THE IMPORTANCE OF A BUSINESS PLAN IN YOUR BUSINESS

Dash

EPISODE 04

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ABOUT THE SHOW

Dash

Today we discuss the importance of a business plan in your business. In particular not only the importance of a business plan but the importance of the business planning process behind the plan.  

The actual process of sitting down and doing a business plan, to me is probably one of the most effective functions of the business planning process.

Traditional business plans can be big thick heavy documents that once completed sit on the shelf and gather dust, never to be looked at again and can be a complete waste of time.

Done correctly though a business plan should be a living dynamic document. This is because the environment that most businesses operate in is also dynamic and ever-changing.

It is critical to your business success that your business plan is adaptable to those dynamic, changing business conditions and lights the way to help you navigate predictable success.

WHAT YOU'LL LEARN

Dash
  • The importance of a business plan
  • How a business plan can help create a more profitable business with less stress
  • Why the strength of the business plan is in the actual process of putting it together rather than the end document
  • How often you should do your planning and why regularly reviewing is so critical
  • My Ten Steps to putting in place a dynamic actionable business plan that grows with you and moves with the dynamic business environment in which we now operate.

EPISODE TRANSCRIPT

Dash

G’day g’day and welcome to another episode of the Business Made Easy
Podcast, where we make business easy. I’m your host Jason Skinner, and
wherever your listening in the world today, I hope you’re well, and you’re
kicking some goals in your business. Whether that’s online, offline, whatever
it is you’re doing I hope it’s all going nicely for you.
It’s just me on the show today. I want to talk to you one on one about a very
important issue or topic in business that I see just not being done properly or
at all, and I think it has an absolutely drastic effect on a person’s business; it’s the area of business planning. Now for those of you who don’t know, you may or may not know, I’m an accountant in practice, so basically, I’m advising businesses every day of the week on these topics. I’m raising this one because it’s one that I’m just seeing so often and I just believe and know that if it was implemented and done, then people would have a lot more profitable businesses and a lot less stressful businesses, so I find it a really relevant topic. That’s the area of business planning.

When we think of a business plan, we sort of think of tombs of information, volumes of information that we have to sit down and pay thousands of dollars for and never look at again and just sits on the shelf. Usually, banks, want to see, a business plan, if you’re going to borrow money from them or you maybe have
a business coach and they want you to do a business plan. Whatever the
reason is, there is a number of reasons why you’d do one. But to me, they are
the foundational document before starting any business and they are also a
vital document if you want to grow a business and make sure your business is
heading on the right track. I’ll give you an example. I don’t know if you have
ever parked your car out in the front during winter, you know not undercover, so
it’s out in the cold weather. And you come out in the morning and you go to
get in it and you go to drive off and every window in the car is frosted over.
You can’t see out of it at all. That is the equivalent of not having a business
plan in your business. Picture your car as the business and you cannot see for
the life of you, where you are heading, where you’re driving. You can’t do that
unless you get out and clean the windows off, so you’ve got a clear vision of
where you’re going. And that’s how I see it in business. If you’re driving your
business, and you haven’t got a clear vision about what’s going on in your
business, you can’t see where your business is going. Until either, it’s too late
or you’ve missed opportunities in your business that you could have really
benefited from. That’s where the business plan comes in. To me, the
strength of a business plan is in the actual putting the business plan together.
Not the end document so much, but the actual process of sitting down and
doing a business plan, to me is probably one of the most fundamental things
that you should do in your business. This is something that I do every single
year, and there is even more reason, nowadays, to make sure you’re doing
this more regularly, I mean in the past, you know business plan was… because
it was such a process and it was so big to do… such a big job to do. People
would only ever do them one every sort of three (3) to five (5) years, you
know every 5 years dusted off and see whether they’d actually made it, what
they’d planned to make or where they plan to be. So, nowadays though you
just can’t afford to do that. You can’t afford to have a business plan that’s not
dynamic. That’s because the business environment now is so dynamic. I
mean the internet – if look you at the speed of which the internet is growing
and at the rate of which technologies changing things in our businesses. You
know, you can’t just set a business plan, set a journey a course for destination
and go, “Oh this is where we’re going to be head” and then put them on the
shelf and hope you get there. That’s why I think, you know, business plans
now really need to be done more regularly rather than sort of once every five
(5) years or so.
To do, like, I’ll go through some tools to help you do that. Because we have to
do them so regularly now, they really need to be a concise document and not
something that does take a long time to do it. You really should be able to sit
down, in half a day to a day, and really come away from that with a good clear
direction of where you want to head with your business, what your
marketplace looks like, what your customers look like. You know, we go
through all the elements very shortly, but you know, it’s just a document that
really now you should be able to pick up, have a look at and regularly, weekly
have a look at and see whether the things are still adding up and you’re on
track. Cause as I say, that environment is just changing so fast out there. And
if you’re not changing with it, the real risk for you is that your competitors
are. And that’s the frightening thing, you know, you might think you’ve got a
hold on a particular market but your competitors could be really nipping at
your tail. Particularly, if you’re in online business, you know, there is so
much competition getting out there now. People selling things on Amazon
and, you know, there are just so many courses. There’s so much going on and
so much noise out there now. You really want to make sure your business is
at the top of the tree amongst that environment.
So, to make this easier, I put together, to sort of help you, I put together what
I call a business plan on a page. I’m going to take it through sort of the
process that I use to do this. But what it is, it’s like uhm, it’s a way of doing a
business plan without actually sort of having to sit down, and you know
spend weeks on end, and getting all sorts of various people involved and that
sort of thing. This is something that you can do yourself, and I guess really
feel that at least just had this in place then you’d be a lot better off than not
having anything at all. So, I’m giving it away free of charge, you can access it
on my website at the businessmadeeasypodcast.com website. You’ll see
that at the very top of the homepage and it’s called Business Plan on a Page
free download. So you’re welcome to go over there and grab it if it’s of
interest to you. But if we just go through the elements I’ve sort of gone
through, why you need a business plan or why they’re important. I’ll just now
go through the elements of what’s involved in a business plan and try to make
it as interesting as possible because to me it is an interesting process. I love
to, it might be the accountant in me I don’t know, but I love sitting down and
working this stuff out with businesses because you really get to have this
helicopter look at your business and the whole market that you’re operating
in. Who knows, you might be heading in the wrong direction. You might
actually be, you might be doing a lot of hard work heading in the wrong
direction. So, this process can help you identify that, and that’s why another
reason I think it is really important that we get that in place.
So the very first thing, I just have to look here there are 10 Steps here, so
there are 10 steps that we’ll, I’ll just quickly go through with you. There is an
implementation guide so these steps are coming out with the implementation
guide so you can grab those over on the website as well so when you go and
download the business plan on the page, you’ll get my implementation guide
as well which will just give you hints and sort of tips to just think about as
you’re going through each of the steps and that should help you. I really want
to just help you to get this going and make it easy for you to put in place so
that you look at it regularly and hopefully guide your business in the right
direction.
So, the very first step is to make sure that the setting that you are doing this in is
right for you. It’s very very important when we sit down doing planning of any
type, I believe, to make sure that you’re in the right environment, that means
comfortable not cold, not hot, away from noise, away from distractions, turn
your phone off, turn internet off, or Facebook off or all these things, make
sure there is nothing there that’s going to distract you, and set yourself the
right amount of time to do this. So when I do it, just an example, I like to…I
love I’m a bit of a victim the 80’s music, so I’ll have to sit down and have my
80’s music playing, Spotify and then I lock myself away and just set the day
aside to just to do nothing, but really think and strategize about what’s going
on in my business. So, you’ve got to make sure that you’re comfortable and in
the right sort of motivating environment, whatever motivates you that’s
where you want to be. You want to be sitting there in that, in that
environment. So that’s probably a critical thing to do because you don’t want
to get through this process and go jeez it’s cold or I’ve gotta go I’ve run out of
time, or whatever it is, just make sure you’ve got a good block of time to do
that.
All right, so the next step is on the page. Write clearly your business name,
just put in there, you know, set the period that you’re looking at for this
business plan. Now that’s important because what that does is that frames
the period, the time period at which this applies to and where you want,
where you want this plan to cover. Don’t… just a bit of a tip, don’t set it too
far. As I said at the start, what we want to look at is a shorter of period if
anything rather than a longer period. We want it to be dynamic, so we want it
to be timely, we wanted to be up to date with the current state of play with
your business. So don’t set that time period too far away.
Step 3 is to really sit down and what we’re going to do here is look at your
business “why”. Why is it that you do what you do? What is the destination
for your business, where do you want, where do you want your employees to
be focused? Where do you want everyone to be looking at in the future for
your business? That’s what we call a vision statement, so we want to set
here a vision for your business in terms of clear concise it doesn’t have to be
long winded, just needs to be a few concise sentences or paragraphs, but just
make sure it’s clear, concise language.
So, we want it to make sure, it’s a stretch for you, so don’t just describe your
current situation. Look into the future, and say look “In the next five years I
want my business to be doing x”. Clear mental pictures of what it is, so if
someone reads that, they can, if they read your vision, they get a clear mental
picture of exactly what your business is going to look like once you finish
tinkering and doing what you do. So that’s the vision and that’s in step 3;
you’ll see that mapped out on the page. If you find that there’s not enough
room on the page, just follow my example and start another word
document, and you can elaborate on that. That makes more room if you need
to. I tried to make it as much, is a fillable PDF. So I’ve tried to make as much
room as possible, but just see how you go without.
Step 4 is another important thing in your business because it’s the core of
your business. So your vision is where you’re pointing the business, where
you want it to go. Then step 4 we’re looking at the culture of your business.
So, what do you want your business values to be? Okay, now they might be
what they are now. Generally, though I find when I talk to people there’s
always something that can be improved here or they really don’t have the
values in their business that they want. Particularly if you’ve got staff,
then quite often those values might not be pointing where you want them to
go, so we’ve got to do a bit of work here. So we want to write out, what
culture do we want in our business. When others or outsiders see our brand
or product or service or whatever we do, what do we want our culture to look
like? What do we want them to say, in their mind “wow that’s like, you
know, really cool” or whatever it is that you want your business culture to be.
How do you want your team and your people to interact together? So when
they come into work in the morning, I know in our accounting practice we have
a thing that when you come into the office in the morning, it doesn’t matter
how bad a mood you’re in, it doesn’t matter where you are in your head, you
leave that at the front door, you’re coming in ready to work and the very first
thing you do to set your mind right, you just say ‘good morning’ to all your
fellow teammates. You go around and it doesn’t matter how long it takes
or wherever they are but if you find every single one of them, and you say
good morning, how are you going, and you acknowledge them as your
teammates and it just sets the day as a team building, a well-gelled team as
opposed to just everyone coming in and just sitting at their desk and, you
know, not saying anything to anyone, and that sort of thing.
So that’s what, we want to talk about there when we talk about culture. What
sort of culture do we want in our organisation and how do we want it to feel
when people interact with us.
Step 5, we’re looking at… now we’re getting into… now we’ve looked at
where the business is pointing, so the vision, where we want it to go. Step 4
was the culture, how do we want people to see it and how do we want people
to interact, and look and feel inside that business and that’s the central core.
Now we’re going to look at who is it that we serve, who is our ideal
customer.
So, what do they look like? What is their avatar, if you like, or their
demographic – are they young, old? You know, online, offline. Is it business to
business type customers that we want or is it business to consumer type
customers we want. We want to sit down and have a really good think about
what our target client or customer looks like, and how do they act? What’s
their…where do they hang out? What sort of…are they on social media or are
they married, you know, really get a good idea of what they look like.
How I’ve done this in the past when I do these planning sessions I really like
to sit down and have a whiteboard, have a really good size whiteboard and I
just brainstorm it, just jot it down. A good trick is to, actually I learnt this
from Dale I think it was, on his podcast was to write in blocks, so set yourself
a timer and just dump everything out about so you’re going to write about
your customers. You set a time limit for 10 – 15 minutes or whatever. Set the
timer and then just brainstorm and dump out everything in your head and get
it out onto the whiteboard. Don’t make decisions about it, don’t um and ah
about it, just what we’re doing is really dumping it out and getting that all out
there. Once that’s out there, we can then sit down and “cherry pick” whether
or not you know, is that right or is that wrong or whatever but just get it out
to start with and then just work it through that way and you’ll really be
surprised, to see just what’s in your head and what you know.
The other thing to look at too and this is probably going off a bit deeper off a
simple plan, is to have whatever customer if you have an existing business,
you might have pre-existing customer information so you may know a lot of
that stuff and you may be able to drill down. Like for instance, in our
accounting practice, I can tell you what the average age of a client is, I can tell
you what the average business type is, I can tell you all sorts of data, because
we track that sort of thing so it’s not a big job to get it when you’re doing
these sessions, but that’s what you get there and that’s what we want to do
when we’re looking in step 5, of our ideal customer. Cause we really want to
have a good idea about, you know, what are their needs, like, what are their
pain point? Where can we serve them best? Where does our product fit in
solving those pain points so and solving their big problems? That’s what you
want to do here is to get a good clear picture of that because that helps you
to drive your marketing and everything like that, right into that space. So
that’s step 5 – who is your ideal customer.
Then at step 6, we want to then start looking at so we… I’ll just summarize
back again, we know with our vision, where we’re heading, where we’re
pointing. We’ve now got our culture, so we know what we want our business
to feel like when people interact with it and how it works internally. Even if
you haven’t got staff on that culture one, you can still drive the culture. Even
if you’re a solo business owner, don’t think “I don’t have a culture.” You do
have a culture, it might be you, but what are your values in looking after your
customers? How are you going to prioritize customer service? Don’t think
that it’s only for people with staff, it’s also if you’re a solo person, or you’re
even just starting up in business, have a good think about how you want to
interact with your customers, and the relationships you have in your
business.
Step 6 is your financial targets. So now what we want to look at it…okay we
know who already your customers are…and your profit we be
making in this business? What do we need to survive in our business? You
know, it’s no good going out trying to sell three million dollars worth of
products and services if you need 5 million, or you know, whatever, even if
you’ve got, say 200,000 dollars of turnover. Is that enough to meet what you
need to do. Now I have another system for that which I call my reverse
budget which can help you with that in terms of setting up your financial
targets, but I’ll be honest with you, I want to fine turn it and just get it a lot
more honed down but I’ll do a training session on
that reverse budget thing, so feel free to jump on my mailing list, and I’ll keep
you posted with that when it comes out.
Step 7, we want to look at what major opportunities exist in our marketplace.
So where are the sweet spots in our marketplace that competitors are
currently not servicing, and look all markets have them. Because we’ve
identified the main points we can now start to look at where are the
opportunities to meet those main points who’s not meeting those things as
well as others. So, you can get some really good leverage here. Because this is
where we’re going to sell us, this is where we’re going to deliver our services
and products right into that sweet spot. That’s what we’re looking for when
we’re looking for the major opportunities that exist in your marketplace.
Again, that’s another brainstorming exercise you could sit down and just
really brainstorm that and a good way to find out too is to ask your
customers, you know, once you’ve identified them ask them what are their
pain points, or what things are they are actually wanting that aren’t in
existence yet or competitors aren’t meeting.
At Step 8, we want to look at the major threats in the marketplace. So, it’s no
good… I’m a huge… I guess security fan, I guess, in the sense that, it’s no good
going and building all this and then only to have it taken away in a week’s
time. I mean it’d be you like going and starting a Blockbuster video
store right now, you know, when the whole marketplace has been threatened
and taken away by downloads and Netflix and things like that, so what
threats, have we really had a good look at where they are, and what risks
exist and then can they be mitigated and what can we put in place to make
sure they don’t have an impact on our business. That’s what we want to do,
we want to make sure it doesn’t have an impact on our business, and that’s
again another big brainstorming session there. In the implementation guide
I’ve got some examples of what types of risk could be out there for you, so
feel free to grab that and download it as you see fit.
At step 9, we’re then want to look at the key performance indicators. Okay,
so KPI’s for short. There’s a saying out there in business, and it’s basically
saying if we can measure it, we can manage it. So, what we mean here is we’ve
gone and identified all these steps, in the previous steps in the business plan,
but how we’re going to track, whether or not we’re actually delivering on
those action items that we’ve come up with. And what we want to look at
there is then… because this is one of the things that I love about accounting in
business is that we can… there’s always a driver behind a result. So, if we can
measure that result we can drill down and identify what the driver is behind
that.
I’ll give you an example. Let’s just say you’ve got a business that sells physical
products, whether that be online or offline. And you’ve been buying stock
and you just keep… the new stock comes out and you keep buying more… and
we might have, you know, 20 – 30 different product lines. That stock all has
to be paid for. Now we might find that we don’t have any money in the bank,
but you know, our cash is really dry, so measuring the cash flow we want to
then… so that’s the measure, that’s the key performance indicator that we
want to put in place – what should our cash flow balance be? Then we want to
look at what is driving that cash flow balance. One of the things I would
then want to look at, the KPI I would want to look at, is my stock churn rate.
Am I turning that stock over or is it turning it over regularly and generating
more cash for me or am I investing in stock and it’s just sitting on the shelf?
And if anyone wants that – how to work that out, let me know, drop me a line
or something like that, but that’s an example, I guess. If we can measure the
metric, if we can measure whether or not we’re on track to achieve what we
want. If we’re not, then we can drill down and measure in these KPI’s or key
performance indicators.
So, I guess another way we can look at this is like a dashboard in your car. To
use the car analogy again, but if you look at the dashboard in your car, then
you can tell when you’re running out of fuel. That’s what that a key
performance indicator is like in business. It’s a measurement to indicate to
you that something is either going well or on track or not so well and then we
can drill down and find out why. I’ll probably do another training on that too, I
can teach you how to put a dashboard in place, which can help you
complement this business plan on a page document as well.
Step 10. Once we’ve got all of those things in place, what we want
to do then is look at setting the short term and medium terms goals that
we’re going to use to achieve our business plan. So, what things, what
actionable items have we got to put in place to move towards achieving this
plan. Goals are probably one of my most favourite things like… I can’t stress
the importance of them enough. But a good way to set goals and just a couple
of rules with setting these goals is one they should be clearly defined and
realistic goals. So make sure you jot them down and they’re clearly defined
and realistic, so you can look at them and understand them. They should be
actionable, so they can… they should be able to be actioned something that is
in your control to do. You can make sure that this is going to happen. Lastly, they should be measurable. You want to make sure whatever goal you set to achieve your strategy is measurable. And that’s
another important thing.
So, I’ve got that all listed out in the implementation guide as well for you so
you can check that out there. And I’ve also made a spot
on the business plan on a page, I’ve called it a business plan on a page but
there’s more than one page, because there’s a page there where you can put
your goals down and action what steps you’re going to act to, to take place.
So, there you go. There’s the ten steps to putting in place a dynamic
actionable business plan that grows with you and moves with you and moves
with your business environment. It doesn’t have to be a document that you
never look at again. You can add to it, there are lots of things
you can add to it, I would recommend certainly doing a cash flow budget as
well and all those sorts of things, but I didn’t want to complicate that in this
episode today and I’ll cover that in future topics. We’re going to be covering
things like how to read your numbers and what they mean and I guess, and
cash flow, how to really build a really realistic and tangible cash flow and all
sort of those things so I’ll help you with those as well. I’ll try to make them as
interesting as possible, the last thing I want to do is bore you with numbers,
but it’s just so important, as I said at the start, to know where you’re heading
in your business. You just wouldn’t get into a car if you couldn’t see where
you were heading and I see businesses so often, the business owners start
with a passion for selling widgets and so they just jump in to a business selling
widgets and, you know, without any idea of where the widget business is
going. But sorry to use the widget example, but you get my drift.
All right, that’s all I wanted to cover with you today. Thank you, thanks so
much for listening in, I hope that’s been of value to you because I really… I
just see this is such important part of a business – for any business owners –
small, medium, large, online, offline, so please take the steps to put those in
place if you haven’t already.
If you’ve got a question regarding business, your business, or something
you’d like answered on the show, I’ve got a record button over my website
you can record your question there. Feel free to go over there and jump on
and, yeah record your question and I’ll get that in a voicemail and I’ll answer
your question on the show and get your answers through to you, and yeah
that’s a nice thing to do.
Also if you haven’t gone onto our Facebook page, please feel free to
go over there, at the Facebook page, and uhm, and join the group there.
There’s a Facebook group business community where we’re pretty well going
to share ideas and all that sort of things. I’m going to… a lot of my contacts
and things like that – people that are able to help in business, etc. are joining
that as well. So that will be chiming in and helping solve problems and that
sort of thing. Plus we want to also celebrate the wins too, if you’re doing
something great in business, if you know, if you’ve had a problem and then
you’ve solved it, we really want to know about that, because other people can
benefit and like learn from your experiences as well. So please feel free to
share those success stories as well.
Well, that’s all I had time for today, that I wanted to cover with you. I hope it’s
been a help as I say, but I might hand it over to Mia now to take us out and I’ll
talk to you all next week. To your success. Bye!

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