Are Business Plans a Waste of Time?

As a business advisor it may seem strange that I should ask that question at all. Don’t all advisors/mentors/coaches stress the need to have a business plan and say things like, “fail to plan is a plan to fail”?

In my opinion it comes down to the type of business plan that is produced and the length of time it takes to produce it. Many business plans ARE a waste of time because they are too wordy, too “corporate”, don’t motivate staff and are not connected to the day-to-day operations of the business. I read an article recently on writing a business plan (unfortunately I can’t remember where) and it said that a business plan could take between 400 and 500 hours to produce. ARE YOU KIDDING! Who in small business ownership world has a spare 500 hours to produce a business plan, and probably one that no one will look at again for another year! Get real. That would be a HUGE waste of time.

What is of real value is the PLANNING PROCESS involved in putting a business plan together. It’s all about the journey, rather than the destination, in my opinion. I do encourage business owners to take some time (not 500 hours however) and examine where their business is at, what went right and wrong over the past 12 months (a SWOT analysis can help here), set some realistic goals for the next 12 months and think about the strategies, budget and tactics that will be required to achieve those goals. Then regularly review progress towards their goals using a combination of monthly reporting and quarterly themes that aligns people’s daily activities.

The output from this process need not be a 50 page document that is put on a shelf to gather dust, but a summary on a couple of pages that remains a living, working document on a constant basis. There are a million planning templates out there that you can use to base your own planning process off. Most unfortunately focus on the end document and tend to result in a long and dusty plan that fails to inspire. One model that I have used with success in several businesses is the 1-page plan (actually 2 if you use A4 instead of A3) developed by Verne Harnish of Gazelles.com.

It takes a bit of time and effort to develop the foundation part, but once you have done that, you can quickly update it on a quarterly and annual basis to provide a short but clear path to guide your business into the future. Here is the link to download a copy of Gazelle’s classic 1-page plan and then you can either go to their website to download a guide on completing it, buy his book, The Rockefeller Habits, that also explains it, or book a planning session with me to fast track you to success in 2012.

Andy Burrows

Business Advisor Phone 09 912-1901

Create the Right Environment in Your Company

An owner/manager is a motivator and hence you need to ensure that you, and any supervisors or managers reporting to you, are motivating your staff to come to work every day.

To generate job satisfaction and an environment that will stimulate and encourage your team to attend work you will need to assess and apply the following where possible;

1. Encourage internal promotion and select new recruits with care. Hire for attitude and cultural fit first, skills second.

2. Recognise and give regular feedback to your employees. Understand the importance of their work and show your appreciation.

3. Ensure people are paid fairly and competitively. Remember under-paying staff does de-motivate them and they should be rewarded accordingly.

4. Provide acceptable working conditions for all staff. Where possible implement new systems and technology and give your staff as many facilities as possible.

5. Always have regular meetings that identify work in progress. This can also be an ideal time to have group discussions and input for certain business activities or decisions.

6. Set and revisit objectives or targets. These must be clear, concise, measurable and regularly assessed to ensure that everyone is on track.

7. Measure individual staff member’s contribution.

8. Set high standards. These may require people to take an extra step or go out side of their boundaries, however this is what it is meant to do. You want your team to be able to take calculated risks and grow with your business.

9. Never make promises. You shouldn’t make promises if your intentions are otherwise. Offering rewards and then retracting them will make your staff angry and lack confidence in you.

10. Be honest with your staff. If you have bad news tell them as it is better coming from you instead of anyone else. Honesty also relates to good news. Praise them where you can.

11. You must set an example to your staff as if you imply a bad or unprofessional impression then they will assume that this is the standard the behaviour will be accepted.

12. Measure absenteeism and staff turnover. This will be clear indicator if staff are finding their positions difficult or unsatisfying and will present a pattern of what the company must do to ensure that the position is filled should staff leave.

Having a fair, diplomatic and structured environment will keep your employees active and enjoying their jobs. By simply applying the techniques above you will be able to have a more efficient and accepting work environment for your employees to attend to every day.

For help in building the right environment and culture in your company, Contact Me by email or visit my website for other articles and resources - click here: Business coaching

Andy Burrows - Business Advisor

DO Sweat the Small Stuff

As the old adage goes, “perception is reality”. In the absence of facts or prior knowledge, what a person perceives about a business becomes reality in their mind, even if it not actually correct.

Business owners should keep this in mind when hiring and training staff, and in all their future interactions with customers. It can be particularly important when the owner is focused on the technical delivery of the core business function and becomes detached from thinking from his customers’ mindset. Many customers have a limited understanding of the technical aspects of what the business actually does because they do not have the specific knowledge or skills of the trade, or actually care about such things for that matter. What they DO understand however, is how the business and staff PRESENT to them, and often in ways totally unrelated to the core function of the business. A restaurant may have the best award winning food and the top chefs in the country, but if the toilets are not clean many customers won’t come back as they assume the kitchen and chefs are in a similar state.

These are things that Paddy Lund, a famous dentist in Australia, calls Critical Non-Essentials. Aspects of business that have little or no bearing on the core service delivery process, but are just as important, BECAUSE THE CLIENT UNDERSTANDS THEM. Ignore them and you risk your business suffering, even if you are the best at what you do and have the best products or services on offer.

The famous management guru, Tom Peter, reported another example of this phenomenon in action. A study of 140 former patients from 225 U.S. hospitals revealed that of the top 15 factors determining “patient satisfaction,” none—NONE!—was related “to the patient’s health outcome.” The two biggest contributing factors were “staff interaction [with the patient]” and hospital “employee satisfaction.” The implications are clear: An obsession with the “simple” human factors pays off—and, furthermore, these sorts of reactions grow rather than diminish in the patient’s recollection with the passage of time. The rallying cry of one successful hospital, derivative of these findings, is their “kindness is free” strategy. Listening to patients or answering their questions was encouraged, and by-the-way costs nothing. Being non-responsive to patient needs or requests for information results in them being angrier and less co-operative, thus increasing the time and therefore cost of interacting with them. Being nice pays off.

What are the Critical Non-Essentials in your business? Have you ever taken the time to consider this? If not, I suggest you contact me and we can review your business and develop a customer orientation program that will help you build greater customer satisfaction, more referrals and lead to better profits. Either email me direct andyburrows@iconbusinesssolutions.com or visit my website here: Coaching in Business to find out more about what I do with the owners of private businesses.

Confessions of a Micro-Manager

I know that modern management books and HR people at seminars tell you that you should hand duties to your staff and let them get on with it. Great in theory, but I hear from a lot of business owners that it doesn’t work. “People never listen”, they say, or “They only do a half-arsed job and take twice as long as me”. So what is going wrong?

A common scenario is that the owner is handing over control of some relatively important jobs and not following up like they should, often because it was a job that they didn’t like anyway and were glad to get rid of it. It may not be a core production job (most owners like to keep those) but an equally important support job that is equally as critical to the success of the business. Maybe invoicing, for example. What often happens is the owner ABDICATES the job to another person rather than DELEGATING it. There is a big difference and it is around the process used and the control retained by the “delegator”.

Like many things in business, delegation is a process and involves several steps. Miss one or two and the process breaks down, the job doesn’t get done properly and the boss gets (more) stressed. So step one is to delegate properly, don’t abdicate.

Until you feel VERY confident that a staff member is competent, check and re-check what they are doing until the process is as smooth as a machine running in a bath of oil. Then check some more. Have the staff member report back to you on a regular basis on what is happening, the roadblocks they are facing and the progress they are making towards activity and performance goals. That might be a DAILY reporting process for some tasks. Like President Ronald Regan said during the cold war, “Trust, but verify”.

Keep control of the cash. There are some areas of small business that I am loathe to encourage an owner to delegate. One is the control over the bank account. By delegating (read abdicating) control over the accounts payable function in particular, a business owner can lay themselves open to less than ethical employees taking advantage of the situation and starting to steal money. I remember being in a network group a few years ago and one of our members was a panelbeater. He employed an office lady to look after the accounts as it was an area that he didn’t like and had little interest in learning about. The office lady was actually the wife of a good friend of his. Not long after employing her, the panelbeater’s wife developed cancer and grew steadily worse. They had 2 young children who needed attention and this started to take an increasing amount of his attention, which was not unexpected in view of the situation. Unknown to the panelbeater was the fact that his office lady had a gambling problem and she started to siphon money out of the business to feed her habit. Remember, this was a family friend who on the face of it was saying she would look after the accounts so the panelbeater could tend to his gravely ill wife. The stealing was eventually uncovered after the business started to perform poorly and an audit was conducted, but tens of thousands of dollars had gone.

The moral of this tragic and true story. Trust no one! I am not saying that you need to retain all the day-to-day accounting function yourself, but don’t pass over control of this area until you have some strict policies and reporting functions in place. If you don’t understand about money matters, learn about the critical issues and find a good accountant to help you put good control measures in place.

It’s okay to micro-manage a bit. Wear your control freak label with pride.

Visit our website for more information here: Coaching in Business

Where's The Tomatoes?

Businesses with a website perform better.

So says the latest MYOB Business Monitor Report and has highlighted the fact that businesses with a website have consistently higher revenue performance, more work in their sales pipeline and are more optimistic about future prospects. A few other highlights that came out in the report include:

· 31% of businesses with a website have experienced a growth in revenue over the past 12 months, compared to 26% of businesses without a website experiencing a growth in revenue.

· 40% of businesses with a website have more work on, while 26% of businesses without a website have more work on.

· 54% of business with a website expect revenue growth in the next 12 months, while only 27% of businesses without a website expect revenue growth.

For the full report click here.

So what is your online strategy and if you have an online presence, especially an e-commerce one, is it effective?

Think of this analogy. You go to the produce super store. It is a flash affair and you can enter the store through a dozen different doors. It sells a HUGE range of fresh food items in all sorts of colours. Beautifully packaged and displayed next to all the awards that the store has won for its design and packaging. But where are the damn tomatoes! All you want is a kg of tomatoes and all you see are Tahitian mangoes, Chilean Red Globes, 15 sorts of lettuce and 10 varieties of potatoes. And to make matters worse the place is crowded. You can hardly move for fear of loosing your place in line, so you give up, don’t buy anything and leave.

Thankfully there is a more simple produce store next door. One door and a limited range of basic items that one needs every day. And guess what. They have tomatoes. They are easy to spot and just behind them are other sorts of tomatoes too. This place is less flashy, but it gives you what, and you buy.

The moral of the story is this. Websites don’t have to be flashy and complicated to work. In fact a basic, well thought out website with the right sort of content that your target buyers want will win out every time. Flashy websites that aim just to attract a big crowd on the off chance it has something that you want and get lucky, don’t tend to have a good return on investment. Focus on what sort of customer you want to attract to your website. Give them a good experience while they visit and make it easy for them to buy.

Of course you don’t need to go the whole way and have e-commerce functionality on your website to begin with. The important thing is to look at the MYOB report and understand how businesses with website are generally ahead of their competitors. The important thing is to “get in the game”. If you don’t have a website for your business, I strongly recommend that you consider talking to a good website company, plan how it fits into your overall marketing strategy and make a start. For help with your marketing strategy development and for a free planning and review session click this link:

Growth For Business

Andy Burrows - Business Advisor

Ten Things to Think About Before Going Global

Like any sound business plan, the first step is doing your research and taking a breath to think clearly. Here are ten factors to consider before taking the plunge and going international:

Point 1. PLAN at least a two-year lead time for world market penetration. It takes time and patience to build a successful export business, especially in Asia where relationships take longer to develop.

Point 2. DECIDE how much you can afford to invest in your international expansion efforts. Pick a figure based on a share of domestic profits and stay with that consistently.

Point 3. CHOOSE the appropriate model for entering the market. This may be a simple export model of manufacture in NZ and ship to an importer overseas, or maybe something else. Joint venture or a licensing arrangement may be more effective. Offshore manufacture in a third country may be required. Don’t assume it is a 1-size-fits-all strategy decision.

Point 4. FOCUS on a narrow product or service offering. The same principal that is necessary to dominate a market niche in New Zealand is even more essential overseas. Don’t try to be all things to lots of people. Stick to one small segment and do it well. What is your USP?

Point 5. RESEARCH to identify your prime target markets. You want to find out where in the world your product will be in greatest demand. Try to look for an unsatisfied need or even better, a problem that needs fixing.

Point 6. ADAPT your product for export. This may be basic labeling requirements or more significant design changes. What regulatory and legislative requirements are there? Know this before you make an expensive mistake.

Point 7. FIND a good lawyer, a banker with international experience, a good accountant and wily transport specialist. Good advice is expensive, but bad advice is MORE expensive. I can help you put an export plan together that has the benefit of 25 years of export experience behind it. I don't have every answer, but if you make half the mistakes I made and learn from my experience, you can't go too far wrong!

Contact me via my website here: Mentoring and Coaching

Point 8. INSIST on clear terms, conditions and other financing options, in advance. Never sell on open account to a brand new customer, EVER.

Point 9. PROVIDE an awesome customer experience. Ensure this extends to well after the sale is made and keep the lines of communication open all the time, even if that means some very late nights on the phone.

Point 10. MAKE contact with your customer at the heart level as well as the head. Learn to embrace the culture of your customers and aim to incorporate a bit of it into your own life. Learn to enjoy these new experiences.

Icon Business Solutions website is here: Coaching in Business

Andy Burrows

Business Advisor - Email me here

The Power of The Numbers

Do you know the Key Financial Drives for your business? If so, do you review them on a monthly basis and compare to best practice? If not, wouldn’t it be useful to have some objective way of checking the health and performance of your business and know where to tweak it for better results?

What you may need is better FINANCIAL control. Financial control is different to the business bookkeeping system. Bookkeeping is about recording the figures while financial control is the management of the money and making the numbers work better for you and your business. However in order to have an effective financial control system you need to have accurate bookkeeping. Computerised systems will help you keep your books in order.

A good financial management system facilitates you in accomplishing your daily financial objectives and future goals and targets. This means that the management system helps you become a better manager by enabling you to:

• Manage in a more proactive manner
• Borrow money more easily due to the possibility of being able to plan ahead for financing needs and set budget which can assist in the loan approval process.
• Provide financial planning information for investors.
• Make your business more profitable and efficient.
• Assist in major decision making processes affecting finances
• Avoid investing too much money in fixed assets.
• Set sales goals
• Improve gross profit margin by pricing your products and/or services more effectively or by reducing supplier prices, direct labour, etc.
• Help with tax planning.
• Plan ahead for employee benefits.
• Perform sensitivity analysis with the different financial variables involved.

In developing a financial management system it is a necessity to have your financial statements. These statements should be printed on a monthly basis and include your income statement, your balance sheet and your cash flow statement. These will help you to be far more proactive and manage your finances better.

For help in identifying your Key Financial Drivers email me at andyburrows@iconbusinesssolutions.com or call 09 912 1901, to book a FREE Net Variable Cash Flow analysis and strategy review report. Check out my website for more offers of assistance and what co-funding is available from NZTE. www.iconbusinesssolutions.co.nz

You can find out more at our website here: Growth for business