Issue 0046 June is a Great Time to Prepare a Business Plan
Business plans are very important for all types of businesses, large and small.
Business plans for businesses are just like maps for tourists. It helps you determine where you’re going to go and to be able to measure along the way whether you’re on target.
Some of the key things contained in developing a business planning strategy is to determine where you want to be in one year, two years, five years and 10 years. It also helps to give some consideration as to what your exit strategy might be.
Accountants and business advisers can assist you to prepare business plans. In fact, I recommend that you have a conversation with your accountant or business adviser, to help you in the business planning process.
Where do you start?
My recommendation is you start with a Think Tank Meeting with your key team members or whole team if you like, along with your key advisers. Appoint someone to be the facilitator, in many cases, this should be your accountant or business adviser, to guide you through the business planning process. That person should then prepare the overall business plan for the business.
Some of the key areas you will be looking to discuss in the business planning process include:
Review of your current business performance. How is the business performing in all of its aspects?
What are the resources of the business? Do you need new resources?
Products and Services
What products/services are you producing? Are they all profitable? Are they all contributing? Do you need to make some changes? Are they still fashionable? Are they meeting the market’s requirements? Are your customers happy?
This is the time to do some profit analysis on various products and services and other products that you might be looking to introduce.
What’s happening in the market in which your business operates?
Are you getting feedback from your customers on changes that they would like to see introduced? Are you meeting their expectations?
Is the location of your business OK? Will it still be OK in another five years’ time?
What are your competitors doing? There’s no law against copying competitors, as long as you’re not copying copyright material or patents, however you can learn a lot by observing what your competitors are doing.
Have you developed systems to improve the reporting of the performance within the business? This might mean dividing the business into a number of different operations (eg transport department, retail store, the office). Within workshops, a job costing system will assist in determining profit or loss for individual jobs. This will help management by being able to view actual results for each component of the business, rather than putting everything in one of those horrible Statement of Financial Performance Accounts that have all your businesses just thrown into one. Does that really help you run your business? I don’t think so.
Work in Progress/Stock Control
If you’re in a business that’s producing work on an individual work in progress or job basis, have you introduced a computerised work in progress/stock control system? The benefit of this is that you will then receive a report on the individual performance of each job, not lumped together in one overall account.
I’m working with a client at present that’s been lumping everything into one Statement of Financial Performance Account for a turnover of around $5M - $6M. We’re now dissecting it into individual job costing results. I believe they will be able to better manage their business.
Do you need to talk to your suppliers to improve your arrangements with them, by discussing some of your strategies with them? Give them some advanced notice that you might like some particular support. This might be a personality that comes to your area that your supplier arranged for a visit.
Is your team adequately trained? Are they motivated? Do you have regular toolbox meetings or team meetings so they can understand what’s happening within the business?
Is your marketing plan appropriate for 2016/17? Does the business have a social media strategy? It’s difficult to envisage that anyone these days can run a business without having a social media strategy and, for this matter, a website.
Who does the selling in your organisation? Is there close cooperation and communication between the marketing person, the sales person, the product developer or are they all just going off and doing their own individual thing? It’s very important that it’s coordinated.
Is the organisation structure suitable for your business?
Have you looked at the risks that confront your business operation? Some of the key risks are insurance and the Personal Property Securities Register (PPSR). There’s at least another 50 significant risk areas that most businesses in Australia have. Businesses need to develop strategies for them.
Once you’ve developed the business plan, it’s very important that, as part of the process, action plans are prepared for every item and allocations are given as to who is going to be responsible for implementing the strategies. Then, on a monthly basis, a Board of Directors, Board of Advice or management meeting review what’s happening on the actual implementation.
You could have a formal retreat meeting every six months. Go away somewhere, separate from the office, with no day-to-day phone calls happening. Review where the business is going.
Find an Accountant/Adviser
You might ask: “Where are these accountants that can undertake this type of work because our accountant is only interested in preparing income tax returns?”
ESS Small Business has a directory of accountants who are interested in supplying a wider range of services, commonly known as “business advisory services”, to small/medium enterprises. This directory is called “Find an Accountant/Adviser”.
Visit www.esssmallbusiness.com.au and click on “Find an Accountant/Adviser” menu tab. All you need to do is to type in your postcode and the system will then show you accountants/advisers in or near your postcode who offer a wider range of commercial services to small/medium enterprises.
ESS Small Business contains other free articles and articles for sale, prepared by approximately 20 other businesses, on a wide range of small/medium enterprise matters.
ESS Small Business also presents webinars, free of charge, covering a wide range of small business matters. These webinars are also recorded and are available for viewing.
We will be presenting a webinar on Tuesday 14th June 2016 at 3pm AEST, featuring “Business Planning”. Click here to register to attend, free of charge.
Whilst you are on the ESS Small Business’ website, why not have a look at the offerings from a wide range of business people who are able to assist small/medium enterprises?
A copy of a complimentary article, “Planning Your Business – Small Businesses”, can be downloaded below.
If you have any questions on services that accountants can offer, please don’t hesitate to contact us.
If you wish to receive future editions in the Survival Hints for Small Business series, you can visit our iTunes – Podcasts - Survival Hints for Small Business page and subscribe to our podcasts. If you have any questions or suggestions on future items to be covered in Survival Hints for Small Business, please don’t hesitate to contact us.
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Episode 0046 June is a Great Time to Prepare a Business Plan
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