In past blog posts, I have written about how Indigenous organisations can start small businesses and social enterprises. Participating in the broader economy is, in my opinion, an important part of success for any Indigenous organisation.
This month, I wanted to write about how to provide a plan for your small business.
Whether it is a small business or social enterprise attached to a larger Indigenous organisation, or whether you are encouraging your members to start their own enterprises, all small businesses need to have the support of a well thought out business plan.
Statistics consistently show that 80% of small businesses fail within their first 5 years. Indigenous businesses will be no different.
What’s even more telling however is that of those small businesses that survive their first 5 years, most say that they are “struggling” but of those who say they are “successful”, a significant majority say that their success s due to their having and following a business plan.
What can an effective, implementable business plan do for your small business?
- It sets your cohesive, strategic direction, offering you clear choices for all your decisions – which option gets me to my ultimate goals faster and more reliably?
- Having a clear direction for your business means you can get organised – no more flip-flopping on projects and activities, you can decide up front which activities and projects are most capable of getting you what you want, and you can disregard the rest.
- A long-term direction means you can cascade your goals into long-term, medium-term, and short-term strategies – taking out a lot of daily frustration and confusion about what to do next.
- Having these cascading strategies means that you are better able to set out prioritised action plans with steps you need to follow, almost every day. This gives you a daily sense of purpose better than any short-sighted to-do list.
- Knowing what you need to do, and when, means that you can organise and obtain resources at the right time – know when to hire skilled staff, know when you need investment in equipment.
- Inserting a simple monitoring and evaluation (and accountability) system into your plan means that you can stay flexible and fix what’s not working – while still keeping your eye on the single strategic direction and ultimate goal.
But what makes an effective, implementable business plan?
Let’s first look at what’s not.
You can buy templates and fill in the blanks – these will not give you an actionable plan. All they do is provide you with the structure of your business plan, and you attempt to complete it as you fill in the blanks.
But the process of writing a business plan does not follow the order of contents of a completed document!
You need to think through some key issues in the right order, to then arrive at key decisions you need to make, to then arrive at the strategies that have to be implemented in the right order.
The analysis is what makes the plan, not the collation of different pages.
You can also hire a consultant to help you write the plan.
The problem is that there are consultants…and then there are consultants. You need to find and choose one who can translate what you tell them into something that you can action, not some pie in the sky list of wonderful things to achieve that you have no resources to carry out. On top of that, you spend a lot of time with the consultant telling them what you know (you are the expert in your business, not the consultant) when you already have the knowledge but just need the system to put it all together.
So, an implementable and effective business plan first clearly lays out where you want to get to (so you can’t make a wrong turn to somewhere that looks like it but isn’t it somewhere along your journey); that logically sets out what you have to do to get there, and then breaks it down into step by step projects for you to implement.
Also, what makes it implementable is the inclusion of monitoring and evaluation dates and systems, correcting wrong turns and analysing why some things haven’t worked, and making changes that will still get you to the ultimate goal.
Let’s now go through the 3 phases of writing your own business plan. The 3 phases are:-
- Get to know exactly where you want to go;
- Understand exactly where you are now; and
- Find the key gaps between 1., and 2., and create strategies to bridge those gaps.
Where Do You Want To Go?
The first step is to describe exactly where you want to go.
What is the vision for your business? What is it’s ultimate purpose – to provide a stellar service, to provide an incredible product, to wildly satisfy customers?
In this case, I’m not talking about the background purpose – to create employment, to support culture, to provide private funds for community – I am talking about what customers see in the business.
Take a company like Coca-Cola.
Let’s be frank – the background purpose is to make a lot of money for their shareholders. But if they put that in their vision statement, how would you feel? So companies like that talk about sharing experiences, making people happy, and so on. These are the things that attract customers.
So, describe what your business does once you have reached your ultimate goal – does it make a better mousetrap? Does it provide a service that makes people happier, healthier, better?
Then, look at this complete picture from 4 different perspectives.
First, stand in the shoes of your customers and ask: “Once I have attained my vision, what do my customers think and say about my business?”
Why do they continue to buy from you? What satisfies their needs, and how do you do that?
Then, stand in the shoes of your employees and as: “Once I have attained my vision, what will my staff be doing and how will they see working there?”
Why are they loyal? What remuneration and support do you provide? How skilled are they, in what areas?
Third, look at your business from the point of view of its finances and ask: “Once I have attained my vision, what will my finances look like?”
What is your turnover? How much money is in reserves? What dividends are generated? What assets and liabilities will you have on your balance sheet?
Finally, look at your business from the way that it does things and ask: “Once I have attained my vision, what key business processes must I really excel at to keep me there?”
Which business processes have got you there? Which business processes are required to get your customers talking the way you described, get your staff working the way you described, and get your finances to the stage you described?
Is it your marketing? Your training systems and your procedures manuals? Is it your governance systems?
Describing your future “ideal” business in this way sets a clear target, in the form of a description of what you want, so that you can start to think of how you can get there. Breaking that picture down into the 4 perspectives details what “success” means in each of those 4 areas. For example, if your description of why customers buy from you is your responsiveness, then you’d better have strategies in place to develop responsive systems and attitudes.
From this analysis, you can write a few draft goals, like “To develop and maintain a responsive customer relationship management system.”
Where Are You Now?
In this second phase, you need to take a good, long, and honest look at exactly where you are now.
One of the tools to use when doing this is called the SWOT Analysis.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
Strengths and Weaknesses are internal characteristics – things that you can control. Once you understand your strengths and weaknesses, you can develop strategies to use your strengths and fix your weaknesses.
Opportunities and Threats are external factors – things that may or may not happen outside of your control. However, once identified you can develop strategies to take advantage of opportunities and mitigate against threats.
In order to be thorough, you should conduct your SWOT Analysis on the business as a whole, and then on the individual components of it such as Sales & Marketing, Production and Purchasing, Human Resources, Administration & Finance, Systems and Procedures, and so on.
For each area of your business, list all the strengths, weaknesses, opportunities and threats that you can think of, and then note the following:-
- How they affect your business now;
- How much, on a scale of 1-10, do they affect the business;
- How they might affect your business getting to the vision;
- How much might they, on a scale of 1 – 10, affect you getting to your vision;
- Whether they have a knock-on effect on other strengths, weaknesses, opportunities and threats.
From this analysis, you can identify priority strengths, weaknesses, opportunities and threats.
Compare these to your description of what your business should look like and be like once you have attained your vision – these are the gaps between where you are now, and where you want to be.
Looking at these gaps, you can now identify the Key Strategic Issues (KSI’s) that you must take care of between where you are now and getting to your vision.
Bridging The Gap
Having identified your KSI’s you can confirm your draft goals from phase 1, and you can write strategies.
Writing strategies is not a complex exercise.
Having identified the gaps, and translated them into goals, strategies are just a description of what you need to do.
For example, say there is a gap between the current skills of your staff and how you want them to be skilled in the future. The goal may be to have a workforce that understands the technical specifications of your product enough to be able to assist customers as the first point of contact.
This may give rise to two strategies (2 ways to “make it happen”.
- We will provide intensive training to key staff members over the next 3 years to develop their technical knowledge; and
- We will seek to hire technically trained and certified staff within 5 years to add to our workforce.
Once you have written your strategies, you should categorise them as short-term (capable of being implemented within 12 months), medium-term (implemented in less than 3 to 5 years) and long-term (implemented in more than 3 to 5 years).
Looking at the medium and long-term strategies, analyse them to see if they can be started within the short-term. Some of them may not be capable of this because their start may depend on completing the implementation of another strategy.
If they are capable of being started within 12 months, then analyse them further to see if you can define any “milestones” you can get to at the end of 12 months. For example, if a medium-term strategy was to employ technically skilled people in the next 5 years, but you just don’t have enough resources to do so in the next 12 months, perhaps a milestone at the end of 12 months is to have identified exactly what certification is required and which colleges potential recruits may be found.
At the end of this analysis, you will have come to a few short-term strategies and milestones.
Next, you should write an Action Plan for each of these strategies and milestones, listing the logical order of steps to be taken, who is responsible, and when the steps will be completed by. Be realistic about these deadlines!
The collation of your analyses and working can now be performed, following any standard contents page of a business plan – as long as the collated document clearly states where you want to go, and how to get there. In other blog posts, I have set out my suggested list of contents.
Finally, don’t forget to insert your monitoring and evaluation procedures – when you will do this, what you will measure and look at, and what you will do to make changes as necessary. I have an approach to making this actionable, by creating simple reward systems and other motivational techniques, but this is not the article to delve into this.
With the above, you can follow the steps to write your own business plan. If you want to know more, my online training business called Teik Oh Dot Com offers an eBook and Business Planning Checklist and it comes with a free 4-part video training series on how to write your own business plan. You can get it by clicking on the link here.
Some people would prefer having a guided exercise when they prepare your business plan – where a guide takes you through each step to coax the information out of you. If that interests you, Teik Oh Dot Com also offers an online workshop called Your One Day Business Plan, and you can read more about it here.