Every entrepreneur that wants to run a successful business starts with a plan. You may not have had a professionally written business plan, but you at least had a plan in mind for what you wanted to do with your business when you started, right?
Planning your business is a lot like planning your finances. It can be easy even if you hate finance. There are some important components to creating a business plan.
Components of a Business Plan
You have to explain what your business is, what you do, and what goals you plan to accomplish; that’s your executive summary. That lays the groundwork for everything else you plan. The executive summary can be a short paragraph or a full page. Whether it is long or short, it should be succinct and not waste words.
Then you have your marketing plan. And that is what explains how you’re going to go about completing the goals in your executive summary. This is the part of the plan where you detail your customer base and how you plan to reach them.
Then there are your financial statements, those are the backbone of your business. They outline how you will fund your endeavor and when you will start making money. Some say that the financial statements are the most important part of a business plan because numbers don’t lie.
Planning your personal finances is no different. The names of the components may be different but the idea is the same.
Components of a Personal Finance Plan
Your executive summary states what you want to accomplish in your finances. Do you want to be a millionaire? Do you want to retire by the age of 30? You first have to think about your goals and what you want your money to look like. Creating a life plan helps you to determine a focus for your goals. I was given a suggestion a year ago that has helped me tremendously this year. I was told to create a vision board with pictures and words detailing what I want my life to look like. I have already begun to accomplish many of those goals that are on my vision board. That is my executive summary in visual form.
This is like your marketing plan. Are you going to work for someone else and save what you can? Are you going to create a business to earn income for you? With this plan you start to think about how you will accomplish the goals that are in your life plan. I personally have a goal to become a CEO of a major corporation by the time that I am 50. I am working my plan in order to get there. I either need to build my own business, or work up the ranks in someone else’s businesses. But either way, I have to plan that.
So many people hate this word. Budget sounds restrictive. It reminds people of when they were kids and they were in the grocery store with their mom. Remember that? You would say, “Mom can I have this candy bar/toy/shiny object?” And she would say “Put that back! It’s not in our budget.” I think that’s the main reason we have such a negative association with this word. A budget can be as free as you make it. YOU are in charge of what you save and spend. The main point is that you have to have a plan in order to reach your goals.
What’s your plan? Do you have a method of attack to reach your financial goals?