With the 2008-09 financial year drawing to a close in the next 2 months some of you will recall it as “pessimus annus” – the worst year, whilst others hold a more optimistic view – why?  We would hazard a guess that the more optimistic of you reading this article are the handful of business owners that have taken the time out to thoroughly review your business AND have a plan in place for where you want it to be in 3-5 years time.

In conjunction with our business partner ZENBUU, (www.zenbuu.com), all subscribers are asked to answer a series of questions to benchmark the performance of their business.  An overwhelming proportion of ZENBUU subscribers have indicated that they lack a written strategic or business plan to drive the growth and performance of their business. Experience highlights that the absence of a written plan means that as soon as a crisis occurs, owners and their managers are caught unawares and often forced to make reactionary decisions, sometimes with success, but more often exacerbating an already poorly performing situation.

Strategic planning versus business planning

Strategic planning is about setting a long term vision or future direction for your business and considers the resources both financial and human that will be necessary to get you there - say over a 3 or 5 year period. A business plan is the tactical interpretation of how that that vision will be achieved and identifies the steps your business is going to take to move you down the path to realising that vision.  A good business plan should consider things such as marketing, operations, management and finance including how you intend to structure the business.  Together the strategic plan you formulate and your business plan helps you to identify the specific actions you will need to make to reach your long term goals.

Size doesn't matter

Regardless of the size of your business, planning is critical if you want your business to:

• grow
• retain and engage the right people
• make informed decisions
• adequately manage risk.
  

The five critical elements of a plan

There are five essential elements to the development of a strategic plan, they are:

• Review
• Plan
• Act
• Adjust
• Review and adjust every 90 days
  

>>Initial Review – Where is your business now?

This involves understanding as much about your business as possible, including how it operates internally, what drives profitability, who are the targets, how does it reach and sell to these targets, how does it compare against competitors, what makes your business distinctly different to the competition, what is happening in the “environment” your business operates in, and so on.

It is critical that this sort of analysis is kept objective and separate from the day-to-day running of the business. Most businesses don’t have much of this information readily available – typically because there has been a failure to capture and record key metrics and measures across the business’ operations.

There are three key steps in this process:

• Set up the measures, go back sufficiently in time to determine the “norm”, and look for trends
• Avoid gut feel and what people think – base as much as you can on fact and evidence – and study what is changing outside your business that may impact it
• Objectively investigate causes (good or bad), and identify the improvement opportunities.

>>Plan – Where do you want to be?

This is where you define the long term vision for the business, in other words answer the question of where you want the business to be in 5, or maybe even 10 years from now. Given this end point, where should the business be 3 years from now, and then where should it be 1 year from now.

Most plans fail to identify clear and measurable goals and objectives, and so as a result it becomes very difficult to objectively determine if you have reached these milestones.

We are strong advocates of using the SMART goal setting methodology. “SMART” stands for Specific, Measurable, Attainable, Realistic, and Time-bound. In other words set goals and objectives that you are confident your business is capable of achieving, moves your business forward towards reaching your vision, something you can measure and track, and something that has a timeframe.

For instance, if your vision is to become the premier supplier of Security Systems to businesses in Victoria, then you would need to set goals and objectives that define what “premier” means, over 1, 3, and 5 year periods so that you can track and measure that you achieved it.

>>Act – How will you get there?

Setting the vision, goals and objectives is relatively easy compared to figuring out how you are going to achieve them.

To determine the most effective strategies that you can undertake often requires you to seek input from a wide range of people (internal and external to the business) – in part to get some objectivity, but also to stimulate some creativity and innovative thinking. Its fresh thinking that leads to identifying, developing and implementing a sustainable competitive edge in the market.
When determining your key initiatives / strategies consider what changes are needed to achieve your stated SMART goals and objectives. Strategic growth can be achieved through a number of ways:

•    New product development and other forms of diversification
•    New sales and distribution channels
•    Cross marketing and selling
•    Technology and productivity improvements
•    Strategic sourcing
•    Strategic partnering
•    Acquisition
•    Export

>>Adjust – Measurement and reporting

Now that you’ve defined what your strategic goals and objectives are, and what initiatives you will implement to help you achieve those, there remain two key success ingredients – measurement and reporting.

Measurement
Determine the performance indicators that you would need to track on a daily, weekly, or monthly basis to ensure that you are edging closer to achieving your SMART goals and objectives. These aren’t always the financial numbers, such as revenues or profits. They can also be things like warranty claims, customer complaints, amount of discounting, utilisation of billable staff, stock outs etc.
Reporting
Ensure that the information being collected is reliable and accurately reported to the key people in the business and that they are being held accountable in achieving these measures. The frequency of reporting should be in line with the need by management to make decisions.

>>Review and adjust - Every 90 days

The greatest mistake that a business makes when it comes to planning is to not periodically review and adjust the key initiatives / strategies given the conditions of the market, the business, and any other factor that impacts the business. How many times have you heard, or been involved in the development of a Strategic Plan that ends up on someone’ bookshelf collecting dust? When it is finally pulled out what most people discover is a collection of good ideas and plans that were either executed poorly or even worse weren’t executed at all because the day to day running of the business got in the way.

Get planning now – we’ll kick start you at no cost

Over the years, the Incite team have been asked to help numerous businesses with developing their strategic and business plans.  The common factor we notice is that disciplined owners and managers are more likely to plan well.  This insight is one of the key reasons that drove us to develop ZENBUU.

ZENBUU educates owners and managers to engage in a 90-day cyclical review process so that effective adjustments and refinement are consistently made to the business strategies to ensure that the goals and objectives are achieved.   ZENBUU’s role is to remind you to engage in reviewing your business and provide you with the tools and resources needed to success in the development and implementation of your strategies.

ZENBUU uses a simple, yet effective, one page plan to capture your business strategy, which is called a Horizon Plan. Incite is so passionate about the value of planning that we would like to offer all Incite newsletter subscribers, at no cost, the opportunity to utilise the Horizon Plan to kick start your strategic planning process. 

Click on this link and create a free ZENBUU trial subscription account and for the next 7 days you will be able to download the Horizon Plan template from ZENBUU’ Knowledge Base free of charge.

Remember, it is easy to procrastinate about planning but in the words of General George S. Patton III, “A good plan today is better than a perfect plan tomorrow.” – so get planning!