Successful businesses actively engage in strategic planning.  They know where they’re going and why and they have a plan to get there.  I am sometimes asked whether a formal business plan is necessary.  While business plans can be very helpful by assisting business owners think through the details of their businesses and how all the parts fit together, sometimes the very structured formality of business plans makes them less useful.  Business plans are more often used for raising money.  They cover topics such as the business model (how the business makes money), cash flow and other capital expenditures, etc.  

Both strategic plans and business plans involve significant financial planning, although a business plan tends to be broader in scope.  The strategic plan often focuses more narrowly on how you’re going to get where you want to go.  Very often, a strategic plan is included in a formal business plan.

Why is financial planning important in business?  Very often, when I meet with business owners for the first time I notice that the resources of the business are spread too thin to accomplish real success – that is, success with momentum.  One of my favorite expressions “It’s like a small piece of butter on a big piece of bread.” In other words, business owners often are attempting to do too much with the resources they have.  Every business has more opportunities open to them than they have the resources to pursue.    As a CFO, I assist business owners in narrowing the deployment of their resources to maximize the return on investment (ROI).  Together, we can create an actionable strategy. 

I am often asked who is involved in strategic planning.  Certainly, if the business owner is good at strategic business planning, he or she could develop a business plan or strategic plan on his or her own but, in my experience, it is a richer, more successful endeavor when it is accomplished with the help of a strategic planning business professional, especially one who is deeply financially oriented.  The best business plans are those that are developed by all key players within an organization.

Developing business plans is important for every business because they become a decision map, which makes it very easy to develop budgets and to ascertain where outside capital may be needed to accomplish specific objectives.  It also provides a frame of reference for cost reduction strategies.  A cost reduction strategy developed without the frame of reference of a broader plan can result in weakening the thrust of an organization’s most vital initiatives.

When asked about the importance of financial planning, my standard reply is that strategic financial planning can make the difference between real success and moderate success.  Truly, small business plans don’t have to entail excessive formality to make a big difference and they can make budgeting a whole lot smarter. 

Why do it alone?  Let’s develop a business plan for your company together.