This might seem an odd question, especially if you have only just started it, but in my opinion, there is only one true answer: In order to sell it.
You might think a sale is a very long way off, and with no idea of when or much for, but it should be an investment that you can use to fund your retirement, or something equally useful.
Even if you are not ready for a sale yet, read to the end of the article: it will put you in the right place for simply growing your business and when the surpise buyer appears you will have done most of the groundwork way ahead of time.
Lets’ get the foundations right. Start with the end in sight, even if it’s a long way off. I have a saying: “If you Plan to succeed and follow The Plan, the results should be predictable.“
The role of a business (growth) plan
A business plan, or a growth plan is a valuable asset for every business, whether you are thinking of selling soon, or have no wish to sell for the foreseeabele future.
Having one forces you to work on the
business rather than in it. You have evidenced your ability to
create a strategy, so by “just following The Plan” you are very likely to improve
the business simply by following the process. With the added bonus that if a selling
opportunity for your business does arise in the future, you’ll be in a far better
position to get a better price.
When you create a plan, get outside
eyes to take a look and give you a hand, because so many plans that I see have
been cobbled together when a business is doing great, is expanding already, and
everybody is so busy “doing” that there’s not a lot of time left for strategic planning.
Let’s take a look at a template:
growth plan template
You should already have a lot of
these things, written down ideally, but if not written down, then in your head.
Now is a great time to get the recorded.
Vision, mission, culture, purpose
What’s the point? Why does the business exist? What is it trying to achieve? Why does it make the word a better place? Is it to provide you or others with financial independence or early retirement, or is that simply a happy outcome of the real purpose of your Company? Are you driven by a sense of purpose or a cause?
Very often we push these questions
aside as being “too deep” but their answers should become the goal, the place
the business is heading for. Once published your answers will keep you
motivated and guide the business (towards profitability and eventual sale).
The answer here is not “to make lots of money”. However, if you quantify that with an amount and a date, it becomes a goal. So it could become “Sell the business when I’m 55 years old and make £1m clear profit for me to invest and retire on”
Be guided by your Vision and Mission when setting your Goal. Once you have your Goal, you need to check it is SMARTER, Specific, Significant, Stretching; Measurable, Meaningful, Motivational; Agreed, Attainable, Achievable (at the right price), Action-based; Realistic; Time-bound; Ethical; Recorded (written down).
Let’s start doing some checks
What is the size of the market? And
what share of it do you currently control? Who is your ideal client? Why are
they your ideal client? Do they spend more? Or is the process of doing business
with them more productive/enjoyable? What are the pains, fears and desires of
your ideal client?
Your SWOT analysis
Have you assessed the strengths,
weaknesses, opportunities, and threats to your business? You can use a SWOT
analysis to concoct plans for tackling weaknesses and threats, for building on
your strengths, and for exploiting opportunities.
Quick Wins vs Strategic ones
Quick wins are great, but they often
fade away. What is going to take their place in 18 – 24 months? What will be
fuelling the growth in couple of years time? New products, New markets? How
will you accomplish this, and how much resource will you need?
The Org Chart
Most businesses organise their activities and job roles around personalities rather than accountabilities and responsibilities. Wrong! Start from scratch and ask “What does the business need. Then assign the roles you have just decided on to the people in the team, and hire as appropriate and necessary. Fortunately, a business growth plan is the perfect opportunity to review this. And while you are there – do you have key-man insurance?
Does you hierarchy scale to where you want to be in 5 years time: Will you be the MD at the top? Will you need expert team leaders around you? an Ops Director, Sales and Marketing Director, Finance Director?
Sales and Marketing strategy
Your marketing strategy should answer the question: “What must our business look like in the eyes of our prospects so that they to choose us over everyone else and become customers?” How does your plan maximise the conversion rate from interested prospect to valued client? How do you nurture them and keep them coming back year after year?
Something that is systematised “just works” and should use best practice too. It shows that you know: “Here’s how this works.” This is gold dust to you as the owner, but when shown to a potential investor is the Holy Grail. The investor will be able to continue to run the business as successfully as you have done.
Your SWOT analysis will have thrown
up areas of the business that you will want to change. What are they, when will
they be implemented and by who? It takes specific actions to you reach your
Measure, monitor and compare
If you can’t
measure it, it doesn’t exist!
A business without measurements isn’t
managed; it’s guessed. That’s why great businesses understand and create milestones
towards each activity, task and goal. Measure first, implement change, measure
again. Was there the expected improvement? If yes, move on, of not, revert.
The really important measures are
shared and referred to as Key Performance Indicators (KPIs).
By choosing your KPIs carefully, you
will know exactly how your business is performing and, as a result, can adjust
your Plan accordingly.
By starting with the end in mind you can work backward to “here” and you should find this relatively straight forwards. So, for a 5 year Plan, have The Result (yr 5), the Yr 4 targets, the Yr 3 targets, and so on, sub-dividing the Yr 1 target into monthly ones.
Know your numbers
It’s imperative to “know your numbers”: your costs, your profitability, your customers buying patterns and more. Personally, I’m a great fan of having an online recording system like Xero to put all the information into, and then use another tool like VFD-Pro to interrogate it and provide an insight for your Accountant to check and relay back to you. Of cousre we must remember that any subsequent reporting will only be as good as the data that gets put in. Once you have two years of date in the system you should be able to see trends and perform useful analysis such as client attrition (number of clients gained or lost), purchasing cycle (how many time they buy), average spend, and much more.
Once you have two years of data in the system you should be able to see trends and perform useful analysis such as client attrition (number of clients gained or lost), purchasing cycle (how many time they buy), average spend, and much more.
Motivate your staff to work better
People don’t work for money. Most humans like to over-perform if given the right appreciation, rewards and incentives. When your staff are motivated they are a joy to work with, your customers will love giving them orders, and you will love the results. Try giving some extra responsibility and remember to say “thank-you” and “Well done” sincerely and often, even if it feels strange at first!
Incentives can misfire, so beware of the law of unintended consequences, and think them through very well before you implement any, but get it right and productivity will soar and you become the “go-to” employer in your area.
So I’ve got my Plan, now what?
Stick to it, improving it where you can!
You should be constantly reviewing your growth plan, even if only for a few hours a month. It’s also important to review your KPIs each month, and to make any necessary adjustments to the Plan. Bear in mind that it’s perfectly normal to sometimes NOT hit a milestone or goal exactly on time, so don’t worry if that happens, just look into it and see if you need to allocate more resource, or give yourself a bit more time. A pigeon constantly corrects its course as required by strong winds, but it always gets home. Similarly, the process of following a Growth Plan means taking new twists and turns and adjusting it as you gather new intelligence because the new way is the right track to take to get your business where you want it to be.
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