Part-time CFO | Update Your Business Plan Yearly
The biggest mistake that business owners can often make is not taking the time to create a business plan according to part-time CFO. But the second mistake business owners can make is creating their business plan. And then never looking at it again, or even updating it.
If business owners take the time to create a business plan. They need to be reviewing that business plan very regularly. To ensure that they remember the objectives they want to achieve. What their vision of the business is, and what they need to do every single day in order to accomplish that.
If they are not reviewing their plan. They are not helping their business succeed. Because they are not keeping in mind all of the most important aspects of the plan itself. That they need to do in order to succeed.
However, in addition to reviewing that business plan regularly. Business owners also need to be updating it regularly as well says part-time CFO. That way, as they achieve goals, and increase the revenue of their business. That business plan can continue to reflect the business’s realities.
A business plan that an entrepreneur creates before the have any experience as an entrepreneur can only be so effective says part-time CFO. This is because entrepreneurs with no experience often overestimate what they are going to be able to accomplish in a year.
But also, an entrepreneur will learn so much every single year that they are in business. That the knowledge they have in year two. Is much better than the knowledge they had in year one. So updating it in the second year, can end up with better goals and better strategic priorities.
And year three they are going to know more than year two and so on. Therefore, updating their business plan every single year. Is not just going to help them update the revenue of the business. But will also help them have even better information in their plan year after year.
In fact an entrepreneurs should only spend about four hours of their own time on the business plan in their first year. Many entrepreneurs spend forty hours or more on their first business plan. But that does not mean it is any better than entrepreneurs who spend four hours.
In fact, there is more likely going to be diminishing returns on the business plan that has forty hours behind it. Because it is not likely going to be ten times better than the plan that was created in four hours. And a business owner should spend that additional time on their business. Instead of trying to continually refine their business plan.
By understanding that a great business plan does not need to take a lot of hours. Can help ensure that a business owner blocks the few hours that it will take to create one. So that they can have the tool that is going to help them succeed in business.
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It may be very difficult for business owners to understand that the needs to update their business plan on a yearly basis says part-time CFO. Especially when there are business owners out there struggling with just creating a business plan in the first place.
However, many entrepreneurs tend to overestimate what they are going to be able to accomplish in the first year of their business. Creating a great business plan is important. But updating that plan is going to help ensure that they stay on target.
And that they are going to be able to update their goals as they achieve them. Therefore, rather than spending forty hours on their plan once and then never reviewing it. Business owners should plan to spend about four hours each year.
They can get help from their part-time CFO. And there business plan template. And in four meetings, and four hours. A business owner will have an effective business plan that will help them significantly in their goal to grow their business.
In the first meeting, their accountant will want to understand all of the entrepreneurs personal experiences. So that they can ensure the business plan that is created is achievable as well as realistic.
They should explain all of their financial needs, including all of their debt servicing including mortgage and car payments. As well as any other income that they have from other sources. Or if they have family members that are helping pay for household expenses as well.
The second meeting will be the entrepreneur reviewing the financial plan as well as the tax plan that the part-time CFO has put together to reflect the business owners reality. This is also the meeting where the business owner will get a copy of the business plan template. So that they can write in the vision of their business. But they would like to accomplish, and what goals they have.
The third meeting will be the entrepreneur reviewing what the accountant has put in for the strategic priorities they need to accomplish. In order to achieve their vision and their goals. The business owner should look at this information to verify that this is something that they are ready, willing, and able to execute. In order to reach their goals and fulfill their vision.
And finally, the fourth meeting will be the accountant and the business owner reviewing the final business plan. To ensure that they are no errors. And that everyone agrees that it is a realistic plan. And they both feel good about the entrepreneur executing it.
Once a business owner has this plan. They need to ensure that they are reviewing it on a regular basis. So that they can be reminded not only of what the strategic priorities are that they need to accomplish. But also, what their vision and goal for the business are. So that they can continue to be inspired. To put the time they need to grow their business.