Try six tips for business planning to make your budgets stronger and your company better prepared for the future.
Drew Greenblatt, President of Marlin Steel, offers the six best business planning tips he’s ever received in a recent post at Inc.
Greenblatt relates a story about his friend Martin, a real estate guru, who gave him “one of the best pieces of advice” he’s ever received about “crafting a business plan that can absorb shocks to the system.” Greenblatt takes that advice and applies it to “setting budgets” and expectations.
First, he says, “craft a well-conceived list of assumptions” that includes items like additional hires, product line growth, and payroll adjustments. Next, group these assumptions into three scenarios to prepare for a great year, a good year, and a bad year. When it comes to building your budget, Greenblatt recommends that you “use the conservative scenario,” and then go back and further reduce your revenues by 10% and increase your costs by 10% for “surprises along the way.” After that, you’re ready to create a balance sheet that will hold your assumptions “to a higher standard of rigor.”