Baby steps are a great way to start
You work in your business every day. Have you taken time lately to work on your business?
If you own a successful small business you likely put your customers first, service and client satisfaction are high on your priority list, and you spend most of your time working to earn and keep your good reputation. There aren’t quite enough hours in the day, and you have ideas and plans in your head just waiting to be put into action. One of the things on your ‘to-do’ list is to update or create your business and financial plans. You’re going to get to it – really – you just have to get through a few other pressing items on your list first. Sound familiar? I’m with you.
It’s interesting to note that in theory most business owners agree that a good business plan and financial plan are important for long term success running their business.
The recent “2011 Manulife Financial Small Business Research Report” revealed that a surprising number of small business owners either don’t have a plan at all or keep it locked away in their heads.
Susan Cranston, AVP for Manulife Small Business Marketing states; “When asked, ‘Do you have a written business plan?’ 26 percent of the owners/managers said that they definitely have a plan. Thirty-four percent ‘kind-of’ have a plan and 40 percent admit to not having a business plan of any kind. This means almost three-quarters of Canadian small businesses are operating without a formal plan or get by with a loosely crafted plan at best.”
Our intentions are good but we struggle to find the time. Years ago I found a saying that really spoke to me and I put it on my fridge. It says, “Do I own the business, or does the business own me?”
It is a reminder to remain strong at the helm of your business and not be a slave to it. It’s important to take the time to step off the gerbil wheel of daily operations to sit in your managers chair with your strategic planning hat on.
We could list the benefits of a good business financial plan (cash management, long term planning, spotting trends, effective forecasting, prioritizing expenditures, understanding profit margins and financial ratios), but chances are you know ‘why’ planning is a good idea, you’re just struggling with the ‘how’ and the ‘when’ to find time.
Consider this: start with baby steps. Creating a full plan is ideal, however, part of a business financial plan is better than none at all. If the idea of creating a full plan is daunting and stopping you from proceeding then just take one step at a time. There are mountains of business and financial planning data available on the internet that you can follow for a template.
Start with one or two key financial measures that are important to your business that you know you should track and monitor and start tracking them – weekly, monthly, quarterly – whatever timeframe is most appropriate for that measurement and your type of business. You don’t need anything fancy, just start tracking. You can use excel, a word document, or just scratch on a piece of paper if that’s more your style. Whatever method gives you the greatest chance of success to continue tracking. Within weeks you will find it is just a regular part of your routine. This is when you add on another measure to track. Once you get a few under your belt and you see how easy it is you will wonder why you didn’t do this sooner. Keep adding measures you wish to track and give yourself a deadline to pull everything together into a formal plan.
You really should know your business financial numbers inside and out so go ahead and take one small step as a catalyst to creating your full plan. Building your plan one step at a time is better than not building it at all.
Stephanie Farrow, B.A., CFP., Stephanie has over 20 years experience in the financial services industry, a diploma in Financial Planning from the Canadian Institute of Financial Planning, and Certified Financial Planner designation. Stephanie has been writing a financial planning column for the local business magazine Elgin This Month since 2010 and hosts our Farrow Financial Blog and Twitter @farrowfinancial. Stephanie and her husband Ken Farrow own Farrow Financial Services Inc., are busy raising three young children and actively involved in the community. Our Farrow Financial Services Team.