I have dedicated several recent blog posts to the importance of creating a multi-faceted business plan, which may seem excessive until one realizes how integral this document is to the strategy and direction your business takes. These plans are comprised of four parts: business definition, objectives, operational strategies and financial management. The final major portion of the business plan is very closely related to the operational strategy, as your finances will help fund your company’s activities and help you reach your professional goals. (You can find more details about this process in The Entrepreneurial Journey.)
All the business activities you undertake, from marketing to sales to services, will have an impact on the five financial levers. These levers are: product and service mix, size of sale, number of sales, seasonality and cyclicality, and are closely connected to the marketing, sales and service strategies I outlined in my post, “Drafting Operational Strategies in Your Business Plan.”
Regarding the marketing plan, you need to create a budget for how much you are going to spend and what effects you plan to see. What should you do to deliver a return on investment? It is important to engage in activities that will deliver a measurable result, such as conducting a periodic review with your current clients or working to engage clients and prospects by launching a social media campaign that includes blogs, networking sites or a newsletter.
The financial side of the sales plan – which covers how, when and to whom you will sell – should set targets for acquiring new clients or increasing services to existing ones. Meanwhile, the financial aspect of services should detail how you plan to create even more value for your clients and profit from those efforts.
The natural extension after planning your current budget and the activities you will pursue is to forecast how these will impact future revenue and company growth. Consider how you want your operations to expand over the course of the next 12-15 months, as well as three and 10 years down the line. Calculate those anticipated revenues, expenses and profits. What will you have to do differently to reach those targets? How much money will you need to fund those efforts? Will your company’s current revenues be enough to supplement those plans? If not, you must work backwards to determine what needs to change – your activities or your goals.