Forward thinking

Everyone knows they should have a business plan, but few people actually make a plan and stick to it. Here’s how to do it right.
Earlier this year, when Gabrielle Hayden decided to expand the activities of her beauty therapy business, she and her business-savvy sister-in-law knew what was required to guide the transition. Gabrielle’s latest idea, simple yet untested in the North Island, has been to work in partnership with Dermalogica New Zealand to offer a variety of skincare products and services within an existing department store, in this case Kirkcaldie & Stains; an initiative aimed at building on the success she has enjoyed over the past six years in owning and operating the nearby Essence Beauty Therapy.
So she sought out the best advice and formulated a business plan.
Simple really. So why do so many businesswomen neglect this last requirement?
Imagine you’re in a new city. There’s a particular place in it that you really must get to. But you have no written directions, no map, no global positioning system – no idea how to get there. How silly would that be? Pretty silly, obviously.
So, why do many people in business try to get by in exactly the same situation? They know where they would like to get to, but lack the written directions, map or GPS to get there – they lack a business plan.
Thinking about this recently – which isn’t hard to do for anyone with a professional interest in business performance – it struck me that a great business plan is a bit like a CPS, or ‘company performance system’, something that represents your guide, your map for everything you want to achieve. Why is it, then, that some people go in to a new line of business thinking they can get by without a CPS rather like our hypothetical visitor to a new city thinks she can survive without a GPS?
Part of the answer has to do with simple pressure. An entrepreneur comes up with The Great Idea and pursues it initially with great energy. In fairly short order, though, she gets beaten down with the never-ending day-to-day hurdles, and simply runs out of time for the big-picture stuff.
A much smarter alternative might be to approach things from the other direction, getting the big picture – the map – drawn out first and then moving on to the day-to-day issues. That map, which is to say, the analysis, planning and testing of your idea, is the business plan.
With the current year drawing to a close, now might be as good a time as ever to take another look at your business plan, or possibly to look at creating one afresh.
The essential starting point involves reflecting on what do you really want to achieve.
Set some specific targets, but do so with some outside help because it’s often hard for a business owner to do this with complete objectivity on her own. At my own organisation, we focus on helping clients develop and implement a plan that will help bring the necessary discipline and accountability into the culture of such an operation.
After all, the costs of working with a financial planner will be more than covered in the resulting focus and tools that you can apply in your business.
Once you have the targets, work them back to the key items you can measure on a regular (I would suggest monthly) basis to assess how well you’re tracking towards those long-term goals. Often this process becomes overly focused on the accounting information. Yet I believe it is essential that the regular measurement and reporting on the business includes non-financial items, too. For somebody in a service-based business, for instance, a couple of obvious measures might be client satisfaction and staff productivity, and other sectors will have their own as well.
While the client satisfaction can always be measured by two easily tracked measures, such as number (and dollar value) of clients lost each month, along with number (and dollar value) of referrals from existing clients, these types of additional measures will also help one’s behaviour with clients to further improve the way you service clients and build the client base.
Often as a business owner, one is so busy with the daily activities that one never has the time to step back and look at things afresh. As I say, there are only two ways to address this: make the time, or pay someone to prepare the report. I prefer the latter for a number of reasons, not least because a great business advisor will coach and mentor you to lift your business further than you possibly could on your own.
In either case, the chances for a successful 2011 will no doubt reflect the state of your CPS! “It’s definitely a great help,” Gabrielle said recently of her own business plans – and business plan – for the coming year, “at least if it’s done properly.”
Debbie Haddon
www.openside.co.nz