When seeking funding, banks or investors will want to see your business plan and believe that it’s built for success (thus, reducing their risk). For this alone, it’s good to come prepared. But getting your financials in shape is only the first benefit...
A business plan will become your roadmap for achieving goals and your greater vision. By following it you can keep track of what’s important and make smarter decisions that lead to constructive action.
What’s more, a business plan will bring your team together and help them get on the same page. So why not get them involved from the beginning? Having your team participate in a business planning session will increase their moral buy-in and create accountability for results.
And for those teams of one, a business plan will help organise your thoughts and create focus. Ready to get started?
Forget writing up a 10-20 page document that details everything about your business. It will look great, but will you ever read it again?
One page is all you need.
One page is easy to modify as your environment (market, financial, competition, etc.) changes. It’s easy to stick to a wall and refer to. And it’s easy to communicate with your team. Now, here’s what you need on that page.
What will your business look like in 5 years? How do you imagine your life/workload balance? Do you want to be the leader in your marketplace? Are you building something to sell or as a retirement income?
You may have a simple vision or a grandiose one. Your vision may change over time too. It’s not fixed in concrete, but rather gives you something to shoot for.
Once you have your vision you can set goals to get there. These need to be SMART:
Running a SWOT analysis is important for crafting a bespoke and effective action plan. The planning technique will have you examine four main aspects of your business:
What to do with your analysis? Put it into action! Use strengths to your advantage, make moves on opportunities, and ensure weaknesses/threats are addressed - not ignored.
What problem are you solving? What is the value to the customer? Why will they buy from you?
Answering these questions will shape your marketing decisions, customer interactions, and staff education.
Ultimately, you need to have a proposition that is unique, valuable to the customer, and will make them want to buy from you. Will you guarantee that they will get that value?
Your core values will give potential clients a feel of your business persona and how you fit with them. We use ours to guide how we deal with customers, staff behaviour, and to measure that behaviour.
Key Performance Indicators are simply indicators for measuring business performance. Normally you will have financial ones such as revenue, profitability, expenses, and positive cashflow. And you may even measure the direct cost percentage against industry standards.
Non-financial indicators, however, differ greatly between businesses. They could focus on social media audience, job profitability, response times for customer support, or upselling rate.
When devising KPIs, think about what’s important for you to keep on top of things. Typically you’ll want 4-5 main indicators with additional KPIs for each specific area of your business.
This requires building a budget, cash flow forecasting, and setting measurable targets for each week/month/quarter/year depending on what works for your business.
What actions must the business take to achieve its goals and vision? What actions must we take to build on strengths, take advantage of opportunities, and resolve weaknesses/threats?
The best way to create your action plan is to set high-level actions and then devise what you will do in the next month/quarter to complete the action or to progress for longer-term goals.
Note: make sure every action has an owner and a deadline. This gives everyone focus and accountability.
You may find your action plan requires reviewing your systems and processes to enable collecting data for measuring.
Your financial system (we recommend Xero) should deliver all key financial measurements which may be fed by other systems such as inventory, e-commerce, project management, or job management.
Linking these and getting your processes efficient is critical to making this job easier and minimising the impact on staff. You don’t want to spend hours collecting information to tell you how many billable hours each staff member has performed!
It’s inevitable that your situation will change which is why you need to make your plan adaptable...
How will you use this plan and modify it as business needs and your environment changes? When will you formally review the plan? Monthly, quarterly, annually?
I don’t know many people (none) these days who do it annually. Most businesses are reviewing their plans monthly as the environment is so changeable and quick reactions are essential for keeping ahead of the game. An added benefit of setting regular review points is that it reduces your brain drain by knowing new issues are managed in a controlled way.
Finally, keeping your plan to one page makes it easy to sit down, run through what has changed, and modify your action plan accordingly.