The Business Planning Formula

The Business Planning Formula

Indigenous businesses (or indeed Indigenous not-for-profit community-controlled organisations) must prepare business plans.

This is not because they are Indigenous but because every organisation that wishes to grow must be in control of where it wants to go and how it gets there!

It's common sense - would you go on a holiday without a plan in mind? You don't just jump in the car and decide to go - you booked some time off ("when"), you decided what you wanted to do on holiday ("what") which helped you decide where to go to do it ("where") and you decided who would come ("who").

Yet, why would you start your family business or social venture without a plan?

Many who realise this will think that they don't know where to start so they hire a "professional" business plan writer.

Well, that's the old way.

In the old way, you hire a consultant to write your business plan.

He sits with you for several hours to work out what your business is all about.

Then he organises several meetings with you over several weeks so that he can spend each meeting on one aspect of your business or organisation.

He will ask you detailed questions about how you do things, what you do them for, and ask you what you think you need to do to build your business.

He will spend time between each meeting (he will call them "workshops" so that they sound business-like and exciting) thinking about what you have told him because he needs time to assimilate the information you gave him to understand you and your business.

In the end, he will go away and write up a big document and send that to you with his equally big bill.

In this old way, you will receive the document and read it with excitement, you will even agree with most if not all of it because it reflects your thinking (after all it is all your thinking as discussed with him).

You will resolve to follow the plan.

And then, in the old way, you will start to get busy, you will get "caught up" and in very quick time, you will have forgotten what to do next and be caught up in all the tactical things you have to do every day.

Well, that is the old way, because I have a secret for you.

All the consultant did was to follow a formula, and he asked you his standard questions in accordance with that formula, and then he organised your thoughts according to the formula.

So, in a new way, in this modern world of digital technology, what if you knew the steps in that age-old business-school formula and you were guided along with the steps and did it yourself?

In this new way, all the questions you need to think about are set up for you and you can work to put your own ideas and your own knowledge of how your organisation works, and where you want to end up and write your own business plan.

It may not be worded like a literary novel but why should it? You only need to know what are the steps - in the right order- to take in order to grow your business or organisation the way you want to.

With the formula, you can do this yourself, at a fraction of the cost and the time.

In this new way, you have more chance of implementing your plan because you have worked on its every detail and not just sat there answering someone's questions.

You will know, without having to read it every few weeks what it is you need to do, in what order and when.

There are only 5 steps you need to take to write your business plan: -

  1. Get ready, make decisions about what you are planning and who should be involved;
  2. Describe where you want to go, in sufficient detail so that there is no confusion if you come to a cross-road and have to make a decision between multiple choices;
  3. Understand where you are now so that you can objectively see where you are weak and where you can use existing strengths to build your business;
  4. Bridge the gap between where you are and where you want to go by creating strategies to go from A to B; and
  5. Create systems to keep you accountable during your implementation of the plan.

Now let me go through each step. I will focus on a business plan for a business or social venture but the principles also apply to community organisations.

First, get yourself or your team ready.

Make a decision about what the plan is for - is it to guide you in the building of your business? Is it to provide your team with a high-level strategy so that they can do the detailed work in the right way? Is it to attract banks or investors?

Decide who should be involved. Who will be part of the planning team either as stakeholders or as management with knowledge of how the business works?

Decide what information you will need and gather it together. You may need financial reports, product brochures, customer lists, and so on.

Second, describe where you want your business to go.

You started your business with a purpose. Rekindle that purpose if it has not been burning bright lately because you have been "caught up".

Some people started their business to be independent and "be their own boss"; some wanted to invent something and leave a legacy; others wanted to build a better life for themselves and their loved ones.

Whatever your purpose was when you started your business is important because it is what motivates you to look beyond what you are caught up in. It is also important because it will help you to describe the type of business you want to build and be proud of.

Spend some time making sure you describe your ideal business in the future, and how it fulfils your purpose.

What type of customers will it serve and how does it do it? What will those customers say about dealing with your business, how do they see it? What does it do for them and how does it satisfy their needs?

What type of products and services will your business of the future sell and how do you get them out to market? Why are your products or services better than others, what makes them attractive and unique and why do your customers want them?

How will you sell your products and services? How are they made or packaged? Who interacts with customers about them - at the front end, and in the back end. How is that interaction done?

Who works for your business? What type of people are they? What skills and experience do they have? How do they like working at your business and why? What are their financial and non-financial rewards? What do they do and how do they do it?

What works well in your business? How do you make sure that the way you and your people work produces the consistency of quality that your customers like? Is it all about systems? What kind of training is required, what quality control?

How big is your business? Are there more than one store and what do they look like physically? Where are they situated and how do they accommodate people and customers?

How much in sales will you be making? What is your profit margin? What are your costs and how do you monitor them?

And finally, how do you fit into the future business? What are your own financial and non-financial rewards? What do you like about working there? How is your non-business life affected by the business, how does your family-life fit into the picture?

Once you are very clear about where you want your business to go, you can summarise this into a short description of a vision that is sufficient for you to remember all the emotion that achieving it means to you. This summary vision can be as short or as long as you like - there is no right or wrong way.

Having done this, you should be starting to get an idea of what you might need to work on.

For example, if you described a business with expert staff who are able to help customers on their technical queries, then you should be starting to get an idea of the type of people you need to hire, of what their qualifications should be, and of what training you may need to prepare to keep staff up to date.

Secondly, having described what you want in some detail, this will help you every time you have a decision to make.

"Which of the two well-qualified people should I hire?" The answer will be the person whom you think can help you build the business you described.

"Should I reduce prices just to get more sales?" The answer will lie in how you described your customers and what they appreciated about your business.

The third step is to make sure you understand where you are now.

Setting aside your description of your ideal business in the future, focus on honestly describing what your business is like right now.

You will need to know exactly where you are in relation to your customers, your products, your people, your operations or back-room systems, your efficiency and your finances.

You know your business best, so brainstorm each aspect of your business by using the SWOT Analysis tool.

SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

Take one aspect of your business at a time (as listed above, and add your own issue if you are concerned about a particular aspect) and brainstorm what are the strengths, weaknesses, opportunities and threats of that aspect of your business as it stands.

Just be conscious that strengths and weaknesses are internal attributes that you have some control over to change. Opportunities and threats are external factors that may affect your business and while you might be able to take advantage of them or protect yourself against their happening to you, whether they happen or not is beyond your control.

For example, the skill of staff you hire is within your control. The lack of availability of new staff because of a mining boom elsewhere is outside of your control.

As you list all the strengths, weaknesses, opportunities and threats that apply, also ask yourself which are the significant SWOT's that will have a significant impact on your achieving your vision. You can ignore those that will not have a significant impact and focusing on those that will ask yourself what you may be able to do to use a particular strength, eliminate a particular weakness, take advantage of an opportunity or mitigate against a threat.

As with the first step, when you are summarising your thoughts about how your business works right now, you will be seeing things that you can do, and hopefully connecting them with things you want to do that you saw after the first step.

If you need to hire an expert team in order to achieve your vision, but at the moment they are only semi-trained because of your weakness that you can't afford the rates the most expert people want, then you need some strategy to build up what you want from what you have.

Which brings us to the fourth step which is to bridge the gap by creating strategies to implement.

Bridging the gap needs you to look at your vision and how it affects each aspect of your business, and comparing it to how well you are doing within that aspect now. This defines the gap, for example, the need for expert staff against the ability to pay for them.

Once you have identified the gaps, brainstorm the strategies you can implement to bridge the gaps. Perhaps a strategy for the above is to recruit the best you can while providing them with both monetary and non-monetary benefits they cannot get elsewhere and set up an internal training program to build up their expertise over time.

Remember, if you have various ideas on how to bridge a gap, that's where your critical review of your vision comes in - "which option will get me to my vision faster and most sustainably?"

After you have created your strategies to bridge the gap from where you are now to where you want to be, it is important to allocate them as long-term and short-term strategies. With the long-term strategies, you can make them more accessible and real by dividing them into short-term and long-term milestones. For example, setting up your internal training program may be a long-term strategy, but you can identify that an early milestone is to write a series of manuals and procedures that the current staff can follow.

Having done this you can make your strategies actionable by taking each short-term strategy and milestone in turn and writing a step-by-step Action Plan, laying out what has to be done and allocating deadlines and resources to do it.

Having done that you should take the most important fifth step, which is to create systems to keep you accountable as you implement the plan.

You can do this in many ways and what systems you choose will depend on your personality and how you keep yourself motivated.

From experience, I would suggest that everyone should at least create diarised dates when certain things happen, whether they are fixed dates to spend time reviewing progress and making changes to the plan, or whether they are dates of critical deadlines. Envisioning where you want to go is still a dream, but as soon as you put dates in your diary, the steps to take become real.

Other systems you can look at include systems of reward and punishment. Create events like dinner for you and your spouse at your favourite establishment when you complete milestone tasks, and create mea culpa events like publicising on Facebook that you missed an important deadline and committing to do it by a new date. Do this honestly and you will be surprised at what you will do to avoid having to do it again!

Other ideas that people have given me include wallcharts and Post-It notes as reminders to keep you up to track, staff meetings to discuss progress and brainstorm getting back on track, use of apps to send you annoying reminders - whatever works for you but avoid what could be a turnoff for you!

Well, that's it.

Let me repeat my message to you.

If you started with a dream but find you are caught up in the day-to-day and cannot push your business to the next breakthrough, you need a plan that sets out what you have to do, when, and in what order.

You can write your own business plan, just follow the formula and use your own intimate knowledge of your business and what you want out of life.

It need not be an epic tome - a few dot-points is enough if they contain what you need to remember to drive you forward.

Make yourself accountable.

If you need some help to write your own business plan in an efficient way, through my online business brand called Teik Oh Dot Com, I do offer a no-obligations free 4-part video training which you can sign up for here.

My online brand Teik Oh Dot Com also provides an online training and workshop program to walk you through the preparation of your business plan, called Your One Day Business Plan.

"Your One Day Business Plan" gives you the formula steps, worksheets to complete in the order of the four steps, training on each step as you need it, and audio guidance prompting you to complete the steps as if you were in a workshop with me. And, you can complete your business plan in just one day.

If you want to go straight to preparing your business plan with the online assisted guidance of the program, learn more about it here.

See you there!



Cover photo by Felipe Furtado on Unsplash

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