Quite frankly, the most important requirement for success in business just has to be a business plan. If you don’t know where you are going how the heck can you get there? Most people know that they ought to have one but strike trouble in preparing one yet if you do put one together it will always prove worthwhile because “proper planning prevents pretty poor performance.”
A staggering statistic is that 80% of all Australia Businesses will be out of business in 10 years. Now, not all will have gone broke. Some will have been sold, been taken over or plain given up but a huge percentage just simply fail.
Incredibly too, around 80% of businesses in Australia do not have a business plan which suggests that there is probably a connection between success and planning. It’s not true that all businesses fail because they don’t have a plan but there is a lot of evidence to say that it is a major factor.
A business plan is make up of three components… the operations plan, the financial plan and the marketing plan.
The financial plan is where you start by deciding what profit you want to make at the end of the year and profit is just the difference between income (sales) and outgo (expenses). Working out these is pretty simple stuff— how many clients must you have at what average sale to give you the income you need so that when you subtract your expenses you end up with the profit you want? Not exactly rocket science is it?
The operations plan is the people, the equipment and the resources you need to service that volume of sales.
The marketing plan is what you have to do to generate the sales you need to put through your operations so that the financial plan comes true.
Your business plan must answer three questions:
- Where is your business now?
- Where do you want your business to be at the end of say 12 months (and, less critically, in 5 years)?
- How are you going to get there?
Doing some thinking about your business is always worthwhile and making a short list of the 4 or 5 most important things you’d like to do in your business this coming year is a great start. If you believe that those objectives that are both important and attainable then make a realistic assessment at what impact they will have on your sales, operations and financial result. Don’t forget you’ll need to consider not only the extra sales you may generate but also the costs of staff and materials to generate more sales.
Then, if you have a budget, incorporate those figures into it; if you don’t, prepare one.
Next, assess what those 4 or 5 things you have decided will mean in times of more (or less) people, equipment and materials. Make sure that the dollar costs are reflected in the budget and that you list out all the operational requirements and consequences that achieving them will mean.
And finally look at the objectives you’ve now set yourself and realistically assess what extra people and costs will be required to get the sales you are aiming for. List out what you have to do (and incorporate the costs in the budget.)
Guess what you’ve got now?
A business plan… you know where you are now, where you want to be and how you are going to get there.
Wow! You’ve now no longer part of the 80% of businesses who don’t have a business plan. And better still, you’re now probably amongst that small but happy band of businesses who thrive and prosper.
And isn’t that a great feeling? Dare I say f-a-n-t-a-s-t-i-c?
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