In a small business, management is deeply involved in day-to-day operations, so they have their finger on the pulse. Plus, people are very busy wearing different hats.
So why spend valuable time on business planning?
To answer this question, let’s look at the difference between 2 often-confused words: ‘strategy’ and ‘tactics’. Strategy is deciding which battles to fight. Tactics involve decisions on how to fight those battles.
Small businesses relying on just-in-time approach are only operating tactically. Produce a business plan, and you’re empowered to operate strategically.
Use these tips to simplify the business planning process and position your company for a successful 12 months.
Rely on data, not assumptions
A business plan follows a fairly formal structure (a simple Google search will bring up several templates you can use). The market analysis is essential.
However, when I look at many SME business plans, the market analysis is often the weakest, least comprehensive section. Why? Because it can be hard work tracking down and synthesising all the data, which means SMEs fall back on their assumptions as the foundation for growth. This is a fundamental mistake.
How can you plan the best strategy without knowing exactly who your customers are and what they’re looking for? And knowing what your competitors are offering and what their strengths and weaknesses are?
Base your approach and investment decisions on evidence and you’ll be in a strong position to target your ideal customer and differentiate your business.
Set SMART goals and use them to drive your strategy
It’s classic management clichí©, but it’s a useful clichí©. SMART stands for specific, measurable, achievable, realistic and time-based. In other words, don’t just say, ‘We want to get more customers.’ Say ‘We want to double website traffic from new visitors within 6 months.’
Consider the various aspects of your business – admin, production, operations, marketing, customer service – and what SMART goals you should set for each.
But remember, your business plan is a top-level document you use to allocate resource and maintain focus. Think about the ‘what’ but don’t get bogged down by the ‘how’ at this stage (strategy vs. tactics, remember). Once you have your SMART goals, bring in colleagues and suppliers to help you decide on tactics that will achieve the goals and deliver a return on investment.
Do the financials last
Don’t let the tail wag the dog. The financials section comes at the end of a business plan for good reason – it’s the culmination of the market analysis, goals and strategy.
This goes back to the SMART goal approach. Arbitrary revenue or profit targets, or ones based on wishful thinking rather than evidence, can lead to unwise decisions. So consider the market analysis and your annual objectives and then develop your financial targets from there.
Share the business plan
Your business plan isn’t just for management – your entire team needs to be on board if you’re going to achieve your potential. So don’t go through the exercise and then save it in a forgotten folder until next year.
Redact any sensitive financial data share the rest with your workforce. Get their front-line input on the tactics that will help achieve the goals, and align staff performance targets to the company objectives. This will ensure everyone is engaged and collaborating to make 2017 a success.
Monitor your progress
Monitor where you are relative to your goals. Analyse how the market is evolving. Track the effectiveness of the tactics you’re using. And use that data to refine your approach.
Then, at this time next year, you’ll be able to make informed decisions about the next 12 months, leading to a focused and sustainable growth trajectory.
- Do market research to understand your ideal customer and your competitors – don’t make business decisions based on assumptions that may be incorrect
- Set SMART goals and plan production, operations, marketing and customer service accordingly
- Do the financials last, so you end up with realistic targets
- Share your business plan so everyone on your team is on board with implementation