By Susan E. Campbell
As a new year arrives, many company owners review their business plans to make sure every financial decision, marketing program and staff member remain aligned with their company vision.
“Most of the time a business plan is stuck in a drawer and only revisited when the owner needs something, such as a loan,” said William Brigham, director of the Small Business Development Center of the University of Albany School of Business.
“We see a thousand businesses a year from 11 counties, and people would be surprised by the lack of a formal business plan,” said Brigham, who has been with the nonprofit organization for 20 years.
Financial advisors agree that a solid business plan is at the heart of a company’s success. Some aspects of the planning process are commonly overlooked or under-emphasized, according to local professionals who shared some tips for keeping companies on point, especially this time of year.
“The foundation of a business, whether a starter or existing, is the mission statement—what are our core values and where do we want to go,” said John Crawford, founder of JP Crawford Associates in Glens Falls.
With 30 years of executive and managerial experience in industry and business, Crawford motivates clients whose company vision is poorly articulated and does not explain why someone would buy their product or service and not the competition’s.
“We’re better or we’re cheaper” may be common answers but are not sufficient ones, according to Crawford. So he advises them to “go back and put in your plan the core values that the company is built around.”
“Communicating vision and plan for execution to everyone can start your year off in the right direction,” said Sherry Finkel Murphy, an associate wealth management advisor with The Atrium Financial Group of Northwestern Mutual, which serves the Capital District and North Country.
“Ensure family, employees, partners, and resources are all on the same page and can articulate the value you bring in 2020,” said Finkel Murphy, who has been recognized as one of Northwestern Mutual’s 2019 Most Exceptional Community Service Award winners.
“When the company vision and core values are committed to writing, they provide good talking points for employees to get involved in expressing what those goals mean to them,” Crawford said. “The value to employees is that they can show supervisors they understand and are working toward that vision.”
“On the manufacturing floor, workers may not have an answer as to what their business believes in,” he said. “This is a critical point but many ignore it and then wonder why people quit. It is because the core values have not been communicated.”
“Is the team in place that can execute your vision?” said Finkel Murphy. “Are you communicating the value of your benefits package to your employees, so that your turnover is low?”
Crawford said businesses should be looking long term and question whether they are achieving the desired culture in the workplace. Does staff really feel integral to the company?
“If not, the owner may need to go back to the drawing board,” he said.
Crawford and Finkel Murphy said the mission statement can be a valuable recruiting tool.
“An active mission shows potential new employees whether the decision they make is aligned with your company’s stated values,” said Crawford.
“The ability to attract new employees is higher when the company has critically assessed its resource needs,” said Finkel Murphy. “We remain in a tight labor market, after all.”
Brigham said another weakness in business planning is often “not knowing what your credit looks like and not having a good idea of capital needs.”
“It says a lot about the character of the business owner if they are paying their personal bills,” he said. “They may be in a position of having to explain why their credit situation is the way it is. The first of the year, working on financial projections and setting milestones are key,” said Brigham.
“Use the new year as an opportunity to physically bring your team together—financial planner, accountant, attorney, and banker—to put an action plan to your goals and adjust your critical business documents as necessary,” said Finkel Murphy.
Crawford recommended sending “all financial information to the accountant throughout the year, ideally every three months, for another set of eyes. If you start going down the wrong path, you can more easily get back on track. And bankers love to see that you are looking for financial trends and asking yourselves, what are we doing differently to make sales go up.”
When applying for financing, the business plan becomes “the document you lead with, but the company spokesman, the business owner, should lead the discussion,” Crawford said. “The bankers should see the company owners are on the ball and understand their selling points.”
Going over revenue and expenses from last year helps the company to better understand what the balance sheet should look like in 2020, said the experts.
“Then set goals that improve even more on prior successes,” said Finkel Murphy. “If something works, consider investing in it further to understand why it was successful.”
“Address liquidity early and often to ensure your business has the liquid assets it needs to execute your plans,” she said.
As a company considers how to align marketing efforts with financial execution, Brigham recommended making sure companies have an online presence. Without one, businesses today cannot compete, he said.
“It’s very important to have a website so people can reference your business,” he said. “All companies should get a good idea of how social media works and include it in their marketing plans.”
Calling social media “a huge asset,” Brigham said it tends to be one of the more popular topics for training provided by the Small Business Development Center.
“We have a research network and access to databases that can give relevant marketing information to our clients,“ he said. “There is so much data out there that businesses need to be effective in accessing it.”
He said all types of clients, from hair salons to aerospace companies, have tapped into these resources to find demographic information and similar companies in their area, and thus determine who their competition and their customer base are likely to be.
Now is also the time to review the business owner’s continuity plan and exit strategy, advised Finkel Murphy. “It’s the last thing you want to spend time on, but it is critical for your family, employees, clients, and even lending institutions.”
“If you or a critical team member prematurely dies or is disabled, how does the business run? How does your estate exit the business?” said Finkel Murphy. “Consider now if anything has changed in your own plans for retirement or exit from the business.”
A business plan can change and become more in-depth over the years, said Crawford, “but all companies should have something tangible that documents what they will shoot for and that guides them.”