Are you planning not to fail?
Do you undertake any business planning and forecasting in your business?
There are many people who do not, missing tremendous opportunities to understand, evaluate and develop the business – most importantly, missing the opportunity to improve the results that the business generates through the trading year and beyond…
People often lose sight of the fact that a business plan is not just about obtaining finance – it is about testing your assumptions and aspirations and seeing whether they hold true and deliver the result you expect.
Of course, you may need a Business Plan to assist with your financing negotiations, but rest assured that your plan will be most effective if it is positioned as a ‘working document’ that is continuously evolving and so needs to be updated to reflect market conditions and the business’s performance.
In simple terms, see the process as the starting point for ‘Working On The Business’, not in it!
Over the next few issues, I intend to cover various aspects of business planning to help guide you through a continuous improvement programme that leaves you in control of the business and driving its direction whilst also being able to monitor objectively the monthly target performance you aspire to.
So where should I start?
First consider what you are seeking to achieve. It should certainly include:
1. Seeking to organise and drive best use of the resources available to the business.
2. Seeking to be able to take prudent and calculated risks rather than reacting to events on a piecemeal basis.
3. Ultimately, delivering a plan that allows you to improve your income, lead the lifestyle you want, seek a succession path or even exit – over the stages of your business life all of these issues will be in focus.
Then, try to your business by considering and analysing:
1. Strengths and weaknesses.
2. Opportunities and threats.
Try to engage your managers and other team members – you will be surprised what positive feedback and ideas for development often arise, as well as suggestions for improving efficiency and cutting waste.
Next, identify what is niche and key about your business and what can be done to maximise the differentiation with market competitors to best effect.
You should not be surprised to nd that the core services closest to your Unique Selling Point (USP) are probably the most profitable and efficient – so can you focus more upon delivering these services. Perhaps reduce geographic area covered or enhance the type of customer you are working with for example.
Have a look at the market place – who are potential customers for your business and how can you start networking with them. Why do your customers buy from you and how can you increase their custom.
It really is an old maxim, but there are only 4 ways to Grow Your Business:
1. Increase the number of customers of the type that you want.
2. Increase the number of times customers come back.
3. Increase the average value of each sale.
4. Increase the effectiveness of each process in the business.
How can you build a plan that seeks to exploit the simple rules above?
One simple fact – you cannot run a successful business without the skills and knowledge necessary to deliver the service level and quality you aspire to. Do you have the right staffing and experience, or have you been putting o decisions that need to be made to enable the business to flourish? Or maybe you need to invest to complete the Team?
Look at pricing. People are frequently surprised how seeking to maintain turnover levels though lower gross margins can actually produce an inferior result. It is often best to accept a reduction in low margin business in favour of a higher all round margin being generated from the remaining customer base.
Do I have an effective marketing strategy? Will the strategy deliver the clients I want? Will my Team retain them with excellent customer service or do I need to develop their understanding of what is required and / or invest in training?
Do I have the right capital equipment and resources to underpin my plan?
Collate all this information and formulate your ‘wishlist’ – you are now ready to draw up a Financial Forecast, the collation and content of which I shall cover in the next issue.