Drawing up a business plan is just the first step; the real challenge is ensuring that it becomes a living, effective dimension to your business.
Although business plans are often written when businesses are starting out, they can be just as useful for established businesses. Despite the valuable information gathered about their business and customers through the preparation of a business plan, many who have a plan are not using them. Management’s focus is centered on solving the day-to-day problems, with the plan left in the desk drawer. Other businesses may consider the preparation of a business plan a waste of time, as they have seen no benefits to the business to date.
It is often forgotten that the success of a business plan depends on its implementation. Ineffective implementation may be attributed to a number of reasons such as:
- The business plan was not targeted at the ultimate users of the plan (usually the managers and the staff). A successful implementation relies on an organisation wide approach.
- The focus of the plan was on the end product, being the document, and not on achievement of the objectives detailed in the plan. So when the business plan was prepared, all momentum stopped.
- The business plan did not cover operational issues so it was not completely understood how the strategies were to be implemented, or the operational strategies originally proposed have not been updated to include current business processes.
- The strategic objectives of the business plan did not align with the personal objectives of management and owners, or with the marketing objectives of the business. Different areas of the business may be working contrary to each other.
So rather than letting all that effort spent in preparing your business plan go to waste, we offer some suggestions to breathe life into those ideas and visions and make that business plan work for your business.
Review the plan
Your existing plan should be reviewed to ensure that it is reflective of your current business environment and processes. If not, identify what has changed and update your strategies and action plans accordingly. This will be more achievable than attempting a full rewrite of the plan as that will be too daunting and so you will be less likely to do it.
As part of this review, re-examine the key management issues facing the business and ensure that the amended plan addresses them. For example, your customers and staff mix may have changed.
You may also consider asking your customers what they think of your business using a customer satisfaction survey. You should not ‘second guess’ your customers. Their feedback may highlight aspects of your business that you have either overemphasised or downplayed. Your plan may have been misdirected. It also communicates to your customers your desire to meet their needs.
An updated review of your competition is also required. Look at what they are doing better or different from you. If applicable, consider highlighting these differences in your updated marketing strategy.
Make brief notes on why the original plan did not work or became stalled. Ensure the amended plan takes into account these limitations. It is recommended that all levels of staff provide feedback during this process as this not only provides different perspectives of why the plan did not work but also encourages them to participate in the updated plan.
Align with other strategies
Check that other strategies such as your marketing, recruitment, staff training programs and business and tax planning are aligned with the updated business plan.
Ensure the goals are realistic
An independent person, either your accountant, financial or business advisor, will be best to evaluate this. Although a business plan is more than a budget, realistic goals must be used, it is counter productive to include unrealistic targets. Do you have the appropriate resources needed to achieve those targets, or does it require a reallocation of resources or a change in staff skills? It may be worthwhile referencing benchmarking studies prepared for your industry segment.
Prepare an action plan
Prepare action plans and circulate them to key management and staff. The action plans should not only detail the tasks required but also how the successful completion of these tasks is to be measured. As the old saying goes “If you can measure it, it is real”. It should indicate priorities, timelines and who is responsible for each task (see Table 1).
| Table 1. Simple Action Plan |
| Task No. |
Action |
Priority |
Responsible |
Due |
Required |
| 2-1 |
Improve basis of reporting client service levels |
High |
PD |
June XX |
Report on alternative procedures |
| 2-2 |
Implement monthly reporting on client service levels |
High |
MR |
July XX |
Monthly report to managers' meeting |
Appoint someone to ‘own the plan’
Nominate someone to be responsible for updating the action plan. People who were allocated a task must report back to this person on their progress. This person then provides a report on the progress of the overall action plan as a regular agenda item in management meetings.
Ideally the person is not a senior executive or someone with many tasks in the action plan to complete or was involved in the preparation of the plan. A suggestion is the human resource manager.
If tasks are not achieved by the due date, senior management must evaluate during the management meetings why those milestones were not met and what appropriate action should be taken. This may involve an extension of the timeline or the dedication of additional resources (if required) to complete the task.
Communicate the plan to all staff
Widespread involvement and acceptance of the plan and its objectives is vital to the successful implementation of the business plan. It develops a sense of ownership and accountability amongst all staff. Their feedback is important in ensuring the success of the plan.
If staff can recognise that the plan will benefit the growth of the business which in turn will benefit them, they will actively participate in the action plan. Place updates of the progress of the plan in staffrooms so that the staff can get a sense of achievement as they see progress in the plan. You may also consider linking reward and incentive programs to the achievement of the action plan and business plan objectives.
Conclusion
A common cause of business failure is the lack of proper planning and control. A written business plan creates focus, direction and vision but it is only its implementation that generates the outcomes.
It is often too easy to focus on the daily fire fighting activities and not plan for the future growth so why not spread the load. Encourage all management and staff to make the business plan work and everyone reaps the benefits. You may even find the implementation of the plan reduces those spot fires.
Preparing a business plan
Understanding your business
Review and document your industry and industry segment, your competitors, suppliers, customers and distributors.
Identify key factors that impact your business’s profitability and growth such as market share, asset management, and financial management and client service levels.
SWOT analysis
Strengths and weakness relate to the internal aspects of your business such as your product and services, technology, operations and business processes, market position, intellectual property and corporate structure and size.
Opportunities and threats relate to external factors such as political, economic, social, technological and environmental issues that will impact your business.
Where do you want to be?
The vision and future objectives of the business may be stated in a mission statement. Are these objectives realistic and capable of measurement? The objectives should be documented in short precise phrases with set targets. There should be alignment with the personal goals and objectives of the owners and senior management.
What are key management issues?
What will be the key issues that impact on going from where you are now to where you want to be? How are those goals going to be achieved? An increase in profitability may be achieved through attracting new customers, recruiting new staff, controlling debtors, work in progress or stock levels. All issues must be prioritised e.g. top priority, next priority, leave alone for the moment and review if able.
Developing strategies to get there
The action plan should be developed using a ‘top down’ approach, starting with the general success strategies such as market differentiation or product focus. The individual operational, marketing, human resources and technology strategies are developed to align with the chosen general strategy. Prepare a detailed list of tasks in an action plan required to achieve those strategies.
Ongoing analysis
The predicted outcomes will be presented in the business plan. During the implementation of the action plan the actual outcomes are measured against those predictions at specified time intervals.