Today’s business climate is tough, competitive and fickle. Post GFC, SMEs have had to work harder than even before to stay ahead of the pack and survive the turbulence.
Prompting businesses to take a closer look at overall business performance, the GFC (and an increasingly globalised economy) has forced many SME owners and managers to review and rework their financing, financial management and marketing. No longer driven by local supply and demand, today’s economy takes no prisoners and has no leniency for the fickle.
In the past, standout businesses were distinguished by acts of ongoing self improvement and evolution. These great businesses reviewed, identified and remedied ‘gaps’ in their business on a daily basis. Assessing and measuring values, benefits and offerings, these great businesses followed a formula that formed part of their day-to-day business mantra. Today, this feature is no longer an attribute reserved for the great; it’s a feature that has become a ‘do or die’ element of every business.
Unlike their big business counterparts, SMEs cannot afford (and don’t want to afford), full-time staff and the headaches that can come with them. Notwithstanding this, recent changes to the economy and global marketplace have meant that now more than ever, specialist areas such as finance and marketing have become critical to longevity, sustainability and ongoing business success.
So how can SMEs survive without tripling their costs? The answer lies in projection planning and strategic development. Enter the new and improved business plan.
When done right, a business plan can be the best thing you ever did for your business. Providing a template for the future, a business plan should capture your short and long-term goals, where you want to get to by when, and most importantly, how you will get there. A business plan is an essential element for any business, but particularly SME businesses. With fewer staff, less checks and balances and more often than not, a passionate owner and/or investor working in the business, it is easy to lose sight of what the business originally set out to do and for your vision to become clouded by the activities of your competitors, changes in the marketplace and fluctuations in supply and demand.
Where are you going and why?
Typically flexible, adaptable and responsive, SMEs are rarely held back by red tape. While appealing on the whole, this feature can sometimes be an SME’s worst enemy. The capability to change direction quickly and make snap decisions can be of great value but sometimes, without an overarching rationale or strategy in place, these decisions can sound the death knoll. Understanding the purpose of your business and knowing where you are going and why will help protect the business against deviation, overreaction and occasionally, unnecessary panic.
As a business outgrows its SME status, it will typically take on experts to work on the business. Notwithstanding this, many business owners and managers enjoy the fluidity and flexibility only a true SME can offer, and do not want to outgrow their SME status. This leaves SME owners and managers walking the tightrope that is in the business versus on the business, with the in the business typically taking precedence over the on (usually at a high cost to the business itself). In consideration of this, it is imperative that businesses develop a truly individual, meaningful business plan that reduces wasted time (and money), keeps the business (and its leaders) focused and provides a balance between the in and on components.
Have a strategic plan
Irrespective of the size of your business, having a strategic plan that clearly charters where you are going, why you are going there and what you are trying to achieve, is essential to staying on track. All too often, businesses fail because they deviate from their core competencies and focus on areas of growth that are well outside the purpose of the business. This is not to say that businesses shouldn’t change with the times and keep up with market demand; on the contrary. Business evolution has never been so important. Just make sure that the evolution you adopt is in line with your business’ overall purpose, is manageable from an operations perspective and is profitable.
A good business plan should start with a clear snapshot of who you are, what you offer (products/services), why the business exists (purpose) and what you want to achieve and by when. Covering typical areas of finance, operations, IT, HR and marketing, a good business plan will not only identify where you sit in the marketplace compared to your competitors (SWOT Analysis), it will also identify the tactics needed to achieve growth and concrete objectives.
Business plans aren’t easy but they aren’t rocket science either. The average business plan contains general, non-value platitudes about the business and motherhood statements that usually result in the document being banished to the bottom of a filing cabinet. Such documents give business plans a bad wrap. Each and every day, documents masquerading as business plans are produced, containing little more than good intentions. To be of real help, business owners and managers need to look long and hard at the purpose of their business and understand the wants, needs and behaviours of their target market. A true business plan should identify unique selling points and never regurgitate facts that are taken as a given, such as experience or quality; it should articulate unique statements that tell a story.
How to write a good plan
So how do you write an effective, useful business plan? The answer is fairly simple. Make sure your business plan captures, real-time, meaningful objectives and doesn’t omit the all important, critical last step: execution. To a business plan, execution is the difference between being an expensive, well-meaning plan and an informative blueprint for the future. To ensure your business plan is great and not just good, consider what you need to do to achieve your goals and objectives, outline your strategies and then take it a step further. Detail the tools you will need to execute those strategies and set a timeline for delivery.
A great business plan should be something you want to refer to on a daily or weekly basis. For example, having a clearly defined objective for the business keeps you anchored to your core competency and purpose; revisit this purpose each and every day if necessary and use it to stay focused and on track. An overarching guide, your business plan should enable you to anticipate and manage future opportunities and threats to your business, improve on strengths and overcome weaknesses.
Business plan or not, know the answers to the following questions: what are the unique selling points of my business? Why should a consumer choose my product/service over others? What do I offer the marketplace? Who am I selling to and why? How am I selling? What are my short and long term goals and how will I grow my operations, finance, marketing and administrative functions to meet the demands of the business?
For those of you out there with a dusty old document sitting in a filing cabinet or with no business plan at all, proceed with caution. By all means, do away with the vision plans and mission statements, but always know who you are (corporate identity), what you offer (service/product offering), how you offer it (mode of delivery) and why your offer is better than the next (unique selling proposition). Knowing the answer to these questions will be the best thing you ever did for your business.
–Ilona Maher is a director of Start Grow Run, a specialist business providing strategies for growth and improved business health.