Planning for Growth

Source: Business Link (www.businesslink.gov.uk)

Picture this:  After years of struggling on your own, working out of your back room or garage, finally gaining the courage and accessing the support to start-up your own business, you have reached a pivotal moment in your business life; do you stay as you are, contentedly achieving your goals, or do you make another massive leap, choosing to try and grow your business, setting yourself entirely new targets? 

Should you decide upon the latter, the following aims to help you plan for this growth strategy.  Planning is key to any business throughout its existence and every successful business must regularly review its business plan to ensure it continues to meet its needs.  You can use benchmarking to see how the different areas of your business performance compare with that of your competitors. This will help you identify potential improvements to your business processes and opportunities for growth.  Once you've reviewed your progress and identified the key growth areas that you want to target, it is sensible to revisit your business plan and make it a road map to the next stages for your business.

The importance of ongoing business planning

Most potential investors will insist on seeing a business plan before they consider funding your business. However, this doesn't mean that your business plan should be ignored or discarded once you've started your business. A good plan will help ensure that certain key targets are met.

Many businesses will be tempted to use their plan merely to secure funding from a bank at the outset and then ignore it. However, a good plan should set the course of a business over its lifespan and be a means of ensuring that certain key targets are met.

Maximise your chances of success by adopting a continuous and regular business-planning cycle that keeps the plan up-to-date, including regular business planning meetings which involve key people from the business.

When you review your business plan you need to take stock of where the business currently is and where you want it to go. Once you've established the business, use the plan to set a course to achieve the objectives you have set.

If you regularly assess your performance against the plans and targets you have set, you are more likely to meet your objectives. It can also signpost where and why you're going astray. Many businesses choose to assess progress every three or six months.  The assessment will also help you in discussions with banks, investors and even potential buyers of your business. It should also be used to show direction and commitment to employees, customers and suppliers.

What your business plan should include

Your business plan should include a summary of what your business does, where it has come from and where you want it to go.  You also need to make it clear what time-frame the business plan covers - this will typically be for the next 12 to 24 months.

The plan needs to include:

• The marketing aims and objectives, for example how many new customers you want to gain and the anticipated size of your customer base at the end of the period.
• Operational information such as where your business is based, your suppliers and the plant and equipment needed. 
• Financial information, including profit and loss forecasts, cash flow forecasts, sales forecasts and audited accounts.
• A summary of the objectives of the business, including targets and dates. 
• An exit plan, if you are an owner-managed business. This includes planning the timing of your departure and the circumstances, eg family succession, sale of the business, floating your business and closing it down.

If you intend to present your business plan to an external audience such as investors or banks, you will also need to include:

• Your aims and objectives for each area of the business.
• Details of the history of the business, including recent financial records.
• The skills and qualifications of the management involved in your business. 
• Information about the product or service, its distinctiveness and where it fits into the marketplace.

Plan and allocate resources effectively

The business plan plays a key role in allocating resources throughout a business so that the objectives set in the plan can be met.

Once you've reviewed your progress to date and identified your strategy for growth, your existing business plan may look dated and may no longer reflect your business' position and future direction.

When you are reviewing your business plan to cover the next stages, it's important to be clear on how you will allocate your resources to make your strategy work.

You may need to do some precise budgeting to decide on the right level of resourcing for a particular unit or department. It's important that resources are prioritised, so that areas of a business which are key to delivering the overall aims and objectives are adequately funded. Bear in mind that this may involve certain cutbacks in other areas.

Use targets to implement your business plan

A successful business plan should incorporate a set of targets and objectives.  While the overall plan may set strategic goals, these are unlikely to be achieved unless specific, measurable targets have been set.

Targets help everyone within a business understand what they need to achieve and when they need to achieve it.

You can monitor the performance of employees, teams or a new product or service by using appropriate measurement indicators. These can be:

• sales figures over a given period
• milestones in new product development 
• productivity benchmarks for individual team members 
• market-share statistics

Targets make it clearer to individual employees where they fit within an organisation and what they need to do to help the business meet its objectives. Setting clear objectives and targets and closely monitoring their delivery can make the development of your business more effective. Targets and objectives should form a key part of employee appraisals.

When and how to review your business plan

Once you've drawn up your new business plan and put it into practice, it needs to be continually monitored to make sure the objectives are being achieved. This review process should follow an assessment of your progress to date and an analysis of the most promising ways to develop your business.

This process is called the business-plan cycle. In some businesses, the cycle may be a continuous process with the plan being regularly updated and monitored. For most businesses, an annual plan - broken down into four quarterly operating plans - is sufficient. However, if a business is heavily sales driven it can make more sense to have a monthly operating plan, supplemented where necessary with weekly targets and reviews.

It's important to keep in mind that major events in your business' target marketplace (eg competitor consolidation, acquisition of a major customer) or in the broader environment (eg new legislation) should trigger a review of your strategic objectives.

The key aims and objectives of the business as a whole should not need such regular updating and may hold true for up to two years.  Regardless of whether or not there are fixed time intervals in your business plan, it must be part of a rolling process, with regular assessment of performance against the plan and agreement of a revised forecast if necessary. Targets are measured using data such as monthly sales volumes or numbers of customers.

Conclusion

It is important to evaluate whether you want to consolidate your business' position or find ways to grow.  If you decide that your priority is growth then you need to plan carefully if it is to succeed. It can be risky, but the right strategy can deliver stability, security and long-term profits. Once you've assessed the current strengths, weaknesses, opportunities and threats to your business and how well it's equipped to handle them, you can move on to the next stage - building a strategy for growth.

Creative and Digital businesses in Kirklees are being offered a unique opportunity to hone their entrepreneurial skills as part of a new business support programme provided by CIDA in partnership with Kirklees Metropolitan Council Culture and Leisure Services.  With a menu of bespoke business opportunities on offer, from personal development to specific industry training, CIDA will design tailor-made Action Plans and business support packages to take each company to the next level.

The business support programme, funded by Kirklees Metropolitan Council and ERDF, has now begun and will run until December 31st 2007.  If you are interested in setting up an initial meeting with one of CIDA's advisors to discuss this further, please contact Rebecca Morton, Programme Manager, Business Development, or Tony Shergold, Business Development Officer, on 01484 483140.