Plans and Budgets Critical to Emerging Businesses
Building a business needs great ideas and lots of enthusiasm and commitment from the entrepreneurs involved. But business planning is another vital element, as Neill Currie, a partner in Solihull accountants and business advisers Jerroms LLP, explains: "Some business founders fail through regarding formal business plans, budgets and accounting information as irritating afterthoughts. "It's not just about the figures; a proper business plan can be of commercial value, for example, revealing further opportunities to earn revenues or threats from competitors".
Beyond this, planning and budgeting are essential in testing the business plan to make sure it is viable in the current environment and with the available finance and skills base. Effective budgeting is also critical to financial control and to ensuring the adequacy of available finance.
"In terms of the commercial aspects, business plans can bring entrepreneurs face to face with answers they were not looking for" said Mr Currie.
Some great ideas, even when fully exploited, may never turn in the profits that are needed to justify investment ether by the founder entrepreneur or by others. For example, this could be because the markets will not accept the prices planned to be charged or because margins are too low or overheads too high Business planning can also help managers to focus harder on the economic background in which the business operates.
Mr Currie cites the recent announcement of cuts in public spending. …