The first thing every start-up is told to prepare is a credible business plan but more established businesses can be undone by overly rigid visions. Here’s how to spruce up your plan for the new year and embrace inevitable change
If you don’t have a plan, you don’t have a business, but the trouble with planning is that it can become the enemy of progress rather than an agent of change. Simply because no-one will take a young company seriously unless it can convince them it will turn over, say, £10m at the end of five years, the pressure is on to capture that vision, express it in figures, mission statements and market forecasts.
You have to do it, but where does planning leave the passion and creativity that are also essential when building a business? The best entrepreneurs are strategic thinkers as well as visionaries. If they don’t buy into their own plan, then nobody else is likely to be convinced it’s viable. And part of that is to know where and how the business is going to develop. They do it their way.
Locked in
The danger is getting stuck in the plan; as Peter Cullum the CEO of insurance firm Towergate points out: “When I did my MBA 20 years ago every business school used Marks & Spencer as the ultimate case study, showing quality, paternalism and great branding. Then they became the classic example of failure to change – look at all those years they wouldn’t accept credit cards!” M&S is still on all the reading lists – but, thanks to Stuart Rose, now as a case study for the power of adopting change without abandoning core principles.
Cullum grew his £400m turnover insurance group through focused acquisitions, and knows all about markets that go sour on you. “A few years ago we were the biggest insurers of photographic laboratories – they have all disappeared now. Markets disappear and emerge and the trick is to spot movement out there and not to become addicted to old and declining markets because that way you will become a dinosaur. I think you have to be passionate about change.”
Know what it is for
That is where strategic takes over from deterministic planning. The planned economies built on Marxist principles didn’t work because they were drawn up in isolation from global influences and because nobody really believed in them anyway. However some businesses still look on the strategic business plan as the endgame, something to be done ready for presentation then filed away and forgotten.
By all means plan for the year ahead, or even five years ahead: “But the one thing you’ll know about any five year strategic business plan is that it is going to be completely wrong,” warns Cullum. “I think you do have to have a vision of where your business needs to be in five years’ time, though it’s like a journey in a Tardis. Try to visualise what the world will be like but be quite certain it will look very different from that.”
If you want to know what your business plan is for, ask your accountant. Kim Farrell is the corporate finance manager at CBHC Accountants, which works with more than 4,000 mid-range businesses. “Many business owners have an idea of what their business is, how it is constructed and what the strategy is in their head, but never actually formalise it. If you want to grow your business, raise finance, get new customers and suppliers, and enter new markets, it is vital that a formal document is prepared.
“Banks and other third parties who support your business are constantly looking at risk: the more they understand about the business the more likely they are to offer support. Often when we prepare business plans with clients, it formalises the strategy and gives them a starting point to improve the business and achieve its objectives. If this process is then supported with forecasts and key performance indicators that can be monitored, it helps with forward planning as performance can be measured.”
A refined approach
“There’s something about being in a small growing company that concentrates the mind,” says Harry Dunleavy, who has led HR strategy at BMW/Rover, Northern Foods, Tube Lines and most recently at EMI Music during times of substantial corporate upheaval. He is now director of Independent Ltd, a specialist consultancy in change management and restructuring.
“In a large corporation you have shareholders but you are more cushioned. That said, the problems of large and smaller companies don’t tend to be too dissimilar. You can come out of a recession so much stronger – it is a refining experience for many companies.”
Very few people can honestly say they saw the recession coming: for some it was a disaster; many viewed it as a real opportunity for change; others hardly noticed it. Ticketmedia is the UK’s only ticket advertising specialist, advertising on bus tickets, parking tickets, receipts and other ephemera. Regular independent research indicates that ticket advertising is proving to be one of the most effective and accountable outdoor advertising campaigns available to today’s marketers, generating a high return on investment (ROI).
Constant adaptation to change has kept Ticketmedia growing, says co-owner and sales and marketing director Susannah Burbidge: “We have found sales increasing 50% year-on-year and the recession has not affected that in any way. We treat our business plan as a living document and keep it very fluid. One of the key points we have looked at is how customers are being affected and what is relevant to them.”
You might say bus tickets, perhaps any printed tickets, are on the way out but card transactions and Oyster top-ups generate receipts or vouchers so the medium simply evolves, she says. “In good times, customers are tempted to be more creative, but when advertising budgets are under pressure they fall back on something that gives proven ROI.” As Ticketmedia proves, for the fleet of foot, economic pain needn’t spell disaster.