Business Planning - some final thoughts
One of my earliest articles for this newsletter back in 2007 covered the topic of planning in a business context. I want to return to that theme for my final one. Much of our work as business advisers is to challenge business owners to look at their business in a different way. One of the ways we do this is to help owners and senior managers to put together a business plan. All businesses should have a plan, otherwise to quote the lyrics of the George Harrison song: “if you don't know where you are going any road will take you there”. In business we can't afford to take too many wrong roads. So what form should the business plan take?
Whilst there are some exceptions the majority of businesses, of any size, would benefit from having a (shared, if you have a team) vision of where the business should ideally be at a point in time. Whether that point is several months, a year or several years in the future, the aim of the business plan is to plot the journey from where you are now to where you want to be, i.e. your vision. It is no co-incidence that successful companies have a robust and dynamic planning process.
Let's look at planning in three stages: Plan, Do and Review.
You may not feel comfortable with, or even want to think about, a long-term vision for your business - it's desirable but not essential. I always encourage it as it focuses you to think about what you want for the business.
One trick is to imagine a point in time in the future; let's say two years from now.
Describe what your business looks like at that time: what types of services / products - use your current intelligence of your markets - will you be offering; what markets will you be serving; what type of customers - ideally; what level of turnover and profit; what resources will you need? This is not crystal ball gazing and an attempt to predict the future, this is you going through a thought process of where you might take your business in the next phase of its development.
Let's say you want to double your turnover and triple your profits as part of your two-year vision. They key question is what will you need to do in order to achieve this - because the clock is already ticking and you must start the journey now or soon.
So the next thing to look at is your strategies for achieving the vision; let's look at some possible strategic options for example:
- Sell more of what you do to your existing customers;
- Sell new things that you don't currently offer to existing customers;
- Sell what you do now to new customers that don't currently buy from you;
- Sell new things that you don't currently offer to new customers that don't currently buy from you;
You may need to adopt all 4 strategies in order to double your turnover, but each strategy may require you to take a different set of actions in order to achieve it. The fourth option in that list is clearly the most difficult and radical one and is often a last resort. You will need to put more flesh on the bone as it were i.e. what products to which customers, how many, in which market sectors etc. Underpinning this should be your financial plan or annual budgets; how detailed this is will depend on your business and your internal resources. The very least you should do is to have targets for the key things you want to achieve, break these down into monthly chunks and allocate them to people i.e. sales targets, production or output targets, cost targets etc.
For this you need an action plan for each of the strategies that you have chosen. For instance one of your chosen strategies might be to completely revamp your website in order to re-launch or re-position your brand and to give you an improved e-commerce capability; in which case someone needs to physically do something about it. The same applies to all of your strategies. My action plans are simple; for each individual activity I identify:
- What needs to be done?
- Who is responsible to make sure it gets done?
- By when should this activity be completed?
- What resources will be needed, money, people, equipment etc, in order to get it done.
- How will we know that it has been completed successfully i.e. performance measurement. This may not apply for simpler tasks in the action plan - although it may apply to a related group of tasks.
This is where you assess progress, ideally at least monthly. Typically you should look at what people (or you) were meant to do during the period, and whether and how well it was done; also progress against financial targets and budgets. But remember, customers and markets are constantly changing, so it is at the review where you decide if the action plan is still relevant given the events or changes that may have occurred (or likely to occur) and amend and re-plan as necessary.
Also at the review identify and share the lessons learned from doing, which will improve the way things are done in the future.
So the original 3 stages become 4: Plan, Do, Review and Act on the outcome of the review.
I am moving on to fresh challenges and a new career, but Business Link will continue to offer a valuable but free service to businesses. Contact Business Link for help with planning the future of your business, or in fact for help with any business problem.
That's all for this month.
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