Reviewing Your Business Plans - Why And How

A checklist.

If you have a business plan then presumably you have a vision of where you would like your business to be in 5-10 years.

But how will you know when you actually get there? How do you plan to get from where you are today to where you want to be?

In fact, do you know where you are today and how you got there?

A business plan is never cast in cement. The only way you can remain in control of your business's future is by regularly reviewing and revisiting your business plan.

Your business plan

When you originally developed your business plan you would have identified the following:

Vision
This would have been based on the core capabilities of your business. You would have described how your business would "look" in five years. This was your "wish list."

Goals
You would have translated your vision into a series of goals. These goals described the vision in more detail and provided tangible elements that you could measure. Achieving these goals would indicate that your company is on the right track according to its vision.

These goals would have been SMART:
Simple
Measurable
Achievable
Realistic and
Timely.

Strategies and plans
You would then have developed a series of strategies and associated detailed plans on each aspect of the company describing how each goal was going to be achieved.

Implementation
How these plans were to have been implemented.

So why the need for a strategic review?

You need to regularly revisit your original business plan to:

help you determine if your desired level of recompense is achievable;
review the various options available for you to achieve your goal(s), and to
redevelop the framework of your original plan in order to achieve your goal(s).

You should review your business's progress at least annually so that you can learn about areas for improvement and build on the successes.

Your strategic review - step by step

A simple review process

SWOT
A simple review of your business would involve asking questions that will indicate how you got where you are. Usually this is done as a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis.

Monitoring
Monitor the progress of the plans and measure their success against pre-set Key Performance Indicators (KPIs).

Revising the vision
Be prepared to adapt or change your vision in line with market environment changes.

It is critical that any change that you decide upon in your business's operational structure will ensure the continued success of what will eventually be defined as the core competence.

Determining your company's core competency(ies)
Your company's core competency(ies) is the thing(s) that the business does well and which has been at the heart of its past success. By definition it will also be the key element in the future success of the business. It could be:

design excellence
design creativity
meeting customer expectations
reliability
process management
broad industry knowledge
track record
sales and presentation ability
client relationships
successful marketing initiatives

A more comprehensive review process

To undertake a comprehensive review you will need to look a each of the following aspects of your business in detail:

Company's background and organisation -

History
- Why the company was formed
- Its progress since its inception
- Key people involved
- Sales growth, expansion of operational centres
- Strategic changes
- Growth and development to date
- Marketing strategies used to date
Company organisation
- Who does what
- Organisational hierarchy
- Internal management structure
- Legal structure
- Founders and key personnel
- Interactions with distributors, retailers and customers
- Control and reporting systems
Financial results
- Statement of turnover and growth to date
- Analysis of break-even and profit and loss
- Identification of substantial growth
Operational overview -

Ownership/Management issues
- Quality of management and administrative systems
- Are systems in place the most appropriate?
- Man power costing
- Remuneration, packages and incentives
- Delegation and alternatives
- Reporting systems both internally and externally
Organisational issues
- Existing organisational structure, decision-making process
- Is planning within a time frame?
- Industrial disputes or union problems
- Is organisational structure adequate for now and post growth
- Can distribution be made more cost-effective
- Possible improvements in efficiency and accountability within management
- Pricing strategies
- Personal and divisional responsibilities within the business
- Personal and divisional objectives
- Benefits of a strategic alliance as opposed to expansion or diversification
- Market analysis
- Market segmentation
- Potential new markets for existing services
Training issues
- Deficiencies within the company
- Training available
- Currently utilised training courses
- Staff appraisals
- Time and cost factors
- Human resource needs analysis to identify gaps in knowledge/training
Administration issues
- Optimisation of administration
- Effective monitoring of the actual business operations
- Reporting systems/accuracy
- Supervision of budgets and cash flows
- Computer systems
- Time management
Key Development Strategies

Key success factors
- What does the business have to offer that is special?
- What can be done to capitalise on this for example quality, service, volume, location, reputation etc?
Research and Development Plan

General
- Is the company seeking to improve its position technologically/are sufficient time, materials and management allocated?
- Does the organisational plan include Research and Development (R&D)
- Can existing resources, reporting systems and delegations cover the increased load?
- Are strategic alliances or pooling R&D resources with other synergistic organisations being considered?
Analysis of Market Structure

Technical description
- Summarise tests and data collation methodology
- Detail primary data sources and the ancillary methodology for secondary and tertiary research
- Statistics and accredited, sourced information placed in appendices
Market size
- Quantification of entire market in both $$$ and product turnover, past and present
Market segmentation
- Identification of market sub-groups or segments
- Does the company compete in more than one segment
- Identification of products and services in each segment
- Analysis of market share for which the business is responsible
Market growth potential
- National, state and international
- Growth or shrinkage of market segments over 3-5 years
- Is product volume that the business is capable of achievable in market?
Seasonality
- Monthly anomalies
- Effect on business
- Impact on legal, technical, industrial demand, domestic requirements etc
Competition
- Who? particularly the similar competitors
- What are they doing now?
- How do they differ from your business?
- Reaction to your success?
Pricing
- What strategies are being used?
- What strategies are competitors are using?
- Effectiveness of strategies
Promotion
- Current strategies (own and competitors) including point-of-sale, PR, media marketing
- Future options:
  - sales literature
  - online marketing
  - renewed or different efforts by sales force
  - packaging strategies
  - telemarketing
  - distribution network
  - alternative or additional advertising
  - direct to customer promotions
  - on the road servicing by sales representatives
  - direct to dealers promotions
Market trends
- Current and projected
- Planning around trends
- Changes in customer expectations
- Differing impacts of trend on all facets of operation
- Differing effects of impacts on competitors and own business
Marketable strengths and marketing weaknesses
- What makes the business good?
- What makes the business better than its competitors?
- Who makes the business what it is?
- What strengths do these people bring to the business?
- What beneficial resources can the business access?
- What weaknesses must be identified when promoting the business?
- What products/services can't the business provide and does this make it vulnerable to attack from competitors?
- Do areas of weakness have the potential to taint strengths?
Market opportunities and market threats
- What market opportunities exist regardless of current position?
- Is there potential for expansion, strategic alliances with or without using finance options?
- Are there opportunities locally, nationally or internationally?
- What are the factors preventing expansion, prosperity or viability?
- What are competitor and staff reactions to success?
- Are there any trends, legal or technological developments which may inhibit goals?
- Do personnel, legal restrictions, locations, public sentiment or likely developments limit potential growth?
- What are the global, geographical or environmental considerations?
Marketing strategy

Analysis of objectives
- Does the business have any objectives?
- Have they been achieved, were they realistic?
Marketing strategies
- Features and benefits of the product(s) or service(s).
- Price strategies
- Promotion - alternatives
- Distribution, locally, nationally and internationally?
- Identify market niches
Growth projections
- Sales
- Financial performance
- Revenues
- Sales forecasts/risk assumptions
- Projected market growth
- Statistical trends
- Reservations regarding projections
Measurement of objectives
- Keeping track of objectives
- Multiple step goals to encourage workers
Any other strategic issues?
Financial projections and analysis

General
- Policy of business and historical performance
- Composition of assets and liabilities
- Profit and loss, break even analyses, profitability and turnover
- Is the planned level of operations sufficient to support any investment required?
- Can it generate sufficient cashflow to sustain operations or expansion
- Does the return on investment maintain economic solvency and viability?
Financial projections
- Balance sheet projections based on apst history, CPI and current objectives (3 years)
- Cash flow projections based on past history, CPI and current objectives
Profitability
- Break even analysis
- Rates of return on investment
- Effects of financing options
- Real cost of personnel and effects on profitability caused by decrease in staff or increases in productivity
- Is operation running on overdraft?
- Profits may erode rapidly if margins are only fine
Overhead analysis
- Individual past years and cumulative effect for projection
- Projection over next 3-5 years (incl CPI)
- Ratio of fixed costs to variable costs
Capital and funding plan

Implementation schedule and KPIs

General
- Initiatives to avoid conflicts of time and resource availability
- Responsibilities - start and finish timing
- Lead time requirements to ensure achievement of deadlines

You are now ready to develop your action and implementation plans.

Important considerations

Whilst the Vision and future success of the company doesn't necessarily have to rely on the core competence(ies), more often than not it does. It is easier to build on historical strengths rather than develop new ones.
If business plans or goals are changed it is necessary to ensure that management's vision for the company matches these new objectives.
An internal communication strategy is required to outline what information is to be made available and what information is to be withheld both internally and externally.

Disclaimer:
The information published above is subject to copyright and may not be reproduced in any form without written permission from Australian Business Limited. The information published above is intended as general information only and should not be relied on in place of specific legal or professional advice. Australian Business Limited accepts no responsibility or liability for any loss or damage which may be suffered or incurred by any person acting on the information published above. For employment and industrial relations advice it is recommended that all parties seek professional legal advice from Australian Business Lawyers (tel: 13 26 96) or from independent legal advisors.

Reprinted with permission of NSW Business Chamber. For more information about this article or NSW Business Chamber, its products, services and membership, please call 13 26 96 or visit the web site: www.nswbusinesschamber.com.au
First published: 27 August 2003.
Last updated: 8 March 2006.