Plan to succeed and kick failure into touch
(Published at In a City Business - www.themud.co.nz)
By Michelle Hill, Partner at BDO Rotorua
27 August 2014
Failure is a constant unwelcome companion for new businesses but what does success look like?
You might’ve seen the made-for-TV movie recently about Stephen Donald’s famous kick to put the Rugby World Cup out of the reach of their opponents for the All Blacks. Do you think Donald stood behind the ball thinking about how he was going to miss the goal? We saw how he continued practicing and staying fit in spite of being dropped from the team.
Whereas Donald was a seasoned professional, so had previous successes and failures to fall back on, many owners of new businesses don’t have that experience and can be overwhelmed by the difficulties they face.
Between 50 per cent and 75 per cent of small businesses fail within three years of starting, an unfortunate statistic that could be significantly reduced if more businesses were asking themselves a critical question - what does success look like for me?
Identifying this factor is a big part of developing a business plan. Once in place, a business plan can help you avoid becoming part of that unfortunate statistic because, quite simply, failing to plan is planning to fail.
A business plan needs to encompass your goals - what you want to achieve in and from your business, how you plan to meet these goals and measurable steps to ensure you are achieving them.
Writing and putting a business plan in place will help you to:
• Objectively analyse your strengths and weaknesses and how you plan to reduce weakness and build strengths. Likewise, assess and plan around threats.
• Pinpoint areas where you need to improve your performance.
• Identify opportunities in your businesses that you may have overlooked.
• Review your current products and services for any problems and how you can better use assets and/or abilities.
• Set weekly and monthly targets, providing operating tools to help you compare current performance against the plan to regularly determine deviations.
• Put your decisions in writing to enable ongoing referencing and critical examination.
• Have an essential aid in securing financial support from bankers, financiers and other partners relative to your business operations.
• Analyse risk management, another key element. Future-proof the business by exploring and assessing what would happen in a number of scenarios involving an accident or even the death of the principal of the business and ensure strategies are in place to mitigate these risks.
Once your plan is completed, ensure copies are provided to key professionals supporting your business, such as your solicitor and chartered accountant. It has to become a part of your business systems so that if one of the risks does occur there is a well thought out strategy.
If the business is planning for a period of growth then a whole new range of management skills and controls are required. If these are not planned for, then the growth will not occur.
Finally, make it a living working document, a reference point to compare where your business is at against where it planned to be. If there are any deviations, investigate them immediately and take corrective action.
Planning to succeed means you can kick thoughts of failure into touch.