Business Planning can be tricky
This week, we have been involved in doing presentations about Business Planning to several Business Groups. From the discussions following our presentations, we found that many people know it’s a good idea but are not sure where to start or what they get out of it.
A lot of people never get started or only go part way to completing a Business Plan because it is not just a matter of filling in one of the thousands of freely available templates on the internet. Just type “Business Plans” in the search bar and you could have hours of fun downloading templates. The problem with this approach is that simply form filling with no real research or preparation is just that, and doesn’t help you actually plan your business. It’s also really hard to be objective about your own business. They ask questions about areas such as “what is your unique selling proposition” – and that takes understanding and some guidance to identify and bring out exactly what makes your business special. If having the largest, longest, most detailed Business Plan document was an indicator of success, there would be a lot of rich academics. However, the point of this article is – Don’t be put off by the effort to create a workable business plan that has a structured approach, a solid framework and good research and thinking behind it. It will pay for itself many times over.
The other factor that a friend of mine related to me was that a Business Plan would make him commit to achieving goals and would make him accountable. While there is no completed business plan, there is no real accountability to the outcomes you want to achieve, and no changes have to be made. In fact, accountability to a business plan is one of the crucial factors for success. A Business Plan should be an easy and interesting read, easily understood by your loved ones and business partners. If you need an MBA to understand it, you have missed the mark. Getting others to read it not only makes you accountable, but provides you with the support and understanding to achieve those goals.
Having the clarity you get from a well thought out Business Plan allows you to focus your time and energy in a constructive and focused way so that you have time for important things like family and, heaven forbid – yourself. How many business people do you know that seem to be changing their businesses every few weeks in ways that show they are just trying new things because they heard of “something great” at their last business networking group? Rapid and unplanned change has enormous consequences on your resources and that of your business. Putting the thought in first to clarify your Business Plans also mean that the energy and resources of your business are all working to the same goal. You can ignore the distractions and work to a plan that is based on an understanding of your customers, the market, your business, your resources and importantly your desired goals. Without a link to your goals, picking up advice from others is dangerous and can take your focus off what is important for your business to succeed.
So… what’s involved in creating a business plan? Firstly, an understanding of what you want for yourself and your business is key. This can be done through a number of gap analysis techniques, but the key is to identify conflicts and address these. The process can be fun and many people find it enlightening.
Completing an “Environmental Scan” will allow you to understand the pressures on your business and allow you to set a strategic position. That is, you should understand your market in its many facets and work out what area you want to play in. Assessing this against what you can do will provide you with a number of options, so the next phase is to work out which options are the best fit. There are a number of really good techniques to get this done, and then it’s a short hop to getting the list of initiatives you are going to do in the coming period that your business plan covers.
The next bit is the part that most people hate – you then have to do the numbers to see if they stack up. Bad, or no advice costs a lot more than good advice in the long run so if you’re not sure, get your Accountant to help, or at least to review your numbers! Also – please, please, please, record the assumptions you make in your calculations and your plans. The prospect of sleepless nights wondering which type of red cordial made you come up with that budget figure can be avoided this way. Oh.. and yes, you hear me right, Budget.
There is one thing that any Consultant worth knowing will tell you. If you want to control something, you need to measure it. You also need to measure it against something. As an example, if I told you Alan achieved $450,000 in sales last year, you might think, “Well done Alan”. If I told you that he was budgeting to earn $685,000 in sales, you might be more likely to offer some sympathy or suggestions. Business Plans and Budgets therefore provide you with a context that is incredibly valuable.
Successful companies then track their actual results against budget and analyse the variances to see what is going on. This includes challenging the assumptions that you hopefully wrote down.
O’Brien Bousamra & Co regularly run Business Planning workshops that span 8 weeks for around an hour and a half per week. The workshops are interactive, fun and will change the way you think about your business. Although there is homework, it will be fun, enlightening and help form the basis of a business plan that covers all areas of your business and will provide clarity on where you should be focusing your time and energy. Why not contact us to find out more.