Most businesses don’t have a plan for future growth. In fact the 2016 BStar SME Research Report found that only 34% of business owners dedicate time to strategic and business planning.
This is ironic (and worrying) because those same business owners who were surveyed stated their top concern was ‘business planning’.
So it begs the question:
Why don’t more business owners take time to plan for future growth?
In our experience some of the reasons behind this lack of planning are that business owners:
- Don’t have time to think about the future
- Don’t know what to think about
- Don’t know who to speak to about planning
- Don’t believe that a having a plan will actually make any difference to what happens
- Don’t like the planning process and feel it is all too theoretical and ‘text book-ish’
But planning for your business growth doesn’t need to be dull, boring and difficult.
And business planning isn’t just about financial forecasts. It should involve the breadth of your business operations including your team.
How to make business planning really work
- Don’t rely on a detailed document that sits on a shelf (or in your computer) – your improvement plan is what you and your team must be living every day, working to a series of predefined and practical actions.
- Don’t leave it in the hands of your accountant to tell you what has happened last quarter or last month (often that’s too late) – you need to have direct control and access to completely up-to-date data on specific aspects of your business performance on a daily or weekly basis.
- Don’t try and do it all on your own (which just adds to the pressure on you) – the best way forward is to involve your team, get them more engaged, and give them the guidance and space to implement the improvements in their day-to-day work.
Let’s explore each of those three steps.
1. Don’t rely on a detailed document that sits on a shelf (or in your computer)
In days gone by the outcome of the business planning process was to create a comprehensive document that mapped out every aspect of your business many years into the future. The big assumption was that once you had such a thorough planning document it would be regularly used as a guide to running the business.
This style of planning was often driven by what larger (and supposedly successful) businesses did. It was also influenced by the requirements of banks and financiers who felt more comfortable if a business had a “solid plan”.
Another contributing factor was (and still is in many places) the approach taught at university business schools that focused on the long, verbose and academically-oriented business plan document. That was a great approach for students to show they could address all the academic theories, but not so much use for real-life business owners and managers.
Then came the internet. During the early 2000’s the business landscape started changing. Things moved more quickly. Competitors started to spring up without notice. New businesses got funding from investors even though they weren’t profitable, and became major players in the market within a few years. And customers began to expect more, now. This was new territory for business planning.
That’s why you can’t rely on a business planning document that sits on the shelf because it is too removed from actual business operations and the current competitive landscape.
You need a planning method that you can use every day, week and month to move your business forward such as a one-page plan and digital dashboard that monitors selected KPI’s (Key Performance Indicators) and progress with scheduled tasks/projects. In fact it’s best to have a rolling plan that is part of a continual planning process.
An important component of modern business management is to have your key business performance indicators visible whenever you need them – real-time business data – and a digital dashboard is an easy-to-understand way to display the results.
Understanding the critical drivers of performance in your business and being able to closely monitor them enables you to make smarter business decisions that will drive performance improvement.
2. Don’t leave it in the hands of your accountant to tell you what has happened last quarter or last month (often that’s too late)
By the nature of their work most accountants are focused on the past. If you’re lucky your accountant will finalise your last month’s accounts and give you a report within 30-60 days. However in many cases the accountant only does quarterly GST and tax preparation and end-of-year calculations for tax purposes.
That’s just not good enough for running a modern business! You can’t expect to manage the business efficiently if you don’t have up-to-date data on your performance – both for financial and non-financial criteria.
Research from within the accounting industry in Australia shows that over 80% of accountants aren’t comfortable giving business advice. So most don’t do it. Which helps to explain why most accountants get consumed by doing detailed historical analysis rather than providing helpful insights on your financial and business performance. The fact is, their clients are missing out on vital financial data that could change the way they manage their business. Does that sound like the position you are in?
This is a major reason why we recommend clients move to a cloud accounting system if they haven’t already done so. By using modern accounting tools we can give you financial insights that make a tangible difference. And our special method of incorporating non-financial data means that we can look at your whole business in a snapshot, not just your finances.
For example, if you’re about to quote on a large project (or are considering increasing your production capacity) how do you calculate the impact it will have on your business over the next 6 or 12 months? How do you accurately measure the cash flow, profitability and staffing impact of those decisions?
From our deep understanding of business performance and financial management we have developed a system that can quickly give you reliable answers to the questions that drive your business growth. There’s no need to wait for weeks and pay a hefty fee to your accountant.
3. Don’t try and do it all on your own (which just adds to the pressure on you)
Most business owners are quite independent. In the beginning that can be a positive trait, helping to get a new business up and running, and to persevere through the inevitable growing pains.
However, for a business to really prosper the owner must create a team that can help them reach their goals.
Developing a highly-engaged, high-performance team is a challenge. There is no doubt about that.
Just do an online search for “employee engagement in Australia” and you will find many studies that highlight the fact that only around 25-30% of staff are actually engaged with what they do, with another 25% actually disengaged. The rest just do enough to get through each work day. The new term for this type of unproductiveness is “Presenteeism”, when people are present at work but not really being productive.
But there are ways to go about developing your team that have been proven to be successful. It doesn’t need to be a risky proposition for your business.
Some of the factors that contribute towards positive employee engagement have been identified as:
- Employees knowing what their purpose is within the business and how their role helps the business achieve its goals
- Feeling valued by the organisation
- Employees understanding how their success will be measured
- A feeling of inclusion and that employees can share their opinions at work
- Regular learning and development opportunities
Management strategies have evolved to reflect changes in community expectations. It is no longer effective to use the ‘Command and Control’ style of dictatorial management that was accepted a few decades ago. To get the best from today’s employees a more inclusive approach is required.
It’s important to understand that being inclusive doesn’t mean you can’t have goals and accountability. In fact, employees want to know how well they are performing. They want to have an impact, make a difference, and be valued. You can help them do that.
As the business leader the challenge is to develop a structure around how you build your team. You need to develop an appropriate culture and encourage high performance by creating an environment that gives your team the guidance on what is important, the support to help them improve, and the space to surprise you with their achievements.
You must be living your business plan
Rather than the out-dated 30-page business plan approach to management, we believe that you actually live your business plan. Sure, you certainly need to document business processes, policies, and vision etc, but the action really happens on a day-to-day basis. You must be able to monitor your progress by evaluating KPI’s that relate to the goals of your business.
That’s why we use our 5P’s model to cover all aspects of your business that will contribute to getting your business to where it needs to be. Then we work with you to create and implement simple actionable strategies that are tailored to reaching your goals. And those activities are supported by regularly monitoring progress through your personalised performance dashboard that makes it easy to see exactly what is happening in your business.
Business planning shouldn’t be boring or seen as irrelevant. There is a more practical and effective way to create your path to success. The future of your business relies upon it.
If you’re not sure where to start with the whole idea of business planning you are welcome to request a complimentary meeting (this meeting is not a sales spiel in disguise). During our meeting we’ll discuss your options and answer any questions you have about planning for your business success.
For expert help to grow your business visit www.pathfinderadvisors.com.au
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