I often get asked for help to develop business plans for clients. A regular misconception is that they need to be complex and detailed, which is understandable when you consider the vast number of templates and software available on the subject.
My view is that business planning should be straightforward to undertake and with the essence of it able to be retained in our head. Documenting our plan helps us to consider it objectively and to be able to share it with those whose help we need such as banks, investers and partners. If we can structure our thinking to create a logical planning process with clear objectives and strategy, it can be captured in a way appropriate for the audience: perhaps a bank’s BP template for a loan application or simply a presentation for people we hope will back us.
This approach to business planning, based on structured thinking, is captured in my Business Planning Simplified presentation below which is also available as a free download. There is also a companion sheet that gives a little more detail that can be downloaded here.w
Part of the business planning process involves researching the market for opportunities and threats and evaluating the business internally for strengths and weaknesses to produce a SWOT analysis. I’m a fan of a SWOT because it’s easy and quick to do and very effective. However, I’ve found that sometimes people are confused about what goes into each category – what is a threat rather than a weakness for example. My short guide to a SWOT might be useful to you.
It’s widely regarded that one of the biggest causes of business failure is lack of attention to cash flow; many inherently profitable businesses have failed due to the owner not keeping an eye on the cash. My short article gives a few tips to avoid catastrophe. An important aspect is to be able to forecast income against expenditure and there is no better tool than a spreadsheet to give an overview. You might like to try my version, it can also be adapted to track your proft and loss.
As charities adapt to the new realities of commissioning rather than grants, they need to become more business-like and, maybe, introduce new skills onto the board of trustees to help move the organisation in a different diection. To help assess where there might be gaps and what skills are required to fill them, I have conducted several skills audits with various charities. It’s a simple but effective process that can really clarify the situation by creating board skills and experience profiles for a range of key disciplines. Here’s a sample of the how the report is structured.
A crucial part of managing any business is understanding the risks and working to reduce the high ones that threaten to destabilise or even destroy it. Too often risk management can be glossed over or missed because it’s seen as too technical or time-consuming. In reality, risk assessment is a simple calculation of how likely is something to happen coupled with how great is the impact if it does.
If you live close to an airport, and under the flight path, the impact of a plan landing on you house would be catastrophic but the likelihood is very small. If you were to score the two variables of likelihood and impact on a scale of 1-5 with 5 being high likelihood/impact and 1 being low, multiplying the two would give a score of 5 out of a possible 25 – low risk. But, what if the likelihood and impact score higher so that they indicated a high risk? Then some actions would be necessary to reduce the risk so that a lower score could be given. The initial score would reflect the ‘inherent risk’ and subsequent score would reflect the mitigated situation: the ‘residual risk’.
Assessing risk to the organisation in this way not only reduces the chance of unwelcome surprises but also demonstrates to others such as funders and investors that the business is being properly run. To help manage your risk, you can try my free risk assesment tool.
Business continuity planning (BCP)
BCP, now there’s a thing. It often seems to be put on the ‘back burner’ by managers and business owners, perhaps prompted by thoughts that it involves a lot of work to anticipate every eventuality that could befall an organisation. In reality the principles are quite straightforward and the key is to concentrate on priorities. Only consider vital processes and assets and, in the first instance, aim to restore a service within a time-frame that is appropriate to your customers’ need. There is a downloadable version of the presentation below that covers the essential elements of a business continuity plan.