Part-Time CFO | Should Businesses Have a Plan
If business owners do not have a plan for their business say part-time CFO. They may end up working extremely hard, and never growing in size, or accomplishing the entrepreneurs’ version of success.
Partly because an entrepreneur doesn’t know what they need to do in order to increase their revenue or grow their business. But also, because an entrepreneur might not have a defined definition of what success looks like. Or what their goals for the business are.
This is why it is incredibly important for all business owners to have a business plan. Not only is it a place for business owners to formalize what they would like to accomplish in their business. But it’s also an important tool that can help an entrepreneur understand what needs to be accomplished day-by-day and their business. In order to accomplish those goals.
However, part-time CFO says no matter how sold an entrepreneur is on the importance of a business plan. They may still not take the steps to create one. The reason why is because they have a misconception about how much time it will take to create an effective business plan.
In fact, many business owners think that an effective business plan will take 40 hours or more to create. But this is simply not true. There is going to be diminishing returns on the amount of time an entrepreneur spends on their plan. Especially when they are new in the business.
If an entrepreneur spends more time on their plan, it’s rare to increase the effectiveness of that plan. Which is why it is not worth spending an overabundance of time on it.
It’s far better for an entrepreneur to spend four hours every single year on their business plan. Then to spend 40 hours once. Part of the reason is that every year that an entrepreneur is in business. They learn more, and they grow more. Which means putting additional work into their business plan as they learn. Can end up with a stronger and more effective business plan itself.
The next reason why it is much better for an entrepreneur to spend only four hours each year on their plan than 40 all at once. Is because that means an entrepreneur will be reviewing their business plan on a regular basis. And update it to reflect the current economics and personal business circumstances.
Therefore, business owners should rethink their idea on business plans. And end up with a business plan that will help them succeed. But will also continue to help them succeed. Rather than spending 40 hours once on a business plan that was only designed to help them get their loan approved.
What entrepreneurs understand this, they can seek out a part-time CFO who can help them with a business plan. So that they end up with an effective business plan. With realistic financial and tax information. That’s going to help ensure that their goals are achievable.
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business plans are extremely important says part-time CFO. And without one, business owners may be putting the success of their business in jeopardy. Even if business owners have been operating their business for several months or even several years. They need to understand how a business plan can help them pacifically.
In fact, a software manufacturing company called Palo Alto. Wanted to find out exactly how effective business plans were. And helping entrepreneurs succeed. At the outcome of their survey. What they discovered was that entrepreneurs that had any kind of business plan. L performed and were more likely to grow their business. And entrepreneurs who did not have a plan at all.
Therefore, business owners should take the time to create a business plan. However, in only four hours of work with their part-time CFO or accountant. Is enough time for them to end up with an extremely good business plan that will help them succeed.
The first meeting with their part-time CFO or accountant will be the understanding of the entrepreneur’s personal circumstances. Things like will they need to draw a salary from their business, and how soon they will need to draw that salary. How much their debt servicing is, and how much their mortgage or car payments are for example. Does the business owner have another source of income, or do they have a family member or spouse who is paying for the expenses of the household?
The second meeting with the part-time CFO or accountant will be showing the entrepreneur the tax and financial plans they created around the entrepreneur’s personal circumstances. A business plan is only as good as it is realistic. And they will also ensure that they have accurate cash flow projections to base the rest of the plan on.
The third meeting will be dedicated to the entrepreneur’s vision of the business. And they will have spent about 4 hours putting their Vision into the business plan templates. Based on their goals, their ideas for success, and what they want to see for their business.
That will allow the accountant to make their own recommendations, create a marketing plan as well as a schedule that a business owner can follow. So that they know exactly what they need to do every single day in their business. So that they can end up with a realistic plan that is going to help them succeed.
And finally, the fourth meeting is going to be centered around the final plan. Making sure that everybody, the accountant, and the entrepreneur understand it. That there are no errors or omissions. And that it actually reflects the entrepreneur’s circumstances, vision, and goals. If an entrepreneur is able to adhere to the schedule as specified in the business plan. Then it’s going to help them know what they need to do each day to accomplish the goals that they themselves set.
This is how it is very important for an entrepreneur to work smarter and not harder. To end up with a business plan that not only looks good on paper. But will actually functionally help them achieve their goals and succeed in business.