Business planning
is all about knowing what you want, and setting out how you
will achieve your goals. Once you have agreed the mission
and vision, you need to consider what the company's goals
should be, and hi these are to be achieved - what is the action
plan? This is the process of business planning. The plan will
set out where you are, explain where you are going and how
you intend getting there. It enables y to make good use of
your resources (financial and otherwise) and of the opportunities
you have. It is fundamental to business success.
Most businesses
start out with a plan - it is something to show the bank manager
and helps direct actions durin the early life of the enterprise.
But if it is so important, why doesn't everyone continue to
do it?
The major reason
is lack of time. Managers are always drawn towards tackling
the day to day stuff - what to do about this customer's demands,
that person's grievance, and guess what - the computer network's
down again...and so on. It takes a real effort to budget your
time so that you allow yourself space to prepare for tomorrow.
And it's all too easy to let the urgent tasks of today crowd
out those planning efforts.
Taking time to think
about the future is not an option, it's essential. Managers
must allow themselves thinking time and should get together
and talk over the fast moving marketplace, technological changes
in their industry, the threat from new start-ups or innovations
by competitors, and to consider how the business should react.
Better still, they should be devising original initiatives
so that they are the leaders and innovators and not part of
the 'me too' brigade.
Preparing or revising
a written plan gives an opportunity for all of these issues
to be systematically considered. And remember, we are not
aiming at a Soviet-era five year plan to be followed come
what may. Simply a chance to review what we know now about
our industry and devise the best way for the company to take
advantage of current and expected changes.
Developing a plan
takes some effort: is it worth it?
Consider how it
can be used. Aside from the benefits that flow from the thought
that goes into its preparation, you will use it in managing
and directing the business; you will want to show it to your
bank manager and other investors and it will be of value when
you are recruiting new staff. You should share it with your
present employees and should ideally involve them in its preparation:
they each have a role to play in ensuring its success. And
you may want to discuss aspects of it with your customers
and suppliers.
What should be included
in the plan? There can be no universal format, but there are
a number of templates available (we have some - contact dpowell@rileycom.co.uk
if you would like one). There's a range of excellent books
on business planning available (try your local bookshop or
a search on www.amazon.co.uk) but there can be great value
in having outside help with the planning process - this is
a service we offer to our customers, but when it comes to
planning our own business we always seek outside help as we
find that adds valuable focus to the process.
A key part of the
benefit of planning comes with preparing financial projections.
As always, as you work on these remember that sales are good,
profit is important but cash flow is a matter of life and
death for any enterprise. We will look at this in the third
part of this series.
