Story image

Show me the (business) plan

17 Dec 2010

Most Start-Up
readers, a well traveled bunch, know what it’s like to be in a new city. But
suppose there’s a particular place you want to get to in that city, somewhere
you really need to be. But you have no written directions, no map, no global
positioning system – no idea how to get there. How silly would that be?

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 – in other words,
they lack a business plan.

Not a smart idea at the best of economic
times, such a lack could be positively disastrous in the challenging year that
2011 looks set to be.

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 into a
new line of business thinking they can get by without a CPS, rather like our
hypothetical visitor to a new city thinks they 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, they get beaten down with the never-ending day-to-day hurdles,
and simply run out of time for the big-picture stuff. 

A clever 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 new year looming, now might be
as good a time as ever to take another look at your business plan, or possibly
to look at creating one.

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 their 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 be in direct relation to the state of your CPS. Happy New
Business Year.

• Stephen Nicholas
( is a
Chartered Accountant and chief executive of Openside CA (, a
business-performance company.

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