Hopefully by now you are feeling like you should be doing some kind of business planning. So what next? I have spoken about business planning practices in this series, so I would like to go through the types of activities that you should be doing.
You have probably heard about lots of different business plans such as the ‘one page’ plan, compliance plans or business plans for finance or investors. Each type of business plan will focus on particular content depending on the purpose, for example a business plan aiming to secure finance will have a stronger emphasis on financial performance. You will find many examples online, including several at big-small-business.com and crecer.com.au.
As I have already mentioned, the point of creating a business plan is not to create a nice looking document. It is a process that you undertake to plan, research, learn, strategise, discover, ask questions, identify risks and work out how you will make your business work in the future. During that period you will undergo a personal transformation that will make you a better business owner. Your business plan simply documents everything that you discover and all of the decisions that you will make.
In your planning activities you need to answer these questions:
- What are you trying to achieve in your business? Your long and medium term goals need to be clearly stated and measurable.
- What is your strategy to achieve your goals? Consider resources, people, how much money you need, capacity, risk, sales and marketing.
- What is happening in your business? Do you need to change anything to achieve your goals? What are the obstacles?
- What is happening in your business landscape – industry, market, economy and government changes that may affect you and your strategy?
- Measuring progress: are you moving towards your goals? How will you know?
- What are key activities you need to perform?
- Project your income, costs and cash flow.
- Look at your business strategy, marketing, sales and new developments.
- Look at what worked last year and what didn’t.
Business planning activities will be different for every business, so you refine your own schedule over time. It is important to have a team that are consistently involved over time, so choose your own ‘board’ of experienced business people, owners, senior team members and an external coach or mentor.
New business, struggling business or new venture
For brand new businesses, you will have a lot of research to do, so building your business plan will be a longer, slower process. Ideally you will work with a mentor or business coach who can guide you and knows the right questions to ask. This comprehensive type of business plan is the most thorough and gives you time to learn and develop as you go, with an emphasis on you developing a deeper understanding of how the business might work once it has actually started.
This is also the process you should go through if you are considering a big business decision such as changing your business direction or expanding into new products or markets. This process would also benefit businesses that are struggling, as it will help to define what you are doing and what changes you need to make to turn your business around.
Once you have completed your business plan for you new business and have a clearer understanding of what it might look like, you may not like what you see! That’s OK too. If decide not to proceed with your business in that format at that time, that is an equally good outcome. You can re-assess your proposed business model, perhaps delay the start, source more investment or perhaps not start a business at all. The business plan would have achieved its purpose of making you better informed of and maybe saved you a lot of money and stress.
One of my business planning clients was a middle-aged couple that intended to start an art gallery/cafe. They were ready to pay a massive deposit on a property that would involve a substantial financial commitment for many years. Before they started, we created a business plan for their proposal and researched every aspect of their proposed business, including financial viability, council permits, traffic patterns, marketing and the demands of running the business. In the end, the couple decided to start a much simpler, less demanding and lower risk online business.
Business planning for existing businesses
Opening the doors for trade does not mean the end of your business planning. You will move from ‘theory’ mode to ‘operation’ mode, so you will see how it works out in comparison to your plan. For your planning to be valuable to your business ongoing, you need to use it as your roadmap as you run your business. Don’t let it gather dust on a shelf, but refer back to it and measure your progress against the targets and strategies that are described.
Set aside regular time (monthly and weekly) to take a bird’s eye view of the business and look at how your plans are working out, particularly revenue, costs, sales, web traffic and average sales. When your business is not doing what you planned, take time to find out what is happening and to really understand how your business and market operate. This ongoing process of learning is vital to continued growth and survival. Plan to do a major review every year.
On the last day of this series I will present a business planning schedule that is useful for operating businesses.