Unsure What the Future Holds
for Your Business?
Business planning involves looking at
all possible scenarios and making sure you’re prepared for whatever
the future throws at you.
1. Your business plan should
be the road map for your business
It shows where you are now, and how to
get to where you want to go. Don’t just prepare a business plan and
file it away – you need to constantly update it as the economy and
market place change, ready to take a detour or change your route
altogether to stay on track to reach your destination.
2. The business plan needs to
forecast the future and budget for it
Forecasting means looking for data
outside of your organisation – industry trends, economic
indicators, changes in customer or supplier behaviour – and trying
to predict how these will affect you. Budgeting spells out in
financial terms how you are going to manage under the forecast
scenario.
3. Cash flow planning is
fundamental these days
Never has the saying “cash is king”
been more relevant. Your business plan needs to work out where the
cash is coming from and how and when you’re going to need to spend
it. Make sure you know at all times what your liabilities are going
to be at least six months ahead.
4. Successful planning and
budgeting require good management information –
both financial and non-financial
Remember the three R’s – the data on
which you base your decisions must be recent (i.e. timely),
reliable and relevant. A good management accounting system, kept up
to date on a daily basis, is essential. Good accounting software
can deliver this economically and effectively.
5. KPIs or Key Performance
Indicators can give you advance warning when
things start to go wrong
Well presented, maybe graphically,
they can be assimilated in seconds. Many accounting software
packages provide a snapshot overview of your finances on the start
page. Work out which KPIs you need to monitor to keep your finger
on the pulse of your business. For a retailer it might be footfall
or sales value per customer, for a manufacturer it might be debtor
days or stock turnover.
6. SWOT analysis is a useful
tool to use in your planning
Get together with your management team
and brainstorm a list of your business’s Strengths and Weaknesses
and the Opportunities and Threats facing you. How can you play to
your strengths? What do you need to do to overcome or compensate
for your weaknesses? What opportunities have the current economic
conditions thrown up that you need to grasp? What are the major
threats to your success or survival that you need to plan for
now?
7. Business continuity should
be a specific part of the business plan
Think of the worst case scenarios and
work out how you would cope. You can insure against many risks, but
will a lump sum from the insurers get your business up and running
again soon enough? Imagine the day after you are flooded or the
factory burns down - what would you do with your workforce? How
will you supply your customers? You may have a backup of your
computer data (held off-site, of course!), but how quickly can you
get hardware to get it up and running? Disaster recovery requires
an assessment of both the solution and the timescale within which
you need to implement it.
8. Diversify. Don’t overlook
less dramatic but equally disastrous scenarios
How would you cope if – or perhaps
WHEN - a major customer or supplier goes bust? This is not a good
time to have all your eggs in one basket! Your SWOT analysis should
reveal the key threats you need to address and your business plan
should include the steps you are going to take to minimise these
risks.
Remember to
act on these top tips now!