Part-time CFO | Why Create A Business Plan
Many business owners understand that business plans can help them succeed says part-time CFO. But they still do not take the time to create this important document. There are many reasons why. From not knowing the information to include in a business plan. And not knowing how much time they need to spend on making it.
In fact, many entrepreneurs assume that they need to spend forty hours or more to create an effective document. But this is not necessarily true. In fact, part-time CFO says that there are diminishing returns on spending that kind of time on a document.
If a business owner can spend four hours and end up with the great business plan. Spending forty hours is not going to make that plan ten times better. Therefore, business owners should work as effectively on their plan as possible. So that they can spend most of their time working in their business to make it successful.
Also, business owners should get in the habit of updating their business plan every single year. The reason why. Is because a business owner should consider their business plan living document. That gets updated with new goals as they achieve previous goals. And updated as the financial circumstances of their business change.
Another important consideration is that if an entrepreneur spends forty hours in their first year making a business plan. And then never work on it again. It is not going to have the benefit of an entrepreneur’s experience as they run their business.
However, if an entrepreneur spends four hours each year. What they will learn in the first year will help ensure that the next four hours that they spend in year two will be much more effective and efficient. And each year after that, they will continue to learn so much more.
The reason why they should contact their part-time CFO to help them create a business plan. Is so that they can have accurate financial information. Such as cash flow projections. This is an extremely important aspect of the business plan. And a lot of objectives are determined by this report.
And even experienced chartered professional accountants struggle with creating an accurate cash flow projection. So if they get their accountants help on this. It will be more likely to be accurate as well as realistic. So that they are financial and tax planning can be much more accurate.
Business owners who work on their own cash flow projections usually make critical errors. And end up with cash flow projections that are inaccurate as well as far too optimistic. Which will not help that the objectives they come up within the business plan are achievable.
By working with the professional to help them create a business plan. Can help ensure that all of the time that a business owner spends is effective. And that they can get it completed in a short enough time frame. That they will be able to get on with running their business. And be able to be more effective. Because they will have a business plan that will help them succeed.
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When reason why many business owners end up with the business plan according to part-time CFO. Is because they need one in order to secure financing for their business. However, business owners should take the time to create a business plan. Regardless of the financing needs they have. Because it can be so helpful for business owners.
In fact, according to the survey done by Palo Alto, the software manufacturing company. Entrepreneurs that have a business plan are 50% more likely to grow their business. Then entrepreneurs who are running their business without a business plan.
However, despite the fact that many business owners are aware that a business plan is going to help them succeed. They still struggle with creating one. Or do not make the effort to have a business plan.
The reason is that a lot of business owners do not know where to start. Or do not know what information should go in a business plan. And others simply think it is going to take them more time than they actually have in their busy day.
However, by working with their accountant and their accountants business plan template. A great business plan should only take for meetings and four hours.
The first meeting with their part-time CFO accountant will be for the entrepreneur to explain all of their personal circumstances to the accountant. So that they can end up with a realistic and achievable business plan. They will explain things like their debt servicing such as mortgage, car payments, and credit card debt.
As well as if they have any other job or T4 income. If they have any dependents. Or if they have a spouse who is going to also be bringing in and income to the household.
This will help ensure that the part-time CFO accountant can put together an effective tax plan and financial plan that will be realistic to what an entrepreneur needs. They will be able to figure out how much salary the business owner needs to drop out of the business. And when they need to start getting paid as per their circumstances.
Business owners will also need to put their own vision into the business plan in meeting two. And this is where they should spend four hours of time. Since they are the only one that is going to be able to write in their goals and vision of the business. They should ensure that they spend the time to make sure they do not leave anything out.
The third meeting will be reviewing what the accountant has put into the business plan to help them achieve the vision that they described. So that an entrepreneur can confirm that they are ready willing and able to do all of the things that the accountant has put into their business plan. That is going to help them grow their business.
Creating a business plan does not need to take dozens of hours. But even a few hours of time every year. Will be far more effective than spending no time on this at all.