“Good fortune is what happens when opportunity meets with planning.” Thomas Alva Edison
The action word in Edison’s statement is “planning” an activity not the end result. One reason staying in business is hard is lack of adequate preparation. Businesses that lack the resources and knowledge to execute their business model and seize the opportunity quickly run out of money. The act of planning means you have though through the desired project as well as thought about what could go wrong. Unexpected events often become death traps for new business ideas. Likewise, as Edison points out lack of information can result in missed opportunities.Five important planning actions that apply to every business
Set Financial Goals
Profitability is the first objective in business planning. Focus on refining the sales cycle to incrementally improve revenues and control expenses. Every month measure your actuals against budget, verify financial trends and adjust to improve the next month. Like most things in life, the more purposefully you engage, the more likely you'll get the results you seek.Contingency Planning
Surprises can be good like a large order that exceed your capacity or can be bad like a leaky roof that ruins inventory. On a daily basis good planning means verify that cost for equipment furnishings and inventory include delivery, installation and taxes. Anticipate schedule delays with contractors, permitting and inspections, wrong materials, need for rework. Planning can help reduce the most likely cause of a delay when you change your mind and change direction.Adequate Working Capital
A cash flow budget is a basic planning tool in estimating time and money. Cash Flow considers the time difference between when you need cash to pay for inventory, payroll, advertising, rent or loans and when you receive cash from sales. Anticipate that it will take time to sell inventory sometimes several months before sales yield enough cash to repay the initial cost.Monitor Changes in the Marketplace
Understand your customer’s interest is a never ending planning activity. Communicating with your customers is the first action. Seek awareness as to how the customer’s needs and wants changing. Watch the competition to detect if they are doing something new and different; consider a response to keep your customers. Read industry newsletters and journals paying attention to new and emerging ideas within your industry as well as how your products or services are being used in other industries. Opportunity can be recognized when new ideas solve problems.Control Operating Costs
Lack of procedures and measuring of results generally means you lack control over you costs. Planning will help establish simple procedures that promote efficiency; reduce time lost and reworked jobs, and set good purchasing policies. If your business has ten operating steps and the action of planning could improve efficiency in each step by one percent then your costs could be reduced by ten percent.First Published in the Wenatchee Business Journal Tool Box Nov 16, 2012
