What isn't a Business Plan
I’m often assured that a professional practice has a business plan and when I ask to see it – it isn’t.
Instead, it’s an income and expense budget with a cashflow forecast. In other words, what banks ask for when considering a loan application and something that small businesses ask their accountant to prepare, for no other reason.
And when I ask the practice owner what actions are planned that will make the forecast numbers come true, I usually get a shrug of the shoulders, a weak smile and “It’s just the arithmetic of how many clients I think I’ll serve through the year”.
So, what should a business plan actually be?
Well, before answering that, consider this:
You have a sole trader client who is a self-employed plumber. In presenting last year’s accounts and tax return, he asks you “how can I get more customers and get payments coming in quicker?”
You probably won’t recommend a business plan or even a marketing plan because you don’t don’t have either of those yourself. And if you did, it wouldn’t be the right place to begin anyway.
And because you don’t help him he falls prey to a costly marketing consultant or you lose him to a more lively practice.
But if your practice already had a good business plan it would have identified your plumber’s type of problem and how to deal with it profitably. You would have developed business advisory skills and methods for identifying the causes of his lack of customers and cashflow, and have practical solutions that you can sell to him.
So back to the business plan. What should it look like if you are to help your plumber client?
VISION
A sentence that states 5/10 years from now what status your business has achieved that makes it special.
E.g. “the biggest / most profitable local small business solutions advisor”
MISSION
A sentence that states what your business does, who for and to what standards.
E.g. “we help small businesses to solve problems and grow”
OBJECTIVES
Six statements of what must be measurably achieved to satisfy the Mission and keep moving towards the Vision:
Marketing
What I will sell to new customers, in what quantity and when by
E.g. “All round business / financial advisory services to small /medium businesses”
Operations
What I will supply to customers, in what quantity and in ways that brings them back
E.g. “Practical solutions at affordable prices for permanent income from every customer”
Systems
What I will invest in technology and processes to make the business efficient
E.g. “Automation everywhere to minimise employment and maximise data”
People
Who I will employ and manage for commitment and productivity
E.g. “A small stable group of smart people that exceeds planned results”
Finance
What I will invest in the above to get a high return
E.g. “100% return on total assets”
STRATEGIES
The approaches I will take to ensure that the Objectives are achieved
E.g. “Quarterly market intelligence report on competitor activities”
ACTION PLANS
The detailed steps that named individuals will take by specific dates
E.g. “Eric will set up a CRM system loaded with prospects and clients by 30/6/21”
BUDGET
The expected expenses incurred in implementing the Business Plan and revenue receipts as a result
E.g. “New costs of £50K to get total sales to new customers of £240K for 2021”
REVIEW
Monthly management accounts showing actuals compared to budget
Weekly / monthly KPI report of pre-sale statistics and trends
Meetings to agree corrective actions and changes
So, there is our practice plan for the year, where is our plumber in all that?
Well:
Because your practice is now geared up to be an all-round provider of business services you answer your plumber’s questions about lack of sales and cashflow like this:
“OK here’s what we’ll do (Fred)”
A benchmark assessment to see what a business like yours should be achieving.
Here’s how you score against other plumbers for:
a) Marketing
b) Operations
c) Systems
d) People
e) Finance
f) Value
What do you think?
Discuss / understand interactions between all the stats until the penny drops.
Here is a forecast what is achievable and when by.
So is that what you want to achieve in life?
Here is a simple a plan to achieve it.
These are the priorities for action.
Happy with that?
Would you like to see the practical actions to take?
a) I can help you to implement these.
b) At a price you can afford.
Shall we make a contract and get started?
Conclusion
You can achieve anything with a good plan and having mastered the skills for your own business, you can do the same for any client’s business. It’s easier than you think.
By Duncan Collins
Founder & CEO of Runagood.com Ltd