Category Archives: Business Planning

When the “Honeymoon” is over – Why the Plan is so Important

In this blog I will explain how a comprehensive business plan can help business owners after the glitter has worn off and business has become a reality, complete with all is beauty and ugliness, dimples and warts, trials and rewards.

Too many people start out without a plan and, when times get tough (as it most certainly will), many of these people simply surrender, leaving their dreams, efforts and money strewn on the floor, or in the hands of false friends whose only wish was to separate them from their money, and damn the dreams.

When you have a business plan that truly reflects your dream and details how you planned to bring it into being you have a map on which you can:

  • Ensure the dream and purpose reflect your initial criteria in the business world of “noise” and interference;
  • Measure your dream against actuality and identify where you have misjudged your strengths, weaknesses, opportunities and threats;
  • Adjust your plan to ensure you are best equipped to face each new situation before the situation rips them from your control and forces you to follow, rather than lead, your business through the dark times and back into the light; and
  • Choose the best way forward to growth and success.

There will be times when you doubt yourself, your business, your co-workers, and your future. In those dark times it is always easier if you have an emotional anchor on which you can rely for guidance and support. This anchor should be your business plan.

Your business plan is the tool to guide you back to the high road.

I recommend that you keep your business plan handy at all times. At least quarterly (or more regularly when times are tough) you should compare the projections you made in the original plan with the real situation. By doing this you will be able to:

  • Anticipate problems and challenges and prepare to address and avoid/resolve them; and
  • Adjust your projections in line with the changes that have occurred in reality.

One example to show where this form of management was successful occurred some years ago in South Africa, where a large company decided to enter the glass bottle business. Their initial planning determined a need for three refractories producing bottles to be built on three different sites around the country and the most appropriate time frame was that each would be separated by a period of three years.

In reality, the market off take was double their projected size . Within 18 months of commissioning the first refractory was operating at 100% of capacity and the demand remained very strong. The nett result was that the overall plan had to be accelerated, with commensurate increase in pressure on cash flow and management capabilities. Eventually the project was condensed form 9 t 5 years, by which time all three operations were commissioned and operating successfully.

Fortunately it was possible for the company to meet these challenges. By being aware of the situation the necessary funding was secured to meet the additional cash flow demand. Without this early warning and with some astute and courageous management a potential disaster from an overloaded cash flow demand was avoided and the opportunity successfully identified and developed.

For this reason I strongly recommend that a formal, written business plan should be part of your management tool kit. It should always be available and used to measure progress in business life.

Have fun, do good and contribute to your society as best you can. Always remember that you reap from what you have sown.

 

 

What to Look for in a Business Planning Consultant – Part 2

In part 1 we looked at the qualities/attributes we should be able to identify in a good Business Blanning Consultant. In summary, I expect them to listen to me, consider my situation, offer advice that will lead me to a clearer understanding of what, exactly, I am trying to achieve and want to do, then, finally, put together MY plan, which will probably be supplemented by their own knowledge, experience and research.

In this part, I think  it may help to describe the process I follow when interacting with a client. While my approach is not definitive, I find that, through  following the complete process, both of us (my client and I) are aware of what is happening and constantly confirming that the path we are following is in accordance with the mental picture (vision) the client has chosen.

The process I follow is as summarised below:

Step 1.  I discuss the business opportunity with the client, so that both of us have approximately the same understanding of the vision. Then Itry to establish “why”. The purpose almost inevitably is “to make money” but the reason the client has chosen this option is of greater importance and value to both of us as the “making of money has been found to be insufficient to ensure long term success of a  business enterprise.

Step 2.  I then commit my understanding of the situation and needs of my client to writing, in the form of a proposal. Here I can confirm my understanding  of the situation and the needs of the client, detail the cost and how I expect payment,and identify the research that I need to complete before the plan is compiled. The client gets to appreciate my understanding of the situation and correct aspects on which we differ and also where we agree, and is also in a position to plan payments so that our relationship starts out on a firm footing.

Step 3.  Once the proposal is accepted, a meeting takes place between the client and I at which the following matters are discussed. This discussion results in both of us being “on the same page” when the plan is compiled and limits the potential for misunderstanding:

Point 1.  The Evolution of Business. A business starts out with the owner doing everything and, over time,  develops into a multi-facetted conglomerate. I feel the client needs to understand the steps which must be completed on this journey and the specialisation that takes place in the evolution.

Point 2. The Small Business Owners “Hats”. Every business owner wears seven “hats” as part of their responsibility. These are the different personalities adopted by the business owner to make sure their business succeeds. They are The Technician, the Manager, The Visionary, The Accountant, The Marketer, The Leader and,finally, The Steward.

Point 3. The Planning Philosophy. In my opinion, a business without customers is an oxymoron. Thus, the core requirement for success is the presence of satisfied customers. Any business plan must be founded on the principle that ” the Customer is King”. For success, the plan needs to address this aspect before any other requirement is considered.

Point 4.   The “Buying” Decision. Here the process of buying is considered in depth through the medium of a Flow Chart. Then the structure of the business plan is super-imposed on the flow chart. From this basis the total business entity can be examined in detail and a meaningful and effective plan results.

Once these points are addressed, the client is then presented with a questionnaire to complete, based on the philosophy described above. This questionnaire becomes the skeleton of the business plan.

I follow this process with every client as even those with extensive business experience could be limited if there is not uniformity in our combined thinking process. The corollary is that it is difficult for me to compile an effective plan without the necessary empathy between me and my client.

In the next part I will address the research process required for a successful business plan to evolve. I hope this post assists and look forward to your comments, questions and opinions.

 

What to Look for in a Business Planning Consultant – Part 1

The business of planning is similar to the life of Don Quixote, the Spanish knight best remembered for charging windmills. There will be many windmills out there and you need to be certain you are not charging one, sometimes they really do resemble the enemy.

Let us paint a common picture – you have the best idea in the World, need financial assistance to get it going but have no idea how to compile a business plan. What next? While talking to your friends, all of whom have their own opinion of your idea and their personal expert on business establishment, you end up beoming confused and often disheartened. But the idea keeps bugging you, so you go to your banker. He/she tells you that you need a  business plan and, sometimes, gives you forms to complete indicating your current financial state and how much money you think you will need.

Then you decide to look for an Expert – often thought of as a “has-been under pressure”. What are you looking for in such a person? You need somebody who:

  • Will listen to your idea and inform you how business works?
  • Will guide you in discoverning the information you need to properly evaluate your idea as a potential business venture;
  • Will inform you that they cannot guarantee funding but will provide you with the best weapons to be used when sourcing funding; and
  • Will compile your business plan, not their interpretation of it.

Where do you find this kind of animal? If you are reading this on the Net, you are on the right track. Most consultants in this field will advertise their services on the Net, but, it is my opinion that, for best effect, you really need to sit face to face with your consultant. Without this, I feel, the right “chemistry” may be lacking and chemistry I find necessary to understanding.

In my next post I will cover the process I use with a client who needs my services. I hope you have found this helpful and will appreciate your comments, please?