Owner’s Involvement

The owner/manager has normally established or developed the firm themselves.  The risks and responsibilities have been theirs.  The business is frequently seen as an extension of the owner.  It can lead to extreme dedication.  At the same time it can produce a reluctance to change or rethink initial assumptions.

The same phenomenon of involvement encourages many small business owner/managers to become involved in virtually all aspects of a business’ activities.

Generalists Not Specialists

These managers tend to be generalists, not specialists.  This gives them an overview of the firm seldom possible to the specialists in a large business.

At the same time, it can make them unaware of many of the specialist skills needed in today’s business climate if they are going to survive.

Lack Of Concern For Specialist Activities

Many small business owners want to get on with the job and not be bothered with specialist activities, such as management, planning, marketing, finance or customer relations.

In their opinion, that is not why they are in business.  However, neglecting these important specialist activities can do more to erode the business’ base than anything else.

Wrong Priorities On Time

The extent of the manager’s involvement means that they seldom have the time to invest in key business activities such as management, planning, record keeping, personal and customer development.  They either do not have the time or resent spending the time on these pursuits.  They concentrate on working in the business rather than on the business.

But planning is a must to ensure business survival.

Quality Time

Business people, especially small business managers, need to allocate quality time on a daily basis for:

• Planning where the business is going.
• Development of customer relations.
• Staff training and development.
• Reviewing actual results.
• Planning effective delegation.

Where Do You Get ‘Quality Time’?

You plan for it.  Allocate an hour each day when you lock yourself away when you are fresh and alert (not tired at the end of the day).

Have someone take messages.  (People don’t mind as long as you ring them back within a reasonable time)

Tell your staff this is your planning time and that they are not to interrupt you for the next hour unless it is absolutely important.

Use this precious one hour each day – this quality time – to plan the future of the business.

Use a check list (such as parts of the Business Plan Questionnaires) to continually review.

• Where is your business now?
• Where is your business going?
• How are you going to get there?

Allocate enough time to work on the business of the business rather than all of your time being spent working in the business. 

Small Business Failure

The extent of small business failure rates in Australia emphasises the absolute need for planning for businesses to meet business objectives and aims.

Reasons For Business Failure

Various statistics are available but most generally agree that 50% to 75% of the businesses that commence this year will be out of business within the next three to five years.  The reasons for business failure are numerous, however the most frequently referred to are:

• Lack of planning.
• Lack of bookkeeping/computer knowledge.
• Lack of accounting and financial knowledge.
• Lack of marketing skills.
• Lack of customers’ empathy.

All of these items relate to working on the business of the business, whereas what is highlighted is that most small business operators work in the business rather than on the business.

The Business Plan

Business plans can be divided into:

• Short term, probably of a duration of one year.
• Long term three years, or even longer.

The business plan should consider:

• Where we are now – review of the business
• Objectives
• Resources
• Experience
• Competition
• Customers
• Market
• Staff
• Location

and contain financial forecasts and action plans for work agreed to be undertaken

There are some basic questions to be answered:

• Where is your business going?
• How is it going to get there?
• Have you objectively prepared plans, forecasts, budgets and cashflow forecasts?

Other matters to be taken into consideration in developing your business plan:

• Size of the business that you want to have in three years.
• What share of the market do you want?
• Staff development and training.
• Delegation of responsibility and duties.
• Development of customer relations.  Know your customer.
• Succession – in the event of premature death or ultimate retirement.
• Premises – are they suitable?  Will they be suitable for the duration of the plan?
• Investments – diversification of activities.
• Lifestyle.
• Is your business structure still appropriate (partnership, company or trust)?

Preparation Of The Plan

The business planning process commences with the utilisation of a business plan questionnaire to enable a detailed review of the business to be undertaken.

Past financial performance figures are analysed.

What If Analysis are prepared on various proposals submitted as part of the planning process.

From these reviews the final business plan including budgets and cashflow projections are produced.

Performance Review

A business plan is not something that should be prepared, and then filed away somewhere to be brought back out for review in a couple of years’ time.

It should be a living document!

Current performance and the implementation of the plan should be under continual review and monitoring so as to ensure the successful staged implementation of the business plan.

For further information, please contact us.