Q: What is the biggest differentiator between companies that succeed and those who do not?
A: Those which have a clear strategy, communicated to all who work there and those that don't
Sometimes that direction is laid down in a document and sometimes it is just expressed in actions and words by the leader of the business.
This page is intended both for the smaller business who perhaps does not have a well established planning process and for those in businesses small and large who do have a regular process.
For those who don't have a structured planning process we discuss why you should have a plan, and explain it need not be long or costly to create.
For those who have a planning process but perhaps want some external assistance or perhaps sanity check on their processes we hope this page is useful in explaining how we think about - and approach the task of helping companies with their planning.
The great myths about strategy, planning and leadership:
- The world's changing too fast, a plan will be out of date almost immediately. Without a plan the fast changing, complex world we live in will keep pulling you in different directions and because you try and spread your resources and expertise too widely you will end up not successfully competing in any market.
- I've been in business for XX years without a plan so that proves I don't need one now. There are two answers to this:
- Are you sure? Quite often a business is founded with a vision - a vision is a plan. Perhaps the business is started by someone who sees a different process or a different use for a product and that is enough to start. However once the business is running for a while things change, the vision needs updating, perhaps the business is bigger and a different plan is now needed.
- Is your business achieving what you want it to? If not, perhaps this is because without a plan you spend time trying too many different things. Perhaps the directors feel they don't get enough support - and how can the other employees support the directors if they don't know what it is the business is trying to achieve?
- I cannot afford it! Have you considered the opportunity cost - that is the cost of not doing it? Many businesses will pay for a brochure or a mailing list short term 'consumables' which will be used up perhaps gaining a small amount of business but not pay money on the thing that will gain the long term profit.
- I'm too busy! Exactly! If you ever are going to make the best potential for the business then you,and those around you have to know what to focus on. Planning need not take up a huge amount of time, especially if you get assistance to formulate the plan.
Components to a business plan
The diagram shows some of the components to a business plan. All of the components need to fit together.
The business plan is made up of other plans as shown in the diagram. This does not mean a business plan has to be long. It is important that the marketing plan drives the research and development plan and not the other way round.
We define Marketing as a matching process. The main parts of a business plan are shown below:
The marketing plan is generally harder for a business to do for themselves. This is chiefly because of 'group think', the business has set ideas about how it, and its products are perceived in the market place and the needs of the buyers which too often are wrong.
Perhaps you think you have no research and development? Research and Development can be a grand affair, it can also be the more basic things connected with reducing waste, rework or improving packaging to limit damage in transit. Reducing waste, rework and returned goods can be one of the best ways to improve the bottom line. If you are a service company you still need a production plan, or you will probably want to call it a service plan. There are as many efficiency issues with a service company as with a production company.
In any planning process you need to think about quality. Quality is important for many reasons. Value for money is the cost of something for a set quality. Increasing the quality may help improve margins. Improving the quality processes may save in wastage.
Often the rarest and most complicated resource to replace is the human one. What skills are needed in greater quantity, or to be improved? If you want to retain your best staff how are you going to help them develop? What skills are needed for the business development planned? What are the ambitions of the owners and senior management? If the major shareholders and directors want to exit at some stage who will replace them?
Financial planning is not a budget sheet! Financial planning is the process of matching the funding to the business priorities in order to achieve the business plan. It is shown last in the diagram but this is not because it the least important. All of the plans must feed from each other. Marketing, production, HR and quality planning must all be factored into the financial plan.
Over to you
If you want to make a long term difference to your business and develop your business or marketing planning then give us a call or fill out the web form. Just press the 'Contacting us' button at the bottom of this page.
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