BERLIN – With a recession and worrisome economic indicators looming, revisiting your business plan may provide the road map you need to stay on course for your long-term goals. By reviewing and adjusting it in these difficult times, you can stay sharply focused on a strategy for success.
“Think of it as a strategic document that answers the question, ‘Where do we want to take this business?’” advises Michael Wiers, Director of New Credit Underwriting for Merrill Lynch Commercial Finance Corp.
Companies sometimes neglect their plans amid the daily pressures of maintaining operations, Wiers says. But you cannot assume that everyone in your company already understands its goals and how to reach them.
“Your plan sets the course for the lifespan of the firm,” Wiers says. “It gives everybody the same road map to follow.”
Review the plan’s three most important elements: A brief mission statement encapsulates the company philosophy — why you are in business. Next, the vision statement lays out what you want to be. And third, the strategy broadly states how you plan to get there.
“Your strategy connects your business philosophy with the nuts and bolts – the objectives and goals and tactics,” said Chad Johnson, Divisional Director for Merrill Lynch Global Wealth Management. “This is where you put form and substance behind your mission and vision.”
Given the current challenging economy, your business strategies will most likely need updating. Your objectives will depend on your business, your aspirations and your competition, among other factors.
“Think about the most significant strategic issues facing your business today,” Johnson says. “Then set goals that are action-oriented, measurable and definable. These can be the performance metrics that point toward specific strategies—for example, introducing new products, expanding into new markets, targeting acquisitions and so on. … Your goals should be ‘ambitious but achievable.’”
By reviewing projections with you, your financial advisor can help determine which goals are realistic. For example, if you aim to double your size in five years, the only way to achieve that might be through an acquisition, which may strain your working capital. You might decide to scale back your ambitious estimates to meet them through more gradual expansion.
Ask your financial advisor to review the finished plan for gaps that could prevent you from meeting one of your goals. According to Wiers, your advisor may also be able to help you find needed outside accounting, tax or legal professionals.
Because your business is always changing, you and your senior staff should review and, if necessary, revise the business plan at least once a year. You should also review the plan whenever your company faces a major event, such as an acquisition, a major change in product line or even a time-consuming lawsuit. While your mission and vision statements probably won’t change, your specific strategies must adapt to changes in your business or the economy as a whole.
During difficult economic times, some companies may delay making staff cuts or eliminating an unprofitable product until it’s too late, Wiers says. When markets decline, reviewing a business plan can be especially useful in alerting a company to problems and pushing managers to make sometimes painful but necessary decisions for the overall good of the company.
(A Merrill Lynch Senior Financial Advisor. She can be reached at 410-213-8520.)