When does a business need a plan?
Not every business needs a business coach, but we would argue that every business does need business planning.
The most simple business can be run on the back of the proverbial fag packet, however as the business gets bigger the fag packet approach usually fails as more turnover, staff, stock, vehicles and processes increase the complexity of the business.
Effective business planning is particularly important when dealing with scenarios involving start-up, growth, turnaround, succession, exit, mergers and acquisitions.
So what do we mean by business planning?
Business planning can mean different things to different people but in the SME world it is often associated with the growing pains that a business encounters along the road. Effective business planning usually goes hand in hand with a well organised business which would ideally have the following elements in place:
A long term strategy with clear targets to be achieved within 3-5 years, usually expressed in terms of turnover, profitability or market position
A clearly defined marketing strategy that involves an annual marketing plan and marketing budget
Clearly defined internal processes relating to all aspects of the business
Effective financial management including an annual budget, monthly or quarterly managements accounts and a cash flow forecast
A well understood annual planning cycle based around the year end that includes budgets, cash flow forecasts and marketing plans
Effective internal communication so that staff at all levels of the business know that they are part of the solution rather than part of the problem
An effective HR framework including Job Descriptions and an Appraisal System etc.