Planning to plan

Whenever I sit down to write an article my mind goes blank and all the great things I wanted to write about seem to evaporate from my memory. In effect the message I want to convey does not easily translate itself easily to the written word. When I finally find my ‘muse’ and start writing, I end up rewriting my articles a number of times until I am happy. So why is this…

For me I truly believe that although I know the message I am trying to convey, I do not spend enough time planning the delivery. This means that each time I write I cannot guarantee that I am going to convey my message as I want to, and I waste a lot of time rewriting articles and learning the same lesson.

So what is my point? Well I believe this is true in business as well. From speaking to many business owners I know that the majority have a vision of ‘where they want to take their business’. The one thing they do not have though is a plan of how they are going make the vision a reality, rather than just a pleasant dream.

By not sitting down and planning the next year or two or three, most businesses ‘get by’ and in doing so waste a lot of time learning the same lessons.

But for most business owners sitting down and writing a business plan is the same as me sitting down writing an article, the mind goes blank and the page stays blank for a long time.

Business planning is not just calculating a set of numbers. Within the business planning process you should take time out to review your strategy and business model. For a business plan to be effective you should ensure you engage your staff, and in particular senior management. Making them part of the process will ensure you get absolute buy in and ownership in the process (and maybe some very good ideas that you did not think as well).

So here is a step by step guide of what you need to think about to prepare an effective plan.

1. What does the market look like? Exploring your market is essential when planning. Look at new initiatives and new trends required by your customers. Look at your competitors and see how they are differentiating themselves? How do you differentiate your business, is this differentiation still attractive in the current market.

2. What external factors are at play? Consider what external factors influence your place in the market. Have you have considered the impact of any favourable or adverse conditions outside your control, such as changes in tax rates, environmental or health and safety considerations?

3. What do you do and what do you believe in? Then explore what does your business does and what are its key values. Consider the values you currently adhere to and the ones you aspire to.

What new products or services do you want to offer and what changes to you need to make to provide these, what benefit will these new offerings give to the customer and to the business? Will these differentiate you further or diversify the business too much?

Your values should be realistic – can you really offer excellent service, 1 hour response time or 24 hour delivery. If you can’t but you want to work towards improved values then allow the business to do this in small, achievable steps.

4. Where should your resources be? Once you have explored where you are and where you want to be you must review all resources to ensure you have the right resources in the right place. Here are some of the questions you need to ask.

  • Do you have the correct equipment to develop the new products you wish to offer?
  • Do you have the correct equipment to meet existing expectations and demands?
  • Is the environment right for your staff to maximise their potential?
  • How do you market your product and is this marketing effective, what new marketing channels are open to you?
  • Do your systems allow efficient processing of orders to ensure the customer experience is pleasurable? Can your systems meet current demands and does it have capacity for expansion?
  • Do you have the right skill set in the right roles?
  • What external issues need to be considered (ie taxes, legislation) etc etc?

Once you have reviewed the 4 areas above you can start putting numbers to the plan.

1. Look at past trends. Starting from past trends, reviewing income and expenditure patterns is generally an effective way to begin. When reviewing past trends however make sure you take into account any ‘outside the norm’ transactions, like a one off asset purchase, or a large deal that may not be replicated.

2. Overlay new initiatives. Overlay your review of the market, your values and products onto your current trends – what effect will a new product have on your income, what effect will introducing a new service have on your cost base and your income.

3. What did your resourcing plan tell you? Then overlay your resourcing plan review. Did this identify you need new systems? If so how long will these take to put in place and what resources do you need to ensure implementation is smooth and effective. Do you need to improve staff morale? How can you achieve this and who do you need to assist you in this development.

4. Don’t forget outside factors. Ensure you take account of all external factors particularly tax and legislative changes.

The end result

So what should you have at the end of this process?

The essentials are

  • Product/Service Development plan
  • Staff resources plan
  • Sales plan
  • Marketing plan
  • Profitability analysis
  • Cash flow forecast

The profitability and cash flow forecast might identify periods of time when cash and profitability is tight. You may decide to accept this or it is quite common to recalculate forecasts a number of times before the final plan is agreed and established.

Good luck….

Oh and how did I do writing this piece well… I must admit it did take a couple of attempts but that is the same as building a business plan…..