or equity financing. A business plan should follow a standard format and contain all ...
A business plan is a documented strategy for a business that highlights its goals and its plans for achieving them. It outlines a company's go-to-market plan, financial projections, market research, business purpose, and mission statement.
Strategic Business Plan: A strategic business plan outlines long-term goals and the steps to achieve them, providing a clear roadmap for the company's direction. It typically includes a SWOT analysis, market research, and competitive analysis. This plan allows businesses to align their resources with their objectives, anticipate changes in ...
A business plan can be used for several things, from monitoring your company's progress toward goals to enticing key employees to join your firm. Deciding how you intend to use yours is an ...
Related: 26 of the Best Survey Software. 3. Organize. Noticing patterns in the information you brainstorm and gather from employees can help you write meaningful business objectives. For example, if many of your ideas relate to revenue, it might reveal that you prioritize profits.
A business plan is a written document that defines your business goals and the tactics to achieve those goals. A business plan typically explores the competitive landscape of an industry, analyzes a market and different customer segments within it, describes the products and services, lists business strategies for success, and outlines ...
The Main Objectives of a Business Plan Here's what a business plan will reveal and how it can save you time and resources. The Main Objectives of a Business Plan. By Eric Butow Oct 27, 2023 ...
A business plan is a written document with relevant information detailing business objectives and how it intends to achieve its goals. With an effective business plan, investors, lenders, and potential partners understand your organizational structure and goals, usually around profitability, productivity, and growth.
6) Stay consistent. This should be yet another objective that a business plan needs to be focussed with is being consistent. A good business plan should place proper value on the exact process and its adherence to the planned goals. Also Read What is Internalization: Meaning, Benefits, Limitations, and Examples.
Focus on the basics first: Identify your industry: Retail, wholesale, service, manufacturing, etc. Clearly define your type of business. Identify your customer. You cannot market and sell to ...
A business plan is an operating document that describes the dream of an entrepreneur with the objectives and plans to achieve them. A business plan shows the viability of the business idea from every aspect. A business plan is a crucial document that is utilized by both the company's external and internal audiences.
What is a business objective? A business objective is a measurable result an organization is aiming to accomplish. Many business professionals form objectives using the SMART goal method, which stands for specific, measurable, achievable, relevant and time-based. As the organization grows, it's important to regularly form new business objectives to effectively track employees' performance and ...
A business plan sells the viability of a business venture, outlining why it will be profitable. It includes details on the business concept, market analysis, operations, financial projections, and ... Outline the chosen option's details, including benefits, milestones, objectives, and strategies for achieving success. Example: "After careful ...
Proper allocation of resources. One of the most important objectives of a business plan is to set the consensus on everything about the business -- vision and mission, goals, projections ...
1. Clarity of Vision and Goals . A business plan provides a clear articulation of your business's vision and goals. When faced with a critical decision, having a well-defined set of objectives ...
Plan Early. Business transition is a high-stakes decision that requires beginning the planning process early. Taking a long-term approach allows for optimally designed transition strategy. ... business transition advisors like the team at Comerica Wealth Management can best position owners to achieve financial goals and business transition ...
Plan Ahead: Effective marketing starts with strategic planning. By mapping out your annual marketing initiatives, you can allocate your budget more efficiently, prioritize high-impact activities ...
Manage the plan: Once you have a plan in place, the benefits administrator will manage it. This means that they answer questions that employees may have regarding enrollment in benefits and track ...