Why Don’t Business Owners Develop an Annual Operating Plan?

Why plan?

Annual operating plan – AOP budget is a great way to help you make investment decisions. Firstly, do you hope to make some investments in the coming year? If so, what financial position do you need to be in to make the investment. Secondly, what new products to launch and when? Which new market segments to enter? Thirdly, how about new hires? Who would you like to hire and when? At what level of profitability do you need to be at to add the next new hire?

Savvy business owners create a budget for the year and put financial markers in place that, if reached, allow them to make investment decisions confidently. Not only does budgeting help you make the decisions at the right time, it also helps you run your business more successfully.

Planning then leads to the discussion about how you are going to get to 15% profitability. What do you need to increase your revenue to? How are you going to do this? Can you scale better? Are there unnecessary expenses in the business? Can you find alternative suppliers? Having a budget with specific financial targets is a great driver to think through these kinds of things and to put the plans in place to get there.

At The Alternative Board India we lead in developing annual plans,  by doing this jointly with your peer advisory board it is critically reviewed and fleshed out with inputs from diverse perspectives. The month of March is not only financial year ending, but a time to plan the next financial year!

VG Somasekhar
TAB Business Owner
vgsoma@thealternativeboard.in
www.thealternativeboard.in