As a Small Business Lender working with dozens of entrepreneurs throughout the year, we find there is a common key element needed from our small business borrowers seeking an SBA504 loan; that is a Business Plan. Not all of our small business clients are startup ventures seeking to purchase real estate or equipment. Many are seasoned businesses that currently lease their business space and are seeking financing for real estate to invest long term in a “home” for their business or purchase equipment to take their business to the next level. We find these entrepreneurs are quite savvy and are looking to maximize their future by planning ahead for their small business growth. They start with projections or a plan for the growth. Some businesses call it a business plan, or just plain business goal setting. Regardless of the name, it is important to keep in mind it should not be just about revenue. It should be about all aspects of the business including planning for future innovation, employee retention and service offerings. It’s about forward thinking.
Below are four benefits of setting future goals for a Small Business:
- Knowledge is Power; By defining your goals, you can develop a deeper understanding of the effects of tactical decisions and how they play against the strategic goals. For example, when you have a budget that considers revenue to expense, you will better understand the implications of a major purchase or winning a large new client.
- Leadership team cohesion; Set goals and share them with your team, the entire team. When your team clearly understands what you are trying to accomplish, their decisions will be made with the same intent in achieving the goals. This effects hiring, incentives, sales programs, and other financially driven decisions.
- Measure Success; Great organizations are always trying to improve, grow and become more profitable. Setting goals provides the clearest way to measure the success of the company. As an owner looking at your company from a three- or five-year perspective, you are looking beyond the tactical side of your business and instead taking a much more macro view, which allows you to see the company from a competitive, broad perspective.
- Reassess Goals; Setting goals and then by monitoring your business against those goals, you have the ability to course correct as needed. For example, if you find your financial projections are not tracking like you had expected four – six months later, you can modify your revenue and expense targets to reflect how your business is trending. If you hadn’t set the goals, this type of information is not as apparent and decisive action is more difficult.
Taking the time to look at your organization from a broader perspective will provide greater confidence in what lies ahead and impact the growth of your Small Business. No one can predict the future, but we can certainly plan for it.
Marie Shires is the Vice President of The Pennsylvania Community Development & Finance Corporation (PCDfc) a Certified Development Company that offers the SBA 504 loans statewide in Pennsylvania. Based in Reading, she can be reached at 610.898.6045 or firstname.lastname@example.org. For more information visit www.pcdfc.com.