Planning Your Company's Growth
Business Advice From CPAs
Preparing business plans may be essential to your firm's financial
well-being and future success. A business plan reflects the goals of
a company and the action steps necessary to accomplish them. For
example, it states:
- WHERE THE COMPANY IS TODAY.
- WHERE IT WOULD LIKE TO BE TOMORROW.
- HOW IT PLANS TO GET THERE.
Certified public accountants (CPAs) can help you identify strengths
and weaknesses and prepare a plan that addresses problems, as well
as opportunities, so your business- whether it's a start-up or an
established one can reach its full potential.
HOW YOUR BUSINESS BENEFITS
Formalizing your company's objectives in a written document can help
you initiate activities that will result in increased profitability.
Setting carefully conceived business goals and plans also can result
in the following:
A learning experience.
An in-depth study of your organization provides a better
understanding of its strengths and weaknesses.
Improved resource utilization.
An evaluation of your company's resources helps determine
capabilities and limitations.
Increased employee motivation.
Clearly stated goals and individual roles in achieving them provide
an increased sense of employees' involvement in the organization's
A better understanding of the business stimulates ideas and programs
for strengthening your organization.
Greater organizational control.
A formal plan encourages adherence to project completion dates and
standards of performance.
Source of information for third parties.
Stated goals and plans may be useful in seeking financing,
negotiating mergers or promoting sales.
THE PLANNING PROCESS
There are five basic stages involved in developing a business plan
for your company's growth. CPAs are equipped with the knowledge and
experience to guide you through each stage of the planning process.
Developing a statement of purpose.
A clear statement of your business' purpose and reason for being
will guide the formulation of the plan.
Determining strengths, weaknesses, opportunities and threats
In order to set realistic goals, valid decisions based on
extensive analysis must be made on what programs to implement to
achieve your goals. A CPA can be an important resource.
Specifically, the following items need to be examined:
- Size of the potential market
- Description of customer needs
- Industry statistics and projections
- Competitive market data
- Promotion and advertising strategies
- Description of product line
- Patents, trademarks and trade secrets
- Manufacturing and operations requirements and costs
- Laws and regulations affecting the business
- Historical financial results
- Projected financial data
- Cash management data
- Defining goals.
When defining goals, determine what the plan should accomplish
and the feasibility of these accomplishments. Consider the
compatibility of personal goals and company goals. Document
selected goals so they can be clearly understood, consistently
applied and periodically evaluated. CPAs recommend that you set
a time frame of three to five years, with enough flexibility to
modify your goals.
- Writing the plan.
The actual plan states what actions you need to take to achieve
your goals, taking into consideration the current economic and
competitive environment. The plan also should identify who is
responsible for completing specific action steps and when.
- Revising the plan.
Once developed, the plan should be reviewed and revised on a
regular basis to ensure that it is consistent with the goals of
A CPA can help you create an effective monitoring program designed
to keep your business on track. Begin the planning process now by
contacting your CPA.
DEVELOPING A BUSINESS PLAN
Developing a business plan requires an analysis of various data on
operations, finances and organization. CPAs are particularly
qualified to help businesses in every stage of the planning process.
Because of their broad background and expertise in financial and
business matters, they can offer you valuable advice and assistance
in devising a first-rate business plan.
A CPA CAN HELP YOU
- Review historical documentation such as:
- Organizational chart
- Financial statements and income tax returns
- Personnel manuals
- Budget and other internal management plans and reports
- Compare your business' activity to industry data.
Analyzing your business' financial ratios and comparing them with
ratios of similar businesses can provide useful planning data.
- Develop projections of sales and other financial and
Projections of possible future results, based on alternative future
actions or events, are extremely useful in determining which plans
might lead to the best results.
- Evaluate operations.
An objective review of your operations will provide information
about employment conditions, expansion potential, inventory,
conditions, storage requirements, equipment condition and usage,
- Facilitate the planning process.
The CPA can serve as an informed facilitator to manage the planning
Whether you use the business plan to guide your future decisions or
to convince others that your business has a sound future, you will
benefit from the assistance of a CPA in developing and documenting
The CPA. Never Underestimate The Value. sm
Communications and MCS Divisions
American Institute of Certified Public Accountants
1211 Avenue of the Americas
New York, NY 10036-8775
Copyright 1990, revised 1996