Planning your future
A business plan is part of the basic foundation of any venture. Catriona Pollard finds out why reviewing and evolving is also a vital part of success.
SME owners sometimes write their business plan when they are starting out but then never revisit it. However, SMEs that want to grow and expand should revisit their business plan, remould and evolve it to suit their changing business and personal goals on an ongoing basis.
The start of the year is the perfect time to look at your business' future as you see it. In other words, determine your vision and goals for next year and spend time planning.
A business plan is a roadmap for the business – a document that provides vision, goals and benchmarking. It creates momentum and also provides an opportunity for a reality check – what worked last year, what didn't, where the gaps are, and what next year is going to look like.
Louise Woodbury from business planning company Quantum Dynamics believes that business planning is important because it provides focus, guidance and commitment.
"It is a process that is focused on your organisation's priorities. There are four to five essential elements that are vital for the success of your business, such as clients, team, productivity, cash flow, image and growth. It creates a benchmark so you can recognise and acknowledge your wins as well as the areas you need to work on.
"Plans make owners and teams accountable. When the year has been mapped out you can get on with running the business."
Planning results in freedom
Plans also can result in more freedom and flexibility for the owner. Woodbury says an effective business plan will help business owners to distribute responsibilities, put the right systems in place, allowing the business to run without constant input from owners in day-to-day operations.
It's this philosophy of planning and creating systems that is outlined in How to Grow Your Business by Taking Three Months Off – a newly released book by Woodbury and co-author William de Ora.
Andy Peters is Managing Director of Pyrosales, a manufacturer of industrial temperature sensors. Peters says he used to hate business plans. "We did financial plans for the banks but then let them get dusty on a shelf," says Peters. "The issue we had was that they weren't a live document that could be used on a daily basis."
After working with Woodbury and de Ora, Peters now understands that a business plan is much more than a list of financial targets.
It needs to contain a marketing strategy that includes activities which target potential clients and emphasise your competitive advantage.
The sales element should forecast sales goals as well as proactive customer relationship building. Peters is now able to provide a comprehensive snapshot of his business – and where it's going – to his NAB Business Banker.
Woodbury says that staff should be factored into the planning process, to take into account recruitment levels and career development strategies. Including staff in the planning process can also contribute to the success of the plan as everyone has ownership of the same goals.
"It's not ‘how' you do it that is important. It's the fact that you declare something about where you intend going with the business over the next 12 months. For example, we didn't let Andy and his team get restricted by the details of ‘how'. We first designed the big picture, even pushing the envelope. After exploring what really excited the management and the team, we then mapped out all the ‘how tos', " says Woodbury.
Plans should also reflect the professional and personal goals of the owner or management team. The business planning process has given Peters the confidence and motivation to start a marketing MBA which he never even thought he could do at his "stage of life".
"I thought doing an MBA was out of my league, but as a direct result of working on my business plan, I have achieved personal development that I can put back into the business," says Peters.
Putting the fun back into planning
Many SMEs don't commit to developing a business plan because they think it is a huge document that takes time and effort they don't have. In reality, the planning process can be enjoyable.
"It doesn't need to be hard work or a document that is 35 pages long. It can be created as a visual item. Some companies have what we call vision boards – a business plan made up of images rather than just words and numbers."
If a business invests in developing a business plan but doesn't review or revise it, then it isn't a useful tool. A recent SME survey conducted by NAB reported that only 17% of respondents had fully reviewed their business plans for the next year. However, a promising 38% had already commenced the review process, with larger sized businesses across the finance, insurance and business services industries most likely to have fully reviewed their business plans.
Woodbury's suggestion is to have a yearly planning session which maps out the year ahead and reviews the previous year. This should be developed into a year-at-a-glance plan with key objectives.
The business plan should be reviewed monthly where the key business objectives can be identified and then scheduled as a weekly activity. Depending upon the size of the business, this might involve the senior management team or team leaders.
For Peters, in addition to monthly reviews in the management meeting, he has lunch every Friday with a key management team member to review the week and focus on what activities need to be actioned the following week.
"We used to look at the historical figures at the end of the month but it was too late to do anything about it. The weekly meetings look at the snapshot of achievement of the last week measured against our goals. Then we can review and adjust for the following week," says Peters, who has 30 staff.
Woodbury describes herself as her clients' unreasonable friend. "As a business owner I have empathy, but demand action and hold my clients accountable to their goals."
Peters agrees that being held accountable keeps you focussed and means that you set goals. "If you aim at nothing, you get nothing.
"In the business we had hit a brick wall. Through the planning process we are in the early stages of finding out who we are and where we want to be.
"The process has us looking over the wall and into the future. It was initially really challenging and even confronting, but has evolved into a liberating experience. Really, it gave us a new lease on life," says Peters.
For more information on the book How to Grow Your Business by Taking Three Months Off by Louise Woodbury and William de Ora, visit www.take3months.com
Catriona Pollard is a freelance writer based in Sydney