Thursday, February 9, 2012
Building Blocks of a Sound Business Plan
As a company matures out of the start-up phase and begins to grow and become profitable, it is important that your business plan mature as well. Here are four important pieces that you should including in a mature business plan.
Many business owners tend to put all their money back into their business. While growing and funding your business is important, neglecting to diversify your retirement funding can be disastrous to your long term plans. I talk to many business owners who depend on their business as a significant source of retirement income and yet their business current plan fails to address the unique needs and opportunities of owning a business.
Most people think estate planning is only for the very wealthy though that isn't true. Business owners have a significant portion of their estate - and the source of their family's income after their death - tied up in a business.
Without proper planning, the untimely death of a business owner can result in a significant tax liability for the family, which can potentially lead to negative cash flow and even insolvency. A mature business plan will address these issues so that the wealth you've created isn't lost to taxes.
Key Employee Planning
Your "key" employees are one of your most important business assets and critical to the success of your business. Losing a key employee to death, disability, or even a competitor can lead to a substantial financial loss for your business, potentially impacting your current lifestyle and could even delay your planned retirement.
There are employee benefits you can provide which are designed to motivate, reward, protect, and retain them for the long term. There are even some benefits you can target specifically and exclusively at key employees, like an Executive Bonus Plan.
Studies show less than a third of small business owners have a success plan in place and about the same number of businesses actually survive into the next generation. A succession plan can help you spell out the terms for what happens to your business when your no longer there. Proper planning ensures that you leave the company on your terms regardless of what happens. I covered more about this in my blog post Reasons You Need an Exit Strategy.
A comprehensive business plan will address each of these important issues. I rarely see these addresses in start-up plans though they certainly should be part of your planning process as your company matures and are some of the things we address at TriLibrium working with our business customers. We know proper business planning can make the difference between just surviving and true success.
Call me if you would like to discuss any of these issues.