Setting up a business plan for your practice is similar to unfolding a road map before driving off on your family vacation: if you want to reach your destination — on time — you have to plan ahead, set goals and determine how you are going to reach those goals.

“A business plan is like having a GPS system in your car,” says Allison Merrow, consultant and coach at Toronto-based Advisor Pathways Inc. “If you never turn it on, how will you know where you are going?”

A business plan provides direction to help you achieve your goals and can indicate where some efforts have gone off track. If you are working in a team structure, a business plan can help keep everyone working together without getting sidetracked or distracted. And, contrary to popular belief, creating a business plan is neither difficult nor time-consuming. It does not have to be extensive, and can be as brief as two pages.

“You can be successful without a plan. But just think how much more successful and focused you can be if you have a plan,” says Merrow. “You would have more communication among your team because everyone will know what you are trying to accomplish.”

There is evidence of a link between having a business plan and a successful practice. More than half (56%) of advisors surveyed in a 2007 study by Toronto-based Advisor Impact Inc. said they had a written business plan. Among the top 20% of advisors (based on assets under management), 68% said they keep a written business plan. Only 42% of advisors in the bottom 20% had one, however.

Here are some steps to building a business plan:

> Set Goals. When setting up a business plan, you should first determine what your goals are, both personally and in business, says Paul Vaillancourt, a senior executive consultant at Investors Group Inc. in Ottawa.

“We always seek to have a perfect balance between work and our private lives,” he says. “So, I plan them as a whole.”

> Block Out Time. Vaillancourt begins by blocking out all his vacation time for the year, so he knows exactly when he will be in the office and when client events and functions can be scheduled.

> Set Annual Numbers. The business plan itself can include various items, depending on what you want to track. The first part of the plan should include all numbers for the year, such as productivity, average client size, number of referrals and new business. You can go further by also breaking those down into monthly targets.

Another important set of numbers are costs, including those associated with marketing and adding new employees and resources.

Include projections for three years and five years out. Any major changes you are considering for the coming years, such as switching to a fee-based model, should also be added to the plan.

“I always recommend writing one-, three- and five-year plans,” says Merrow, “because that enables you to envision where you will be over the longer term.”

> Plan Activities And Events. The second part of the plan should list all projected activities and events for the year, such as client-appreciation events, referral events and seminars. Include when these events will take place, who in the team will be responsible for setting them up and the goal of each event.

While your business’s numbers can be projected for yearend, Merrow adds, activities should be planned on a monthly basis.

> Update Annually. Vaillancourt, who has been in the financial serv-ices business for almost 20 years, has had a formal business plan for the past 18 years. He updates his plan annually, between Christmas and New Year’s, but is constantly thinking throughout the year about what he will add or change. He e-mails his plan, which is usually about five pages in length, to his team to ensure everybody stays on track.

“After the holiday,” Vaillancourt says, “the first thing my team asks is: ‘What are we aiming for this year?’”

Vaillancourt has used the same format for the past 10 years and keeps all his annual business plans in one folder, so he can easily look back over them. He refers to the folder as his “business journal.” If the team is experiencing problems in reaching a certain goal, he can usually pinpoint what needs to be revamped for the next year.

@page_break@“The business plan really guides the rest of my year,” Vaillancourt says. “It really forces me to look at my business as a whole and provides me with a record of all the progress and achievements I have made.”

Plans can be revisited monthly at team meetings, semi-annually or at yearend, when you are starting to write a new one, says Merrow.

Says Vaillancourt: “It has become so much of who I am.” IE