In one of my blogs recently I discussed a few of the reasons why small businesses in Australia go belly up. From bad accounting to rotten business partnerships or simply business owners living beyond their means, there are dozens of reasons why around one in every two small businesses that get started hit a brick wall a short way down the track.
What continues to amaze me is how many small business owners run off the track in the first place, choose the wrong track, can’t find the track or possibly don’t even know that a track exists. Why all this waffle about tracks? Because if you don’t have a decent Business Plan (See how important it is? I used capitals!) you are pretty much setting yourself up for failure right from the start.
The old chestnut ‘nobody plans to fail, they just fail to plan’ rings very true. Simply diving right into business without a clear idea of where you stand, what you wish to achieve and where you’re going in the future is asking for trouble. And if you’re wondering where to start…we can start right here with some straightforward tips.
It doesn’t have to be the Magna Carta
There is nothing in the rules that says a Business Plan needs to be as thick as a phone book. If you’re getting together a first draft, keep it simple and keep it brief. A three hundred page business plan is not necessarily better than a twenty page business plan, it just has more waffle to get lost in.
Be up front about what you want
Every Business Plan should contain an ‘Executive Summary.’ That sounds quite formal, but in essence it’s just a précis of what you want as the business owner. So don’t bury this on the back pages…it should be your guiding light to help you navigate the rest of the document. Put it up front.
It’s a good idea to follow up your Executive Summary with Business Description or Industry Description. A big part of putting together a Business Plan involves holding a mirror up to yourself, your business and in this case, the industry that your business occupies. What markets exist in your industry? What’s the state of the industry at the moment, and the forecast for the future? Do some research – you might just uncover some opportunities while you’re at it. Identifying what your markets are and where your competition stands is the first step towards positioning your own business to take advantage of its own market share.
Know your enemy
Okay, maybe using the term ‘enemy’ is taking things a bit far, but in a cutthroat market, never under estimate the ability of your competitors to impact on the health of your own business. Time invested in getting to know your competitors, their strengths and their weaknesses, can expose opportunities as well as helping you to guard against aggressive moves by competing businesses who might try to target your market share. This might just be a good opportunity to indulge in some ‘mystery shopping’, which can be fruitful as well as a bit of cheeky fun.
The bottom line
Funny how it all comes down to money, doesn’t it? Well, that’s business for you, and as I’ve mentioned before in my blogs, if you’re not in business to turn a profit, you’re possibly missing the point! Sure, there are noble goals to be pursued, but a healthy, growing business demands that profits continue to be made.
That means looking at what you’ve been earning and spending in the past, what you plan to earn and spend in the future…setting realistic goals and regularly checking them against the figures that your business is achieving. This is an area in which you ought to be working hand-in-hand with your accountant…and making sure that they’re earning their keep!
Here’s a great truth about an effective Business Plan – it’s not something that you sink a lot of effort into just once, tie up with a ribbon of good intentions and then shove into a drawer, never to see it again. The most effective business plans are dynamic, elastic things that can evolve and adapt. If Henry Ford had left his designs as they were without re-visiting, upgrading and updating, we’d all still be driving Model T’s! The market your business exists in is ever-changing and evolving. A good Business Plan isn’t a rigid plan, it’s a far-sighted and active document that is constantly checked and fine-tuned.
That all sounds like a lot of hard work…
Yes, it probably does. But even if you’re a ‘seat of the pants’ kind of small business owner yourself, let me tell you that in today’s business world you can go from the seat of your pants to the bones of your arse in next to no time, because your business isn’t just about your business any more. There’s no doubt at all that knowing your business, its finances and its targets is absolutely essential. But you literally cannot afford to ignore what the market and your competition is doing.
A good Business Plan takes all of this into account.
If you don’t yet have a Business Plan in place and the points above have inspired you to make a start, you might be wondering where to begin. Well, like so many things these days, it can all get started online – Google ‘Business Plan templates’ and you’ll find plenty of good options. Any plan is better than no plan at all, and if you’re still feeling a bit stuck or lost, you’re very welcome to email me (HERE) and I’ll forward you one that I reckon is pretty solid.
So there you have it. A good Business Plan might not be quite as good as a crystal ball to help foresee your business future, but at the very least it’ll save you from flying blind.
Wishing you all the best for your week in business.