A well-developed business plan is a critical element in creating, developing and sustaining a business. I read an interesting quote in a Business Insider article on Clearwater Paper that was published on Aug. 27. The quote was from Linda Massman, CEO and president, when asked about the near-term product mix: Were looking at the landscape. Updating business plans annually, along with preparing five-year forecasts, reviewing the status of goals semi-annually, strategy sessions and frequently meeting with customers, thats something big businesses do. They continue to look at the landscape.
It was time for a coffee klatch session with my SCORE associates Joe and Roy. Both are former successful small business owners. The topic: What did they do in the way of business planning and what suggestions could they pass on?
The advice sounds a lot like the planning processes practiced by corporations:
Business plan updates
The business plan provides an assessment of the status of the business and identifies the opportunities available and the steps to be taken to sustain and grow the business. It contains an updated market assessment. Joe and Roy urge businesses to annually review their current plan and update it to reflect current conditions.
Attention to goals and accountability
In their businesses, both Joe and Roy engaged their employees in developing individual and company goals. According to Joe, its a no-brainer to establish goals, establish individual accountability and to review progress toward the goals quarterly. Roy favored a few stretch goals and indicated his experience was that the companys stretch goals were typically exceeded.
Cash is king. Whats happening with your receivables? Have receivables stretched out over the past several months? Are you seeing a new trend line? Perhaps you need to reassess your customers. Are they having trouble? If so, slow pay may be an indicator of problems in a particular sector of your market.
As Joe says, you need to continue to take the pulse of your customers. Competition may have introduced a new product, or perhaps theres been a pricing change or even an opportunity for you to solve a customers need with a complimentary product or service. Customer input should be an important element of a revised marketing strategy. Roy made it a practice to invite customers to his shop, and he had his employees visit his customers.
As part of the process of updating his companys business plan, Roy made it a practice to meet with owners of several other non-competing manufacturing businesses to exchange views of their business challenges and successes.
Market and competitor research
Both Joe and Roy emphasized the importance of market and competitor research. The external environment is continuously changing, and to sustain and grow your business you need to be aware of whats happening in your markets. Its the most significant investment of your time, and the results of your research and analysis becomes the path you will follow in developing and implementing an updated business plan.
Joe and Roy concurred in their concluding remarks that without goals and a business plan it is almost impossible to measure the status and the growth of your business. As CEO Massman indicated, keep your eye on the landscape.