Plan, Plan, Plan to Stay in Business

Running a small business can be time consuming. You’ve got enough to do to fill orders, buy stock, invoice customers and so on without all those other jobs like management, planning, marketing and finance.

Most small business owners just want to get on with the job!

But wait. This is why you are in business – to run a business. This, in fact, must be your first priority if you want your business to survive and move forward. Neglecting these important activities can do more to erode the business’ base than anything else.

You need to find the time to devote to planning and steering the business rather than being the all-rounder who does everything.

You need to allocate quality time on a daily basis for:

• Planning where the business is going
• Developing customer relations
• Team training and development
• Reviewing actual results
• Planning effective delegation.

Research in Australia found that more than 50% of new businesses fail within the first year and after three years over 80% had failed. The results – which would be similar for new business start-ups in New Zealand – found that 80% of these failures were the result of managerial incompetence and inexperience.

If you made a business plan before you started your business – congratulations! But that is not the end of it. Planning does not stop once the business is up and running. You need to keep at it. You need to look ahead one year, maybe three. You need to constantly know where you are heading and where your goals are.

Think of it as a step-by-step process in which you need to focus on the actual steps. The critical part of any planning is in the planning, not the finished plan.

The step-by-step process also makes the business planning exercise much less daunting. People get put off the idea of business planning because it sounds difficult. Don’t think the task is insurmountable. It is simply a method of analysing your business using simple concepts that you may already be using without realising.

There are many useful books on this subject, which provide easy-to-follow steps. Your accountant can also help you get started and answer any questions you may have. The important thing is to start now if you haven’t already.

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Justify before jumping into recruitment

Some businesses spend considerable time and energy in selecting and appraising new equipment before placing an order, but do they approach recruitment in the same way? People are a very important asset to any business yet, unlike other aspects of the business, many businesses do not have a recruitment plan.

The first part of any recruitment plan, before you even think of the type of person you want, is to decide whether a new employee is even needed. Positions shouldn’t be created just because someone is available for employment. Every employment position needs to be justified.

The reason for hiring a new team member may be because:

§  A position becomes vacant

§  You are planning for increased business and envisage more people will be needed

§  A new position has been created.

These points alone may not be enough to justify further recruitment. If it’s relevant it might be a good idea to re-evaluate every task already undertaken within your business. Analyse the tasks being performed and make sure you write them down.

§  What are the tasks carried out in your organisation?

§  Are any of the tasks no longer necessary? 

§  Can any of the tasks be eliminated? 

§  Can any of the tasks be re-organised to avoid a new position being created? 

Once you’ve determined this information, you should be able to answer these questions:

§  Is the position necessary?

§  Can the work be absorbed within the duties of other employees?

§  Can a lower paid employee perform the work?

§  What is the productivity obtained from this position?

§  Will the position be value-added?

Positions cost money – not only in the direct cost of employing that person, but in ongoing training and supervisory costs. Every job in an organisation must be able to justify its existence.  Take the opportunity whenever planning employment to revisit and re-evaluate task allocation within your business to determine whether it is really necessary to create a new position or refill an existing one.

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SWOT Your Business, Stun Your Market

Do you know where you stand in the market? It might be time to take stock. To find out what sets you apart from your competitors or what changes you might need to make to improve profitability.

You can do this by making a SWOT analysis. What are your business’s Strengths, Weaknesses, Opportunities and Threats? It’s like taking a snapshot of where your business is right now and then actioning the results.

With a SWOT analysis you can analyse all aspects of your business and, if done honestly, will greatly assist you to set your business priorities.

Strengths – these are what you need to capitalise on and take advantage of. Ask yourself what your business does really well? What makes it great or different?

Weaknesses – these are what you need to analyse to determine where improvements can be made. Ask yourself why your products or services are not in high demand? What could you do better?

Opportunities – these need to be discussed no matter how optimistic, as you may be able to develop a strategy to take advantage of them. Ask yourself what has changed in the market that you could invest in or take advantage of? Is there a gap in the market that isn’t being filled?

Threats – these need to be discussed so you can develop strategies to overcome or avoid them. Ask yourself what has changed in the market that you need to plan for or mitigate? What issues are likely to happen in the future that you need to plan for?

It would be worth discussing the SWOT analysis with your accountant both before and after you list the issues. They could send you a checklist of items relevant to each heading to ensure you don’t overlook some of the important issues. If required, they could also help you analyse the results and work out the strategies needed to move your business forward.

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Take Time to Research Your Market

 You’ve got a fantastic product or maybe you’re providing a brilliant service. Great! Business must be thriving.

If it’s not, you need to do something about it fast. You need to do some marketing to find out if people even want your product or service and if there is something about your business you could tweak or change to potentially increase demand.

Marketing is the process of finding out about the goods or services that customers want and presenting them at the right price, how, when and where they want them. 

Marketing should be carried out before starting up a business, yet so many people fail to do it. As a result many businesses cannot survive.

Businesses operate in a hugely competitive marketplace, with everyone often vying for the same customers. In today’s business climate, you can’t afford not to find out everything about the market in which you intend to operate.

It’s much more than advertising or promotion. Marketing starts from producing products that meet people’s needs and extends to making those products available and letting potential customers know of their existence.

The first rule in marketing is that you can only sell something that people want. So you’ve got to know your market. For example, you would be crazy to sell cots and prams in a retirement village or Christmas cards in March. Nobody would want them.

But that doesn’t mean you should never try to sell an unusual or unique product or service. In fact the key to success is often just that – providing a unique service or specialised or personalised products in a mass production market. A fresh idea or a new product can be a marvellous money-spinner if it’s marketed correctly, and if people think that they need it.

 www.astillhawke.co.nz