A useful business plan should not be a huge folder that sits on team members’ desks, gathering dust. Ideally, it should be a one-page summary visible to everyone and reviewed weekly, or at least monthly. A master copy with responsibility assignments should be in a common room, like a boardroom or staff meeting area. You and your team can see how far you’ve come and what goals you are accomplishing. Success breeds success — or weeds out failures.
Brainstorming is fine, but without forethought it can often be useless. Before holding a planning meeting, instruct each member of your team to focus as much critical thought on a specific business process as possible.
Have them talk to those already in business to identify roadblocks, examine processes, and learn all they can from trade associations and competitors’ strengths.
Ask them to identify your business’s major strengths, weaknesses, opportunities and threats (SWOT) in advance. Of course, more can be added during the meeting, but advanced planning can keep everyone on task.
2. Understand markets and cycles
Make projections about future market conditions for your sector based on realistic market factors. Even big companies can get this wrong. I had a client working for a large international company during the mining boom, and the Aussie arm carried the whole company through some bad times. Once the boom ended, Aussie sales dropped 50%, and it was as if the others had come to rely totally on that one sector’s outperformance. Rather than plan for the cycle to end, they had rested on their laurels.
The more you know about each sector of your business, the more accurately you can make intelligent projections of sales and potential profits for the first few years and market cycles.
3. Budget for more than you expect
Prepare your budget with a buffer for contingencies. Accept the fact that starting or improving your business — or new projects, expansions or retractions — will always require more funding that you’ve anticipated. Have enough working capital on hand, and secure back-up resources just in case the new business does not prosper as you had anticipated. Know the breakeven point for the business and what it takes to meet it.
4. Set your plan in motion
After you have spent time and energy on research and strategy, put your plan on paper. It should answer the following questions:
What are your core beliefs regarding your business? Can you deliver better quality or value than others? What is your reason for being? Just because dad gave it to you is not enough.
Why does your business exist? Does it exist to improve life for you, your staff, your clients or the environment?
In the medium term where do you want to be? What is your vision? Do you want to be larger, better quality, or make a bigger profit? By when?
Where do you want to be in the short term? What are the small steps that can make a difference?
How can you meet your short-term goals? Break them down in to achievable tasks. Then assign them, set time targets and record them.
Remember, your plan can and should change. Implement, support, monitor, review, adapt and grow the business plan organically as a living document rather than a one-off team-building, feel-good event.
5. Monitor your industry
Once your plan is in place, you must always monitor the market, your competition, new competition and new processes. Look for weaknesses and opportunities so you can find new customers.
6. Keep your team on track
I was always hesitant to take on professional help in business planning, but after the third folder sat gathering dust, we took on a business coach to keep us on track — and it’s working.
In addition to hiring a professional coach, we put effort into understanding the reports our MYOB accounting software could provide so we were up to date and not relying on figures that were months out of date. Having current information helped us realise the impact our plans and activities were making. We can now adjust quickly to keep the business on track according to our plan.
About the Author: Liam Shorte is Principal of Verante Financial Planning in the Hills and Hawkesbury Districts of Sydney. He has a degree in Business Studies, an Advanced Diploma in Financial Services, and is a designated SMSF Specialist Advisor™. Liam is a regular contributor on SMSF and retirement issues for Intelligent Investor Super Advisor, MYOB’s blog The Pulse, and "Your Money, Your Call" on Sky Business Channel. He is a member of the FPA and SPAA.
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