Every small business should have a number of plans. It is simply a must – you cannot and should not operate your business in reactive mode all the time. You need to set a direction and work to a schedule. Things might change, but unless you have set a plan into place, it costs too much in time, money and efficiency to simply react to changes.
Plans need not be massive documents. All plans, however they look and whatever detail they end up in, should set the end point of where you want to go and some strategy or steps that you will take to get there.
At the least, and to some degree, every business needs a business plan, a marketing plan, and a tax plan. What a great time to plan ahead at the end of the financial year.
Here are the facts behind each of these plans.
A business plan is a plan about how you want you business to grow, over a set period of time that you can more or less predict and control. It can help you set geographic markets (where’s the best place to operate), identify needed changes to your products, set levels for staffing requirements, and make efficiency gains.
The basic business plan starts with defining where you want to go within a set period of say 3 to 5 years (reasonably predictable). To do this you set targets – how much your sales will be, how big your business will be, what you will be doing, etc.
Then you need to take a step back and see where you are now – what are your strengths and weaknesses, what are your current resources, how good/bad are your products and why, how good are your staff etc.
Then you need to create strategies on how to get where you want to go from where you are now. These establish your goals, objectives and milestones. From these you can write out the actual steps you need to take, who is responsible, and how long it will take.
Having a business plan will take the “dream” from inside your head and put it on paper so that everyone involved understands it and can work towards the same picture. Otherwise you might have your staff and partners working towards different goals and being in conflict. Having a business plan will give you concrete steps to take (open a new store, hire more staff, get a loan, pay out a loan, buy new equipment) and when to take them.
We have helped clients prepare complex business plans for funding and their banks, we have also helped clients prepare “one-day” business plans to clarify their own direction for themselves. In fact we have a “one-day” method where we simply ask a series of questions, starting from “describe your ideal (business)” and from the answer we tease out your goals and objectives and the steps you need to take to get there.
Having a business plan also allows you to cost the strategies, so that you have forecasts in place and know when you need additional funding, how much of it, and where you can get it from.
The second plan that every business needs is a marketing plan.
Tell me, is it better to understand exactly who your best customers are and target all your marketing efforts at them, or is it better to take out a big shotgun, fire it and hope you hit someone?
In order to sell effectively, you need focused targets, and the best activities that will attract those targets.
Teik Oh has written a book detailing his 7-step approach to preparing a marketing plan. It is called “SMART Marketing – 7 Steps to More Sales” and it is available from Amazon. Teik has also produced an online workshop and training program that you can follow in your own time – it is available from www.teikoh.com.
Basically the 7 steps are these:-
- Identify your real product. People don’t really buy a power drill, they buy something to make them a hole in the wall so the real product there is the maker of a hole in the wall.
- Identify your real market. You don’t sell to everybody. Anyone who tries to sell to everybody will fail. You need to find the market that most needs your product.
- Match your market requirements. Once you know who most needs your product, find out what they need to buy from you and not someone else, and make sure your business can match their requirements.
- Make your selling price a marketing factor. Are you low end or high end? Have you ever tried selling expensive watches in a community market? Match your market.
- Identify your marketing activities. It’s not just advertising – what activities most suit the delivery of the solution to your ideal market?
- Develop your campaign plan. Choose the specific actions in each prioritised marketing activity, and schedule them.
- Implement and monitor. Monitor and evaluate all the time – what works, what doesn’t?
The third type of plan that you should have is a tax plan.
When most people talk about a tax plan they think about the end of the year and how we should reduce taxes at the end of the year.
In fact, every business should have a strategic tax plan. This means that you need to map out what your tax structure should be, to suit your needs in terms of family members, growth and ultimate wealth building. You need to have strategies about the standard annual tax treatments and disbursements. You need to build in tax cash flows into business plans. And yes, you need to consider with up to date information what your year-end position will be and prepare strategies for reducing tax in legal ways.
Many small businesses open their doors with an idea in mind. Maybe there’s a big picture somewhere. Then as they start to trade, things just get “caught up”. They hire more people who have no idea what the big picture is so they take actions that might even work against the big picture.
There’s a way to avoid all that and stay focused on your dream. That way is to prepare the right plans for your business. Make planning a tool rather than a chore.
If you want to know more about planning, have a look at our free resources in our website www.otsmanagement.com.au. Better yet, contact us by clicking on the Contact Us tab on our website and set up an obligation free meeting to discuss your needs.
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