It’s the start of the new year for business, the start of a new tax year, but even more important, the start of a new business year.
While it is important to “re-set” your tax systems and tax plans for the year ahead, consider why you pay taxes. Taxes are paid on profits, and the ultimate tax plan is to simply make losses – however, not a great plan for your business and personal wealth! So, while we would all like to keep the Taxman at bay, ultimately the secret of your success is to make your business grow.
It is an old adage: “businesses don’t plan to fail, they fail to plan”. Yet time and time again surveys show that fewer than 3 to 7% of small and medium businesses that fail have ever done any business planning.
The start of a new business year is the best time to start a business plan. You can “close the books” and think about new initiatives and ideas about your business. It is the business equivalent of making your New Year resolutions, but with a better process that can lead to follow-through and organized action.
A Business Plan is simply a detailed plan of listed actions for your business.
It takes your strategic direction, your overall organisational goals and strategies and lays out the tactics of how to achieve those strategies and thus the goals. It is a document that ensures everyone involved in your organisation - owners, workers, suppliers, advisers - are all stepping in the same direction.
In most cases, you will need help to prepare your Business Plan from an experienced business adviser. This is because an experienced adviser will have a process that is tried and tested to walk you through a series of analytical and dispassionate steps to examine your business and desired direction, and translate it into plans. However, your Business Plan should be your document. It should not be prepared for you, it should be prepared with you.
Your strategic direction is what you are ultimately trying to achieve, your Vision for the business. From this will flow your Organisational Goals and Strategies, and from these will flow the Operational Plans for your business.
There are 5 Operational Plans:-
· The Marketing Operational Plan
· The Production Operational Plan
· The Operations Operational Plan
· The Human Resources Operational Plan
· The Finance Operational Plan
Operational Plans are the detailed steps you will take in each operational area of your business in order to achieve your stated goals. That is why it is important to continuously align the detailed steps with the expected results to see if each part of your business will help you get to the Big Picture.
The Marketing Plan will look at your markets and customers, identify who you want and what you are actually selling to them, and what you need to do to get them.
The Production Plan will look at the way you “produce” - whether this is manufacturing, retailing or providing a service, there are processes your coal-face staff follow.
Your Operations Plan looks at your systems and infrastructure, including support systems such as business advisers, accountants, lawyers.
what skills and abilities you actually need, your organisation chart, accountability and performance measures.
Your Financial Plan pulls all the Operational Plans together and quantifies them. It looks at forecasts and cashflows, capital requirements and financial measurements.
It is worth stating again that a successful plan aligns all the detailed action towards the strategic direction. Say for example you plan for and prepare your staff performance measures piece-meal without consideration of the strategic direction. Your performance measures might reward the number of hours the staff charge to their timesheets. However how will this affect your strategic direction that may rely on fast outcomes? The staff are being rewarded for working long hours without measurement against outcome speed. Hence once the operational plans are written they need to be reviewed against the strategic direction.
Ultimately, what is a Business Plan but a written document? In order to make it work you need action. The Business Plan process must include an Action Planning process where each Operational Plan, each step and decision in an Operational Plan, has a series of Action Plans embedded. These Action Plans serve as reminders of the day to day actions required to implement the Business Plan. They highlight negotiated responsibilities, set out what is expected when the action is complete so that everyone can measure success, and they nominate agreed timelines for completion. Where necessary, additional resources are detailed so that people are not set up to fail.
After the intensity of the work required to prepare the Business Plan, despite the best intentions, you will go “back to work” where you will get caught up in the everyday problems of the business. In that situation it is not hard to “forget” what you are supposed to be doing according to the Business Plan you so earnestly believed in just weeks ago. This is where the secret of following-through needs to be implemented and that secret is a Monitoring & Evaluation system built around teamwork and peer reviews. It must not be a punitive system but a system of support and team responsibility.