Future proof your business – Effective Business Planning
In the current economic climate, the most many of us can do is batten down the hatches and hope that we can weather the storm.
Many of us will be looking to cut and minimise expenses and costs (which is the right thing to do) but what costs do we cut? Where should we be investing?
In the previous downturns those that kept looking forwards were the ones which recovered quickest and have made more profit. Identifying what we should be improving can be a challenge.
Having a robust business plan
Having and maintaining a well-developed business plan is a key factor in the sustainability and operation of your business.
Managers and owners managing costs should prepare a written plan outlining the overall activities of the business including the People, Resources, Innovation/ Ideas, Marketing, Operations and Financial factors pertaining to the business. The PRIMO-F model.
Using proven business diagnostics or health checks can be the best way to identify the strengths and weaknesses of your business. Having a structured approach ensures that all factors are considered and a benchmark is made on current performance. If you cannot measure it, how can you manage it?
Engaging your people
Unlike the business planning our bank managers (and many accountants) want – we need a plan that looks at what and how we do it. The plan needs to be understood by everyone in the business, as they will be the people ensuring its success – not just the owners of the business. – People want job security – the best way to give that to them is get their commitment to success.
Contents of a business plan
- Mantra, mission statement, or vision
- Executive summary
- Milestones for PRIMO-F – make your Business Plan a real plan you will use:
- People – how many, with what skills
- Resources – plant, buildings, stock, energy, etc
- Ideas/ Innovation – new thoughts, products and methods
- Marketing and sales – what, where, when, how
- Operations – volumes, processes, procedures, WIP etc
- Finance – cash-flow, breakeven by product line
- The business You’re In
- What you sell/ do
- Who you plan to sell to
- Why people will want to pay for your product/service
- Start with an initial assessment/ diagnostic
- The financials
Avoid buzzwords – use clear English that you and your management understand – this needs to be a ‘living’ document.
The vital few
An effective plan is not about having lots of targets – it is about having the vital few that will make all the difference to your success.
There are only so many factors that we as business can manage and monitor at one time and the contents of our business plans also need to be kept simple, if we are going to use them as decision making and planning tools. This means we need to identify the ‘critical success factors’ for our business. Under each of the PRIMO-F areas, what are the 2-5 things that must be done to hit our growth or sustainability targets?
Always revise your plan
A plan is just that – your plan – it will change. Developing a strong business plan will poise your business for current sustainability and future growth, even if it takes a while to do so, it’s a wise idea to revisit your plan at least every year, depending on the size of your company.
Trends in the marketplace come and go quickly, so adjusting to them is essential. Your business plan sets the stage for change. In the current climate it is sensible to revisit it at least quarterly.
How long should a plan be?
The $64M dollar question – it depends:
- What you want it for
- Who will see it
- How you are planning to use it
For a business plan that is usable by the managers to make decisions and plan the operations of the business on a day to day level you should have a good robust one page plan backed up by financials.
For a plan that is going to be used to raise finance you will need more ‘meat on the bone’.
If tour business plan is not on your desk, being used for day to day business decisions – then it is not adding value to your business – re-write it so it becomes an invaluable document.
See our post http://rapidbi.com/writing-a-one-page-business-plan/
Mike Morrison is a consultant based in West London with over 10 years experience as a business adviser.