By Pat Hayes
Whether starting the business by buying it or taking it over from previous owners, I would speculate that the majority of small businesses have only a rough plan on why they are in business or where they plan to take it. I started out with an idea, determination and a prayer. In the third year, as the company grew, the need for a formalized plan became more apparent. Years later when asked about my thoughts on success, I explained that at the time I was too dumb to realize that I might not succeed.
Recently, I was asked to offer my thoughts on how print companies might find new markets to fill the downtime of their equipment. I attempted to qualify a response by defining the numerous methods of printing and how one would answer the question without taking into consideration this diversity. On second thought, I gave more consideration to the question on why they had downtime. More often, I would guess this was caused by existing markets drying up, the economy or a lack of understanding of their market. We see something new and want to be a part of it, without doing our homework.
My response in the end was that I can offer no quick-fix answers, and with a good business and strategic plans those machines should not be sitting idle.
To provide a formula on building a business plan would add little value here. However, it’s important to mention the components of a good plan. It should include: executive summary, market analysis, company description, organization and description of the management team, services or product lines, funding, financials and appendix. The contents of the appendix should include: credit history, manager resumes, product photos, letters of reference, licenses, permits or patents, legal documents, leases, contracts and other pertinent information relative to business functions.
In a conversation with colleagues, I posed the question on the importance of business and strategic plans. David Clarke, group director of TenCate Geosynthetics, stated, “The business plan defines the operational actions that need to take place on an annual basis to achieve the actions defined in a strategic plan. These are very basic actions that have assigned accountabilities and are measurable.” He added that TenCate does a strategic plan every three years, and reviews and updates its business plan annually. The plan has four strategies and about 60 actions to meet those strategies.
Marco Alvarez, CEO of Fabric Images, said, “The strategic plan defines what you want to do, but it does not tell you why and how it fits within the overall scheme of things. To me, a business plan contains many little or big strategic plans.”
A frequent excuse for not having a business plan is that no one reads it, and it becomes outdated. The business plan is a “living” document and states the key measurements and points of analysis important to your size business. The thought that creating this document is a waste of time because your markets continually change is exactly the point of having it. Without a plan, you are doomed to go where the wind takes you, and the fluctuations in your defined purpose may be the reason for downtime.
A business plan is not one size fits all. There are basic ingredients that remain constant. A basic test used in developing a plan is the SWOT analysis, focusing on the business’ strengths, weaknesses, opportunities and threats. If we look at each area involved in the decision to add a new market or product line, we would be building those strategies on solid footing.
Clarke talks about a strategic plan looking at long-term factors having effects on a variety of topics, including external and internal environment, competitive landscape and position, strengths and weaknesses, and a definition of what success looks like to a given company in a given industry. Taking this information into consideration, a company needs to identify the key issues that are keeping it from attaining that definition of success. Strategies are then developed to overcome those obstacles.
For me, when traveling by auto, the unknown routes become an “excellent adventure.” Think of your business in the same way. Would you be willing to build your success on luck? Do you have a goal of why you are doing what you do? Where do you want to end up, and when? How are you going to fulfill these needs? How are you measuring success?
A business plan provides an opportunity to take a bird’s-eye view of your business. It offers credibility to those supporting you as a financier, vendor or client. This is the blueprint for development and success.