It goes without saying that unless you plan what your business is going to achieve it is difficult, if not impossible, to manage it effectively.
As the head or manager of the business, you will appreciate the need to stand back once in a while and review your business performance, and the factors affecting your business. To succeed against ever changing performance, you will need to be clear about where the business is heading as well as some way of measuring your business performance. If you don’t know where you want to go, getting there will only be a matter of luck and you probably won’t even recognize it if you do get there.
Key aspects of planning are:
- An overall aim or purpose
- A business plan
- Review of goals and purpose
- Regular review of achievements
Aim and Purpose
Your purpose or aim for the business (sometimes called a vision or mission) is not just about creating a slogan. A good purpose statement is your dream for the business, and will convey why you are in business and what you want your business to become. It articulates a credible yet ambitious future for your business which is better in some important ways to what now exists.
Why do you need a statement of purpose?
It sets your business apart from everyone else and tells your staff and customers what is different about your business.
It acts as a key motivational and confidence element to spur both you and your staff to grater heights: We know where we are going.
Make sure you discuss the aims or purpose for your business with your staff and other interested parties. To go in the same direction, everyone involved in your business must know what that direction is.
A Business Plan
To move towards your overall aim or purpose, you need a business plan. A business plan is normally a short written document that sets out your business’ goals (steps towards your overall aim) and shows how you plan to achieve your goals through specific actions.
Many businesses don’t realize that they carry out, almost on a daily basis, the majority of activities associated with business planning. The information gathered and plans made are simply not put together in what is traditionally called a business plan.
Why should you have business plan?
- Putting all the signposts in place and following them lets you see the way forward clearly and guards against detours
- You can reduce business risk
- You can focus the effort of your staff towards specific actions
- A business plan serves as part of a loan or finance application.
A good business plan needs to look to the future. One approach is to determine short and long-term goals. They are the means by which your business will achieve its overall aim.
Short-term goals are achievable in one or two years and might include: expanding your customer base, refinancing and reducing debt, bringing in a partner, relocating premises, or paying your tax bill at the end of the year.
Other goals might be longer term (i.e. three to five years). Long-term goals might include having the best reputation in your particular sector, or reaching a certain level of income in five years. Why should you look to the longer term? Because it is highly unlikely that you can achieve everything you want from your business in one or two years, and often your investment will involve premises and equipment that have a payback period over three years or more, requiring you to think and plan beyond the short term.
Your goals should be achievable, specific, measurable and carry a deadline.
Once you have your goals worked out, you need to think about specific actions to achieve these goals. This lets you know if your plan if being implemented and if your actions are effective in achieving your goals.
In addition to goals and actions, your business plan should cover:
- What your customers have told you they want
- How you keep track of the market, including competitors
- What risks you face
- What strengths your business has (your core competencies)
- What your suppliers/partners can offer
Getting all the information needed to prepare a business plan requires effective communication with everyone involved, both inside and outside your business (staff, customers, suppliers) to make sure you are all pulling in the same direction.