It’s a new financial year, and that means it’s a great time for small business owners to re-evaluate, set new goals and plans and work on their business strategy for the next financial year.
Many businesses (and certainly many of our clients) find themselves busy with the day-to-day selling, paying bills, marketing, hiring and firing, talking to the bank, managing the office and so on. They know they should plan for the future but who ever gets time for that? They get caught up in the endless cycle of tactical business management.
We encourage and help our clients to take the time to do some serious planning. Consider the following:
1) A strategy is not a plan. A strategy is derived from your goals, the long-term outcomes you want to accomplish. The strategy provides the guidelines on how you reach those goals. For example, if a company wants significant revenue growth, the strategy may be to get there by acquisition or through organic growth. Where a company wants to maximise profit, the strategy might be to launch a new product line in a new market or geography.
2) A plan is not a strategy. With the strategy understood, a plan can be formulated. The plan details what we need to do, who exactly will do it and when we need to take action to accomplish the strategy. Most plans will refer to finance, marketing, sales, product development, human resources, business processes, managing customers, technology and a variety of other items.
3) Who decides strategies and plans? This will depend on the organisation but, generally speaking, the owners of the business (or their board) articulate their goals and the strategy to get there. The more shareholders, the more difficult it is to come to consensus on goals. Ideally, formulation of strategy should be done in conjunction with senior management. After all, senior management needs to develop the plan and then execute it. If the goals, strategy or plan are unrealistic and unachievable, it’s unlikely any stakeholder will end up happy.
4) When should goal setting, strategising and planning occur? This will depend on the “maturity” of the business. A high-risk start up might revisit their goals and strategy quite frequently compared to a well-established 50-year old business with a significant market share. But plans should be revisited more frequently. The trick is to achieve the balance between persistence and flexibility. Certainly, we should never be locked into a plan which is not making sense.
5) Some parts of your plan will not make sense. Let’s be clear on something: making a plan is about predicting the future. How many people do you know that can accurately predict the weather, share prices, the outcomes of sports events, election results and so on? Sometimes we get it right based on reason and logic and sometimes we get lucky. But even the smartest people will get things wrong quite frequently, especially in the complex world of business. It’s better to accept that some aspects of your plan will be wrong – but still finalise the plan and start executing. Labouring over the details and trying to avoid being wrong will waste time and there will be no improvement.
6) Making plans requires some formality. Nothing about planning is flippant, flavor-of-the-month, capricious or flighty. Planning requires analysis and careful selection of actions, estimating time frames and delegation to team members. Good plans result when people have the time to focus intensely on these issues.
7) Revisit plans frequently. A good plan will enable you to track progress based on agreed metrics. You need to continually review those metrics and make changes accordingly.
8) Write it down. Simply put, a plan is not a plan unless it exists in written form all in one place. If you change the plan, amend the written version. Too often, conversations occur in coffee shops, on the golf course or over lunch which result in a new direction. That creates confusion and blurs the definition of success.
9) Share the plan. In addition to sharing the plan, it’s smart to share the strategy and the goals because they provide the context for the plan. People will naturally ask, ‘why are we doing this?’ and are more likely to conform to a plan when they understand its rationale.
10) Get some advice. The best goal setting, strategising and planning sessions are facilitated by third parties. It’s best to have access to someone who can ask the tough questions and intermediate where there are differences of opinion. The facilitator should have an understanding of business, especially finance, but not necessarily an in-depth knowledge of your business. In that way, they can bring a fresh perspective to the discussions.
Accountants are uniquely positioned to help with strategising and planning because of our knowledge of your business and our insight into many businesses like (and unlike) yours. It’s in our interests to see you succeed and the more we can be part of the process, the better! Please get in touch to discuss how we can help you set goals, agree on strategies, makes plans and track progress.