- Date published
Most of us wouldn’t begin a road trip without a plan, even if it’s flexible. We’d think about where we would like to visit, directions to get there, how much money we must spend and how long we can reasonably be gone.
The most spontaneous individual might just go where the wind blows, but that’s not how you should operate a business.
In business, a roadmap is essential, said Amy Jackson, regional business consultant for the Missouri SBDC at MSU (part of efactory). She works with business owners daily to build the foundation, traverse the stumbling blocks, and identify new pathways for new and established businesses to succeed.
Jackson is a consultant working with the current cohort of the Early-Stage Business Boot Camp in Taney County. From her experience as an entrepreneur and working alongside them, she offers sound advice to those she consults with as well as those she teaches in the class.
Identifying risks
For any business, Jackson stresses the importance of proper planning. Beyond big dreams, proper planning includes a strong strategy with research and analysis to understand the market and customer base.
“The more you research, the more you understand your risks,” she said.
Planning helps to mitigate risks, she said. When you build a business plan, you outline the direction you plan to take your business and how you intend to foster that business success.
Even the best planning will leave some things left uncovered. Knowing how to pivot, as we became all too aware of during the COVID-19 pandemic, is also part of planning. Having a contingency plan that you can activate quickly can make a huge difference in your businesses bottom line.
“Your business plan should give your business direction and financial projections over the next three years.”
Business budgeting
Just like on a road trip, you need to have a plan for a budget. A solid plan for expenses and sales projections, Jackson said, can improve your experience when looking for financial support like commercial lending.
To put this into practice, you need to know the number of products or services you need sell monthly to cover expenses and how long it will take you to reach that volume of sales.
You will also need a clear understanding of any startup costs, she added. These are expenses you have prior to making your first sale. Startup costs and working capital will determine how much money you need to start your business.
“When you understand your expenses, you know the sales volume needed to support your business each month, those sales goals are set in your 3-year financial projections. They can also create some motivation. Let’s face it: No one wants to just cover expenses,” she said. “You want to be able to pay yourself.”
In addition to covering necessary expenses, Jackson cautions business owners to focus their time where it can add the most value. She demonstrates this by using the example of doing your own accounting when it’s not in your wheelhouse. Evaluate how long it might take to complete necessary accounting work and be prepared to seek service providers to assist your business instead.
Finding resources
The good news? It’s twofold, according to Jackson.
- A full business plan doesn’t have to be overwhelming.
- You don’t have to do it alone.
“You can literally start with something on a napkin,” Jackson said, “We can help you from there.”
Business consultants and mentors are available to meet with you – at no cost – through the efactory. They can steer you in the direction of tools, resources and training (like the Early-Stage Business Boot Camp) to help you build the road map.
