Business planning is not just for start-ups. Making business plans is an important part of running your business, setting goals and maximising results, says Russell Streeter
There are lots of myths about businesses planning: A business plan is a job that's done once and then followed to the letter; it offers concrete predictions about the future; and it has failed if you have to change course.
None of this is true.
Perhaps the biggest myth of all is that only start-ups need to create a business plan.
"No matter what stage your business is at you should review progress and look at your strategy every year," says business planning expert Russell Streeter.
Many small firms neglect business planning, he adds. "Often there is a lot of activity but not all of it is profitable. If your activity is not purposeful, you are wasting time and you could be damaging the business."
Business planning puts you back in the driving seat. If you plan your business activities in the right way you can have your best year ever. It's about regaining control. Planning puts you in charge of your business you're no longer simply reacting to events as they happen.
Business planning in times of change
Of course, events - such as Brexit - can easily spook small firms that are unsure about what the future holds. So, can you really plan ahead in times of change?
"As any established business owner will tell you, there are always times of uncertainty. And that's certainly the case right now, especially if you trade with the EU," says Streeter.
However, there are ways to plan ahead at times like this, he says. "You always need to be doing your SWOT analysis, you have to know your own market, watch what competitors are doing and keep doing your research; that way, you are more likely to see things before they happen. You can also plan for different eventualities so that no matter what happens, you know what you are planning to do about it."
Business planning fundamentals
But while it is important to look at the horizon, you also need to focus on the road ahead. Business planning is about the fundamentals.
- Is anyone interested in your proposition?
- Who are they?
- Where are they?
- How can you reach them and how can you persuade them to buy?
It's all about finding your niche and creating your unique proposition.
Street says that business owners often confuse tactics with strategy. "They embark on a new marketing activity, such as social media for example, but it is not backed up by the foundations. It's tactical without the strategic emphasis.
"You have to constantly look at what's working and what isn't. Things that you've been doing may work for a few months and then they stop working; you may need to find new ways to achieve your goals. Today we have the ability to measure almost everything we do and reviewing is vital."
For an established enterprise, business development planning is about making multiple small improvements. Russell Streeter advises businesses to focus on seven elements - what he calls the seven keys. These are:
- Lead generation - getting new customers;
- Customer conversion rate - converting interest into sales;
- Transaction value - getting customers to pay more;
- Transaction frequency - getting customers to buy more often;
- Profit margin - pushing customers up the value chain;
- Referral rate - getting more customers to spread the word about your business;
- Customer retention - maximising how long customers stay loyal.
By setting achievable targets and making positive changes in all of these areas, businesses can see a tangible benefit in terms of profits.
Planning for business growth
Focusing on these seven keys is essential if you want to grow your business. Indeed, there are real dangers if you try to grow without planning, warns Streeter. "If you expand faster than the business can keep up with, you often end up fighting fires and you risk running into cashflow problems."
But what about those business owners - and there are many - that are happy to stay the same size?
"It's impossible to stay standing still," says Streeter. "If you don't do any planning you will go backwards. You have to constantly review what you are doing and what your customers want just to stay in business. No-one can afford to neglect business planning; there are many well-known examples of businesses that have taken their eye off the ball."
Above all, a business that is constantly evolving is a healthy business says Streeter. "Don't call it business development planning, call it managing your business."