How to Use a Business Plan

A business plan helps measure your company's progress.

Congratulations on completing a business plan for your company! This road map will keep you on track for optimal business growth. Now that your business plan is being implemented, you must regularly review it to make sure things are going according to plan. Regular evaluation of business results will lead to a healthy company and a growing bottom line.

Things You'll Need

• Business plan
• List of business achievements
• List of business challenges
• Industry ratios

Instructions

1. Implement the actions proposed in the business plan. You took the time to develop your ideas, now is the time to follow through and act. Along the way, note the outcomes of your actions. Outcomes to track include--but are not limited to--the following amounts: new customers, retained customers, revenue earned, liabilities incurred, and equity. Track each of these measures at a pace that makes sense for your business cycle.

2. Compare actual outcomes against the projections in your business plan. Note the achievements and challenges in your business. Determine if you performed better, worse or on track with your projections.

3. Analyze outcomes to understand the health of your company. For instance, convert your financial measures into financial ratios. According to Inc., magazine, there are 10 key financial ratios including the current ratio, gross margin rate, net profit rate and return on investment. The Risk Management Association's (RMA) "Annual Statement Studies: Financial Ratio Benchmarks" is a trusted source for industry ratios to compare against.

4. Assess whether your outcomes justify changing or retaining your company's current actions. If you must change your company's actions, consider talking to company stakeholders--owners, employees, suppliers and customers--to understand how to best meet their needs and create new actions accordingly.

5. Create new projections and plans according to the results of your action assessment and outcome analysis. Update your business plan to take your company to another level.

Tips & Warnings

• Review your company's performance on a monthly or quarterly basis to maintain a fresh business plan.

• Hire an accountant who you can relate to, and is familiar with your industry and company size.

• Include your most trusted senior managers in the process for reviewing and maintaining your business plan.

• The life-cycle stage of your company must be considered when comparing it with other companies. A start-up company will not perform the same as a mature company.

References

• Business Owner's Toolkit: Using Your Business Plan
• Inc: Defining Key Financial Ratios

Resources

• The Risk Management Association: Annual Statement Studies
• Virtual Advisor: Analyzing Your Financial Ratios