Successful planning for your business

For anyone who has worked in Bermuda’s retail, restaurant or hospitality industry; the familiar saying “make hay while the sun shines” is a simple slogan that many of us live by. 

For small business owners, practical application of this suggestion can usually be tracked in the second and third quarter sales period which reflects the peak months (April through September) of the tourist season. 

While we are all grateful that so far this year, the weather has cooperated and, with the exception of the loss of three scheduled trips by the Grandeur of the Seas, the hotels and ships have been operating as projected. 

As the month of August flies by, the approach to the Labour Day holiday is still a sobering reminder that business is most likely about to slow down. 

 In preparation for this inevitability, it is important that business owners evaluate their current position and make adjustments as required. 

One of the best places to start is a review of your business plan; it is even more important at this time to take the next step and plan for your business. 

Important

Whether elaborate or simple, a written business plan is important to the success of any business. It is an assembly of facts, ideas, assumptions and projections about your business. 

Some small businesses may  have started without ever developing a business plan, however, how it can be difficult to keep the business going without one. 

Imagine the business plan as a map to guide your travels. 

Eventually every business will need to assess where they have been, where they currently are, and where they are going, both metaphorically and actually.

 In contrast, many small business owners spend months or even years developing a business plan and once operational, the plan gets put on a shelf and is never referred to.  

If your plan is like a travel map, then most of us would never consider driving in a new place without occasionally referring to a map to make sure we are on course!

With the majority of the summer season now behind us, taking the time to review your plan should be one of your first steps going forward. 

Your business plan will provide perspective and allow you to evaluate opportunities and challenges and compare them with your strengths and weaknesses. 

Your plan will also highlight your due diligence and help you to ascertain what goals you established and if you are on track to meet them.  

It is important to recognize that often things do not go according to plan, as businesses operate, in a world of constant change. Planning allows you to measure your performance against some of the challenges experienced and make adjustments accordingly. 

In other words, during these tough economic times, there may be a number of variables that have changed since you started your business.  

One of the best tools for planning for the upcoming slower season is to build a 12 month cash flow projection or statement from September forward, and to closely track your monthly revenue and expenses actuals against your projected figures.  

When things slow down there is usually greater need to check your position and such planning should occur daily, not monthly.

We are all familiar with the saying “cash is king”. Every business may not have accumulated enough cash to get them through the off-season and in this scenario it is more important than ever that each business keep closely abreast of their financial affairs.  

Not only is it better to cut back (i.e. reduce expenses) than to pay back (i.e. additional financing), but it is always easier to negotiate with the banks on financing options when you have actual funds in your account. 

I hope that all businesses continue to “make hay” long into the off-season, while keeping  in mind that a written business plan is not only important, but planning is essential to the long-term survivability of your business.

Ray Lambert, is the St George’s economic empowerment officer at the SGEEZ office, located at Storekeeper House on Ordnance island, St. George’s– call 704-9057.