Part-time CFO | Why Create A Business Plan
It is very important for business owners to create a plan according to part-time CFO. Because it is a document that will help entrepreneurs crystallize their goals. And figure out what they need to do each day in their business to achieve those goals.
In fact, the software manufacturing company called Palo Alto. On it to do a survey to find out how effective business plans were. The results of that survey show that entrepreneurs have a business plan. Our 50% more likely to grow their business. Then entrepreneurs who had no plan at all.
However, even though many entrepreneurs understand that having a plan will help them succeed. They still do not take the time to create one. Because they either do not know what information should go in a plan. Or they think it will make them more hours than they have to give.
Part-time CFO says that business owners do not need to spend forty hours creating a great business plan. And in fact, spending that much time on a business plan is not going to help them make it that much better.
By utilizing their business plan template. And four hours of their time. Can ensure that business owners end up with great documents. That will help them succeed.
The first meeting with their part-time CFO. Will be understanding the entrepreneur’s personal situation. This will help them determine how much money they need to take out of their business as salary. And how early in their entrepreneurship they need to take that money.
For example, they should find out the entrepreneurs’ debt loads. As well as things like if they have another job earning them income. And if they have someone in the family working to help pay for household expenses.
The second meeting will be for the entrepreneur reviewing the tax plan and financial plan that the accountant puts together based on their first meeting. To ensure it reflects the business owners’ financial needs.
The business owner all then get a copy of the business plan template. So that they can spend time putting their own vision of the business plan into the template.
The entrepreneurs really the only person who can do this part. Since they are the ones that have an idea of what they want their business to look like. What goals they have for their business. And what they want to achieve.
It is recommended that a business owner spend four hours of time putting division of their business into the template. And they can do this simply by blocking time in their schedule. And getting it done all at once.
Ensuring that they take the time to meet with an accountant and work on their business plan. Can be so significant to help an entrepreneur succeed. That they may be able to beat the odds. And be one of the 50% of entrepreneurs that stay in business. Instead of being one of the ones that fail within five years.
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Business plans are extremely important in helping entrepreneurs succeed according to part-time CFO. Especially since the three most common reasons why entrepreneurs fail. Can be avoided if they were addressed in a business plan.
The three most common reasons why Canadian entrepreneurs do not succeed. Is that they cannot find or keeps staff in their business, they run out of money. And the single most common reason why entrepreneurs fail. Is that they cannot find enough customers to make their business viable.
Therefore, if an entrepreneur wants to ensure that they can overcome these odds. They should not only take the time to create a business plan. But also meet with their part-time CFO. And use a business plan template that they have. In order to help them get a plan together.
Many entrepreneurs think that they need to spend forty hours or more on a great business plan before they open the doors to their business. But part-time CFO recommends that an entrepreneur only spend four hours on a business plan. But that they update it every single year.
If an entrepreneur spends so much time creating a business plan. And then do not use it to help guide them to do what they need to do to succeed. Or if they are not updating it every year to reflect the goals they have achieved, and how much the business has grown any year. It is not going to be worth the initial forty hours they spend on it.
The reason why it is better to spend four hours each year than forty hours ones. Is because as an entrepreneur gains experience. They will learn so much that spending another four hours in year two is going to be far more effective than any time they spent in year one.
And if they update it in year three, they will know so much more. That the four hours they spend in year three is more effective than any time they spent in your two or one.
The business plan is a living document. And they need to ensure that they are updating it regularly. To ensure that they know what they need to do in their business to accomplish their strategic priorities. And then succeed in their goals.
Therefore, business owners should plan on blocking this time every single year. So that they can consistently have an effective business plan. That is going to help them succeed every single year.
The need to work with their accountant to do this. So that they end up with cash flow projections that are accurate. Even seasoned chartered professional accountants struggle with creating realistic and accurate cash flow projections.
And since the entire plan is going to use the cash flow projections. They need to be accurate in order to ensure the rest of the plan is achievable.
By getting help on creating their business plan. And by spending the time every year. Can help ensure that business owners will be able to succeed and grow their business.