Are you letting planning fall by the wayside as the dust settles from the GFC? Now's not the time to relax. Here are seven strategies to put in place before the new financial year kicks in.
Business owners are letting planning fall by the wayside as the dust settles from the GFC, but it’s not safe to relax just yet, warns Andrew Graham, RSM Bird Cameron's head of business solutions.
According to the latest RSM Bird Cameron thinkBIG survey, the number of SME owners that create a business plan dropped to 68% from 76% the previous year.
Graham puts this down to a shift in focus from business owners as markets begin to pick up.
“A volatile environment can be a catalyst for business planning,” says Graham. “People are in survival mode, looking at future prospects and potential markets.”
But this is no time for brokers to let down their guard, says Graham.
“I think in the environment we’re in it’s imperative that people are looking towards the future. People need to be asking if they will have a business in the same shape and form as it is today in the next three ro five years and if not what changes they need to be making.”
Small businesses are the worst culprits for failing to plan, according to RSM Bird Cameron’s report, with only 35% of sole-ownership businesses completing a plan and just 56% of businesses with less than five employees.
“I don’t think it matters what size your business is, a business plan is going to give clarity around the markets that you are operating in, whether they are they right markets, whether they are sustainable and whether they will continue to be sustainable in the future,” says Graham.
Businesses in rural areas have, however, been feeling the squeeze of competition, says Graham, and business planning stats are up 13% outside of Australia's main centres.
“Rural areas that have traditionally relied upon relationships with consumers and suppliers on a more local level have seen that shift as internet retailers make competition more intense.”
Of the businesses that do plan, the majority undertake a plan once a year, and some once every two to three years, but these time horizons need to be shortened, says Graham.
“Really good planning processes don’t just take a strategic view in terms of the next few years, but they’re very succinct in terms of tactical actions that they take in the trenches, what they need to do in the next 30 or 90 days.”
Previous research by RSM Bird Cameron has found that businesses that undergo regular planning are 20% more likely to experience growth than the businesses that don’t.
RSM Bird Cameron offers seven tips to improve your business planning:
- Use a succinct one page plan approach to drive strategies and the implementation of actions.
- Prioritise and fix critical issues first before moving to longer term strategic issues.
- Develop a plan B and alternate scenarios if one strategy does not work out.
- Develop plans prior to June in the current financial year in order to hit the ground running on 1 July.
- Develop plans that can be sensitised on the basis of best case, middle of the road and worst case in order to manage risk.
- Review the sales process and develop a clear sales focus with an active prospecting and contact program.
- Business plans are important in supporting funding applications and reviews. Successful SME owners are moving the focus of business plans from a documenting process to a vital strategic planning tool to drive success.
