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Why are Business Plans Important – And How Do You Start Writing One?

Paul Martin • Jul 18, 2017
why business plans are important

Well, our last two blogs discussed financial forecasting – in particular, how to get where you want to go and measure your progress along the way.

However, before you can start using them as a guide, there are two important things you need to know:

1. Where are you now?

2. Where do you want to be?

How do we answer these questions? We write a business plan.

How NOT to go about writing a business plan

Try Googling the term business plan. You'll get thousands of hits on hundreds of different templates for creating your own business plan. 

It's easy to download one, fill it out, feel good about that, then stick it in the top drawer and never look at it again.

Worse still – you download one, feel it's taking too long to complete (or you're bored or don't like facing the truth about your business!) and stop. And you never to look at it again.

What a wasted opportunity!

Quitting so easily means that you probably haven't considered the question of why business plans are important in the first place.

The free templates tend to lack a very important ingredient – the input of an independent facilitator who can guide and challenge you, the business owner. Writing and implementing a successful business plan is a process that requires more than an owner spending half an hour filling in boxes. 

How to start writing a business plan

Who is the best facilitator to help with your business plan?

It's usually your Chartered Accountant – the person who knows your numbers inside out and wants to help you achieve success and reach your goals.

The business plans that we help clients write are one-page documents that not only describe where the business is now, but establish your 12-month goals and 90-day goals, as well as the actions required to achieve those goals (amongst other essentials).  

In short, your business plan needs to be action- and outcome-focused.

Additionally, a business plan should not be written just once . It needs to become a standard part of the annual business cycle: just like preparing your financial statements for the year just gone – but instead of focusing on what just happened, it looks at what you want to happen in the future.

Our most successful clients know that their updated business plans might raise cash flow issues that need to be addressed in the coming year, so it is often teamed with a budget or, even better, a three-way cash flow forecast. 

This highlights the path they need to steer to get where they want to go - and where the potholes might be along the way. It therefore helps them prepare a plan to mitigate them or avoid them altogether.

That's why a business plan is important!

 

How the new Government and coalition agreements might affect owners of residential rental properties

By Paul Martin • 04 Dec, 2023
There were some key takeouts of interest to many of our clients from the recently signed coalition agreements between National, ACT and New Zealand First and the formation of the new Government. In particular there are a number of policies which will likely benefit landlord clients who own residential rentals. I have summarised some of these below. 1. Return of Interest deductibility for residential rental properties Interest deductibility for residential rental property owners will return. It will be phased back in over three tax years: • 2023/24 tax year: 60% of interest cost will be deductible. • 2024/25 tax year: 80% of interest cost will be deductible. • 2025/26 tax year: 100% of interest cost will be deductible. 2. Reduction in bright-line period National signalled in their pre-election campaign that the bright-line period for residential rental property sales would reduce from 10-years to 2-years. While the exact implementation of this policy is not yet known, it is good news on the horizon for residential property investors. 3. Reinstatement of 90-day no-cause termination notices The new government will reinstate 90-day no-cause tenancy termination notices. This will avoid many unnecessary disputes in the Tenancy Tribunal and gives landlords more confidence in letting to possibly “marginal tenants". Many landlords have avoided what they considered to be risky tenants because eviction for anti-social behaviour was so difficult. With this reinstatement, landlords might be more inclined to give a marginal tenant a chance because they know that if the tenant misbehaves, they won’t be stuck with them. If you would like more information on how these changes might affect your personal circumstances, please feel free to contact us to discuss further.

How does provisional tax work, especially in an economic downturn?

By Paul Martin • 18 Jul, 2023
If you had to pay tax of more than $5,000 in your last income tax return, you may have to pay provisional tax for the following year. Provisional tax is like making progress payments on next year's income tax.

How to handle inflation as a sole trader

By Paul Martin • 18 Jul, 2023
Sole traders have had an especially difficult few years as inflation surges. We have got three tips to help lighten the load for your sole trader business. 
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