Businessman Drew Greenblatt offers “The 6 Best Business Planning Tips I Ever Got” in a recent article for Inc.com. While his advice focuses on budgeting, it also applies to other aspects of planning and centers around one notion: Crafting a business plan that can absorb shocks to the system. It’s inevitable that every business will encounter stumbling blocks on occasion, so the key is to be prepared to hurdle them quickly and effectively, explains Greenblatt. Here are his six steps for creating a budget that will have you prepared for whatever life throws your way: 

1. Craft a well-conceived list of assumptions. Spend most of your time here. What do I think the economy is going to do? Will I need additional help? What product lines are apt to grow? Which aren’t? What kind of raises should I give employees?
2. Lay these assumptions into three scenarios: a bad year, a good year and a great year. This exercise is about preparing yourself for success as much as it’s about preparing to deal with difficulties. The phrase “expect the best, prepare for the worst” comes to mind.
3. In building your budget, use the conservative scenario. This is how you prepare for the unexpected. It’s better to come out ahead when things go well, then to be exceeding your budget every time an issue arises.
4. When you’re done with your plan, go back and reduce the revenues by 10%.  Also, increase projected costs by 10%. Giving yourself a cushion on both sides should allow you to deal with most any surprise without having to throw your budget out the window.
5. Create a balance sheet: an income statement and a cash-flow statement. Many businesses look past this step, assuming they are too small to bother. But, creating a full picture of your assets, liabilities, financial operations and cash flow will help validate your plans and hold them to a higher standard of rigor.
6. Review your assessments with your accountant and your trusted mentors. Two heads are always better than one!

Click here to read the entire article from Inc.com.