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Business plan outline aids budget process

In my last post, I talked about the dreaded “b” word — budget — and suggested tools for approaching the budgeting process in an organized and efficient way. To avoid the GIGO approach (garbage in equals garbage out), I outlined a strategy that has produced excellent results for the boutique properties I have been involved with. Key to this approach is to put the budgeting process into context by looking at the numbers in relation to the property — where it is at and where you want to see it go.

I suggested that, among other tools, management provides those involved in the budgeting process with a business plan for the budget year. A simple outline of the business plan may look like this:

Executive summary

This is a brief statement — ranging from two paragraphs to two pages — that provides a narrative of where the property is business-wise and why. What kind of year has it been? What challenges or opportunities have impacted the bottom line? Have key staff changes been influential in the boutique’s performance? Have renovations taken rooms out of service for a period of time? This summary provides a snapshot of the business in time. It is a foundation for making certain budgeting decisions for the coming year.

Review of successes and failures from the current/previous year

This section goes into detail about the boutique’s financial performance year over year. It aids those in the budgeting process in making realistic projections going forward.

Goals and objective for the upcoming year

In this part of the business plan, each profit center has a section in which goals and objectives are clearly stated and quantified. Like the rest of the plan, it may be discussed, modified or tweaked as the budgeting process proceeds. What’s most important is that the budget reflects overall property goals and objectives.

Personnel survey

This section itemizes employees by department, title and salary and provides a clear picture of one of the biggest items in any boutique budget — personnel. Having this all in one place in the business plan assists the discussion of property goals and staffing levels needed to achieve them.

S.W.O.T. analysis

A good business plan looks not only at your property but also at factors that can contribute to or potentially detract from its success. A S.W.O.T. analysis looks at a property through the lens of four quadrants: strengths, weaknesses, opportunities and threats.

Top five action items for business development

This critical section should include ideas for revenue generating, personnel development, capital improvements and other business-building ideas. This can be achieved through a group brainstorming session, or you can challenge each department head to come up with his or her own ideas and then bring them up for consideration and discussion.

Required resources

Finally, your business plan should include an outline of necessary resources for building business and, ultimately, meeting budget. This may include funding for new equipment, new marketing initiatives, products, services, etc.

Does this seem like a lot of work? It is, but once you have the foundation in place, the process gets easier and more accurate every year — an exercise that I can tell you from experience will definitely lead to greater financial success! Happy budgeting!

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