Business planning is very important it’s like knowing the directions when you want to go somewhere.
A great way to make sure your business stays on track is the Now-Where How process.
This process asks three key questions that need to be answered in developing a plan:
1. Now – what is the current situation?
2. Where – what is the destination?
3. How – what needs to be done to get there?
The Now can be difficult for business owners to answer as it requires an honest assessment of the good and the bad within the business, encompassing:
* Financial performance trends
* Staffing issues
* System and process issues
* Customer and product profitability
* Market and wider economy factors.
Reviewing these internal and external factors allows business owners to ‘draw a line in the sand’ that can then be used as the base from which to measure future improvements.Assessing where you are now can often lead to jumping in and fixing problems – or lead straight to the How part of the process. The problem this can cause is that you may just be fixing the easy things or the most visible. Ideally you want to be spending your energy on changing the systems or processes that are going to give you the greatest return in terms of increased profits or dollars spent. The Where part of the process will solve this.
Where is best seen as the strategic plan for your business. This is the plan that answers the questions of where are you going and why? The strategic plan should look three to five years out and cover:
* Core values that guide the business and the reason that it exists
* Vision – where do you want the business to be positioned?
* What capabilities are required to achieve the vision?
* What are the competitive advantages of the business
* How will success be measured?
Once you know the Where, then you can focus on the How. This is your business plan – the action plan that will take your current position to where you want to be. This is the exciting part of the process because it means action. This is when you get to pull the ‘levers’ of the business and see changing performance.
Now-Where-How analysis ensures that your business plan does not simply become an operational plan, focusing on how you will run your business. It ensures that you are not stuck on an endless journey, without a destination. The continual use of this process is like referring to a road map. Always ask where is your business now, where do you want to get it to, and how will you do it.
Financial Performance Trends
Trend analysis is where you evaluate your business’ financial information over a period of time.
This period could be monthly, quarterly or over years. The analysis could be as detailed as seasonally and by product. Your review is to calculate and analyse the amount of change from one period to the next. The analysis uses key ratios in determining financial performance and can be a great identifier of areas the business needs to improve in. Trend analysis can anticipate upcoming problems such as cash flow deficiencies in a business. It can also be used to review marketing approaches you have used to establish their success.
Benchmarking is used by business when they want to evaluate their standing within their industry.
It identifies strengths and weaknesses in an organisation as well as opportunities on
Business owners like to know how they are going against their competitors in relation to overall sales, profit margins and efficiency. Benchmarking tools allow this analysis. Benchmarking shows were you are now and where you want to get to. It is also a great tool for increasing the value of the business for a future sale or succession plan.
One of the key challenges for SME business owners is attracting, retaining and managing staff productivity. Many small business’ face problems running a business and managing staff.
Does your business face these problems?
* High staff turnover
* Loss of key staff
* Difficulty in attracting the calibre of staff you would like
* Performance review process is ad hoc
* Staff do not have specific KPIs
* Staff are not fully engaged
* You would like to be able to delegate more
A staff evaluation program may be what your business needs.
System and Process Issues
Profit is the lifeblood of any organisation. Without profit and cash flow you won’t be able to guarantee your long term survival.Profit generates the capital that you need to grow your business. Without it you cannot reinvest for the future.
Taking a strategic approach to managing waste reduction can bring a range of key benefits to your business and is the easiest opportunity to increase profits. Studies have found that waste in a company can be as much as 30% of the operating costs. This
leaves a lot of room for improvement in all businesses.
Customer and Product profitability
Do you really think about the ways that you can increase demand for your product or services? Do you work on ways that can help customers come to you? A lot of success in the modern business environment is generated by creating demand and creating triggers for customers. This can be critical to the sales process and driving growth.
We estimate that only about 10% of your customers are in the “buying” stage. Good business should be looking beyond this part of the customer buying cycle and putting energy into the potential customers that are still in the “satisfaction” stage. Understanding the customer buying cycle helps us to do this and generate sales demand. This is where we can generate real revenue growth and hit those sales targets that will make your business a success.
Market and wider economic factors:
Market segmentation is simply a tool that helps you to understand your market and the needs of your customers. Once you understand this better you can refine your product or service, positioning and marketing. A key to growing your business is to review the market regularly. You can segment the market by Product, Geography or Customer. This then lets you answer questions like –
* Is your segment size enough to make a profit?
* Is it seasonal or cyclical?
* Is this long term or a quick profit?
* Is it shrinking or growing?
At RSM Bird Cameron in Canberra, we develop seminars and workshops to help clients with business growth, sessions to assist with superannuation, and updates on technical issues. Our events are current, relevant and practical, aimed at professionals, corporate leaders, government departments and other key decision makers. Our reputation is based on our proven ability to provide excellence for people wishing to further their industry knowledge.
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