Business Planning

The Key Components

1. Sales and Marketing

A lot of SME’s confuse their Business Planning with their Marketing Plan You may be able to get away with this whilst your costs are low and other factors such as Information Technology, Human Resources and Financial Investment are not significant. But as the business grows, wider considerations need to come into play within your business Planning.

Any sales and marketing decision you make must be based on a realistic sales estimate over the period.

Your decisions will affect profitability and the working targets for the business. Whilst arriving at a figure can take seconds, it is not easy to get a realistic figure that avoids being too pessimistic or optimistic.

My TOP TIPS for helping you to gain an accurate picture are:

1. Draw on your experience.
   This should be based on both historical records and your personal viewpoint.

2. Make full use of Market Research.
   Your sales force should be a good source of information, backed up by customer surveys, customer visits etc. It may even pay to use a professional market research company.

3. Don't neglect reviewing any contracts that might need special treatment.
   For instance, public sector contracts, where the number of contracts awarded and on what basis each year will be of concern. Here you will need to estimate how long it will take you to win your first contract and how large it will be, then your second, third and so on. This will help you build your sales projection.

   

4. Take into account any published sales figures.
   With a bit of research on the internet, at the library, perhaps through a Trade Association or Trade Directory, or Chamber of Commerce, it is possible to build up a sales picture.

   You then need to marry this information to the likely level of clients. I quite often use the information on the government census for this purpose.

Your marketing decisions will focus on how you intend to reach customers, maintain intelligence about the market place, secure sales and increase revenue.

Rather than repeat information on advice on how to do this, you will find "How to Attract New Customers" is covered in the Marketing and Sales pages on this site.

2. "Igniting"Operations

Operational decisions cover Production, Engineering, Distribution, Human Resources, and Information Communication and Technology.

For many businesses, most of these areas may not necessarily apply, but the majority will.

It is very dangerous just to consider your business in terms of sales growth without connecting how this will be operationally provided for the customer.

Some of my most stressful experiences have come from trying to operationally meet unexpected sales growth.

Usually Customer Relationships suffer as a result.

Virtually everything we do will involve a step by step process. Whether you are selling a product or a service, it is likely to have operational elements. Therefore as the business grows or declines, the existing capacity, scalability and flexibility of operations must be considered within the bsuiness planning process. For instance:

• Do I buy a machine to increase productivity or pay premium costs for additional shift working?

• I now have too much production capacity, how do I balance my costs?

I am strong advocate for "Continuous improvement" in everything that a business does - even small businesses can benefit from the approach. Rich pickings can particularly be gained in the operations area and targets should be set and monitored (Key Performance Indicator's) to achieve these gains each year.

Human Resources
If you employ people or intend to, then your plan should feature how you intend to manage and devlop their skills and contribution.

Some issue to consider are:

• What skills and experience have I got available currently
• Do I need to recruit?
• How much do I intend on spending on pay increases, staff benefits and training?
• How can I get the best out of my workforce and am I ready to pursue "Investors in People"?

3. Technology - In the end, the "Luddites" lost!

For your business plan, it’s worth reflecting on the technology that you may have in a small office:

• Facsimile machine

• Laptop

• Printer/Scanner/Copier

• Telephone

• Internet connection/wireless router

• Mobile phone

As it grows and more people join the business, so the costs of technology investment and usage will go up.

So it makes real sense to ensure that you are really benefiting as business from the operational tools that you are using.

So in your plan you might consider:

1. To keep efficient and in pace with developments, what is your replacement policy (every 2 or 3 years?)

2. Do you want to buy or possibly take out a lease?
   This is more expensive, but will come with a support package). Having recently lost my hard drive, I realised the true value of the service support!

3. Do you need your own server which can also control your own website/email requirements?

4. Can you gain value from “Voice over Internet Provision”?
   I have used Skype to contact colleagues to great effect. There is widely available technology that will keep "off site" personnel in touch with the main office at a fraction of the costs.

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