Blog posts tagged strategy

Why every small business needs a plan

A business plan is the equivalent of a roadmap for businesses. It is a document that provides vision, goals and benchmarking. It creates momentum and also provides an opportunity for a reality check – what worked last year, where the gaps are and what next year is going to look like.

Many start-ups fail because they lack a map to guide them through their new business venture. A research study conducted by simplybusiness.co.uk with 400 British entrepreneurs shows that 54% have no written business plan and more than two-thirds make decisions based on gut instinct alone. According to the Federation of Small Businesses: “Britain’s best performing small companies are being hampered by a failure of the planning system to allow them to expand”.

Writing and maintaining a regularly updated plan can have a profound impact on business success, helping to demonstrate the viability and value of a business to potential investors and illustrating how investment will be used to grow sales and profit. It also provides a useful reference point and motivational tool for the business owner.

In terms of content, a plan should document objectives and strategy across three key business areas; marketing, operations and finance. These aims should be quantifiable and split between short term (next 12 months) and longer term (next three years). Other sections can include:

1. A description of products and services – detailing the main products and services the business provides/proposes to provide in time.
2. Market research – results of any research conducted to validate the business concept.
3. SWOT (strengths, weaknesses, opportunities and threats) analysis – illustrating the position of the business within the market in relation to competitors and identifying areas of opportunity.

In summary, a business plan helps to focus clear roles and goals and motivates business success. As Matthew Brearley, former board director of Vodafone, said: “With a great plan you can engage others with a sense of direction and purpose, align all activities and review progress." 

John Davis is managing director of Business Centric Services Group.

Plan properly to avoid pitfalls and potholes

Would you ever consider setting off on a long, unfamiliar journey without your SatNav or road map and only a dribble of fuel in your tank? 

You might make good progress for a while, but before too long the roads will narrow, your fuel gauge will hit zero and your mobile will show no signal. HELP! Oh, if only you’d bothered to plan ahead!

Funnily enough, business planning is just like going on a journey. You know your destination, that fine place called Success. But knowing where you want to end up isn’t enough because you need to plan your route, too. And you must be vigilant, watch out for obstacles and steer clear of roadworks – not to mention bad weather and mile-long traffic jams.

If you’re serious about starting a business, you need to be serious about planning. You must focus on your ultimate goal – fabulous success – and determine your route towards it. This ranges from the grand plan right down to what might seem like insignificant details. If you plan for all eventualities – however small – you’ll know exactly how to deal with them when they, inevitably, crop up.

I took this approach in starting and running Diva Cosmetics and it quickly brought me success and wealth. Now, having moved on, I feel that passing on my knowledge called Seven Business Disciplines to budding entrepreneurs like you will bring you success. If strategic planning (my first discipline) is about visualising your destination, then business planning (discipline two) is how to plan your route to get there.

Let’s look at planning basics. What is a business plan? In a printed form, it’s a surprisingly slim document. Only 25 or 30 pages with a front cover carrying the business name and logo. Inside, the business idea is thoroughly investigated and includes supporting facts, figures and research. The writing style is easily readable within bite-sized paragraphs and technical jargon and waffle are banned. Titles and headings are concise with the overall structure being simple, focussed and well-organised and there are, of course, no errors (whether spellings, grammar or figures).

If the thought of sorting out your business planning sounds daunting, long-drawn out and too demanding of your scarce time, you should take comfort in the fact that this initial burst of effort will pay real dividends. This one document – and all the research that you’ll need to carry out for it – will help you decide whether or not the idea will fly. It will signal your chances of success and how to go about achieving it.

What are the key elements you need to include?

1. The Business Background
2. The Product/Service
3. The Market
4. Marketing/Sales Strategy
5. Regulatory
6. Risks
7. Financials

Once you’ve dealt with these elements you’ll be in a position to write an executive summary, a two-page summing up of your start-up. It should be convincing enough to excite potential investors, as well as boost your own confidence. Although this is written last, your summary should be at the front of the plan, where it needs to pack a powerfully persuasive punch.

When you’ve finished that first draft, you need to step away from the process. Return to it a couple of weeks later and read it several times. Make notes, gather more data and rework parts that don’t read well. Double check your facts, especially your figures, because they need to stack up and be impressive. Make sure the tone of the document shouts the right message. Does it ignite your passion? If not, revisit the words you’ve used and choose more dynamic, proactive, positive language.

Ask a business colleague, mentor or supporter to review it. This must be someone you trust, who has good judgement, knows you professionally and has an insight into your industry. Ask them to be honest and use their comments to hone what you’ve already done. After all that hard work, don’t allow it to languish on your desk. Instead, actively use your plan for reference, it will help you make good business decisions, take fewer risks and keep customers in the front of your mind.

At Diva Cosmetics, right from start-up, I updated my business plan regularly and used it to keep ahead of the competition. By focussing on the business, I was able to make decisions about staff requirements, how to expand the team and in what areas. I was able to review costs, check suppliers and understand the implications on the business should anything go wrong. I would undertake a full competitive review each year and adapt the marketing strategy on the basis of it.

My advice to you is to make your business plan a “living” document that evolves and adapts as you progress on your journey.  Remember that planning is a necessity and if you want success you can’t afford to ignore it. So, I hope your journey into business is a smooth one – no collapsed drains or muddy old tractors up ahead for you – and do make sure you check your fuel gauge!

Emma Wimhurst is a motivational business speaker, mentor and author

Managing my business finances

Entrepreneurship is all about making things happen and turning ideas into a profitable business. However, it’s impossible to have all the skills and attributes in one single individual- no matter how motivated or how working one can be, to turn an idea into a long-term profitable proposition requires a team of people who complement each other.

I realised a while ago that I could do with bringing into the team someone who has the skill sets to help me really get the numbers behind the forecasts right, and to help me negotiate with banks, funders and other possible stake holders. Someone who can help me turn the forecasts into a reality; in other words, an experienced, trustworthy financial director.

It was time for me to call in the experts. I came across an organisation which offers the services of a “virtual” or part-time FD who will work with a company for a minimum of 1-2 days per month and helps with all the financial strategic stuff. I met with the regional director of that organisation and my FD-to-be if we will take things further. It was a pleasant, purposeful meeting, and I felt I could trust the guy. They call it the “barbecue test”, in other words, would you invite the person to a barbecue. We will go to the next step and meet for a full day to discuss the business past, present, future and financial strategy.

I think this model will be the affordable way to bring an experienced helping hand to complement my winning team and turn my proposition into a reality.

You can find out more about Marcela on the new interactive business website www.inafishbowl.com