business_linkBusiness 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.

 
Plan
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:

 

  1. Sell more of what you do to your existing customers;
  2. Sell new things that you don't currently offer to existing customers;
  3. Sell what you do now to new customers that don't currently buy from you;
  4. 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.

 
Do
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.

Review
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.

Peter Mulhall

Business Adviser

Business Link - the place to go for business support

Online: www.businesslink.gov.uk

BUSINESS LINK ANSWERS YOUR QUESTIONS

business link

I met someone at a networking event recently and we have decided that our companies should work together. Do you think that business co-operation or collaboration is a good idea?

In short: you can't be good at everything, so yes it may well be a good idea.

However, let's look at a few of the things that would be involved.

What opportunities do we want to capitalise on?

You will need to identify an opportunity. This might be submitting a joint bid on a tender, or entering another market sector, or a particularly large customer to target which otherwise you would not have the credibility, skill or the resources to convert into a customer. You may not identify a specific opportunity at the early stage, but all parties should have a purpose for wanting to collaborate.

Choose your partners - but choose wisely!

The choice of collaborative partner is critical. Sometimes the criteria for partner selection are woefully inadequate and more suitable to choosing a golf partner than a business partner. Getting on with business partners is essential, but more is needed.

Taking it on trust

Trust; this is a difficult one as it only truly forms with experience. There will be issues possibly, for some, on intellectual property and the need for confidentiality and confidentiality agreements. But ultimately you will need to trust partners, sometimes with sensitive information about your own business as you proceed to collaborate. Not only that, you will need to trust that the other parties will fulfil their responsibilities on the projects or ventures that you undertake; there will inevitably be division of labour and you are unlikely to be in a position to supervise, hands-on, the things that others are accountable for.

Skills match

One of the big advantages of business collaboration is that you gain access to skills and competencies not available in your own business i.e. the other party excels in areas where you are weak and vice versa. This doesn't happen automatically; drawing up a skills map and skills-auditing each potential partner in order to match skills required with skills available is a crucial part of the preparation stage.

Cultural match

If you, as a sole trader, are wanting to collaborate with other sole traders, understanding the other party's style of doing business, vision, view of the world around them, their values and beliefs and behaviours will be important for effective collaboration.

If you are a larger business with staff and even possibly a management team, how you go about understanding each other's business culture will need a lot of careful thought. Each MD spending time at the other's business getting to know people and processes is a good place to start.

Process matching

This is about how you or your company actually works from end to end. How you sell, market your products & services, communicate internally, & externally, deal with suppliers, customer relationship management; how you actually make the products and provide the service, how you run your admin and finance functions etc. Don't assume that because your own business runs effectively and smoothly that there will be no difficulties when you collaborate with others even if they too have a smooth running business.

Legal & structural aspects

Collaborative agreements or even legal entities may be needed depending on the depth of the relationship and complexity of the work being undertaken. Seek specialist advice.

So yes it is definitely an option to consider...

It is widely accepted that business cooperation / collaboration is a valid strategy for growing a business. There are huge benefits to be had from utilising the synergy of complementary businesses as well as potential economies of scale.

...but don't go into it blindfolded

We have only scratched the surface and looked at a few aspects, but even so it should be clear that some form of due diligence is needed before any decision is made. Good advice is essential for each party separately and, if the idea progresses, possibly a facilitator, either internal, or external to mediate and to project manage the formation and early stages of the partnership or joint-venture.

A sobering thought is that the majority of collaborative business relationships fail. So do your groundwork first, be prepared to put the time and effort into making the partnership work and you stand a chance of being one of those businesses that succeed with collaborative cooperative relationships.

In a nutshell:

  • Identify the business opportunity
  • Choose your partner carefully
  • Spend time getting to know them and their business
  • Take advice
  • Be clear about the risks and benefits

If you think that collaborative co-operative working is a possible strategy for you but you're not sure where to start, talk to one of our business advisers.

That's all for this month.

Peter Mulhall
Business Adviser
tel: 07717 290309

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Business Link - the place to go for business support

Online: www.businesslink.gov.uk/east

 

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