It's important to tightly control expenses, such as payroll or supply chain, relative to growth.An operations plan will also make it easier to determine if there is room to optimize your operations or supply chain via automation, new technology or superior supply chain vendors.
A full expense plan includes regular expenses, expected future expenses and associated expenses.
Regular expenses are the current ongoing costs of your business, including operational costs like rent, utilities and payroll.
An accurate estimate of associated expenses will help you properly manage your growth and keep you from exceeding your cost capabilities.
As with expected future expenses, understanding how much capital is required to accomplish various growth goals will help you make the right decision about financing options.
Evidence shows that complete financial plans are essential to the long-term success and growth of your business: A Palo Alto Software survey found that entrepreneurs with completed business plans were more than twice as likely to successfully grow their business as those who had no plan or an incomplete financial plan.
Here's a guide to the six key elements of a successful small business financial plan.To run your business as efficiently as possible, craft a detailed overview of your operational needs.Understanding what roles are required to operate your business at various volumes of output, how much output or work each employee can handle, and the costs of each stage of your supply chain will allow you to make informed decisions for your business's growth and efficiency.Projecting cash flow for the full year allows you to get ahead of any financial struggles or challenges.It can also help you identify a cash flow problem before it negatively impacts your business.It also enables superior budgeting, such as spending less one month for the anticipated cash needs of another.This section analyzes fixed costs relative to the profit earned by each additional unit you produce and sell.Planning for future expenses will help you ensure your business is financially prepared via budget reduction, increases in sales or financial assistance.Associated expenses are the estimated costs of various initiatives, such as the cost to acquire and train a new hire, open a new store, or expand delivery to a new territory.You can set the most appropriate payment terms, such as how much you charge upfront or how many days after invoicing you expect payment.A cash flow projection gives you a clear look at what money will be left at the end of each month, enabling you to plan possible expansion or other investments.