BIS MAGAZINE/BIS Business: Networking: The key to success/Is your business fit for business...? Part 1

It is a fact that most businesses get so used to running things a certain way or the same way and that there is a strong tendency to never really question what we do and how we do it. And if we don’t regularly question ourselves how do we know if we are doing it right and getting maximum results! This can often result in diminishing income, higher costs, demotivated staff (and owners) and can sometimes be summed up with the old saying of "Can’t see the wood for the trees." So come on be honest......how many of you business owners out there recognise some of those issues?

So...........as your self appointed (Business) Fitness Trainer I have put together a gentle workout for you to get your business into shape. Over the next three issues we will look in depth at what can be done to make your business fighting fit, so whether you have been running your business for years, just started one or are seriously thinking about it, this fitness programme should be useful to all!

Additionally, these exercises apply to any type of business so I don’t want to hear any cries of "that doesn’t apply to us" or "we’re only a tiny business" etc.

The first step is to carry out a little fitness test for your business.

Invariably the signs are fairly obvious, such as sales results, income, and activity levels, however it can be just as important to know why we are doing well as why we are not. For example it may be that your business is doing well right now but might not be at other times of the year unless seasonal changes are accounted for at the planning stage.

We should of course always know how well we are doing, but in order to make an assessment of a business’s fitness we need to break it down into different sectors as follows:

Business Planning or Strategy

People

Business Processes

Technology

Business Planning

The chances are that, if we were travelling by car from Malaga to London, we would almost certainly plan or map out our route before setting out on our journey. If we didn’t, the likelihood is that we would get lost! As a consequence our journey would take more time and we would use more fuel. We may well displease those that are waiting for us at the other end of our journey and if we had made a booking to stay somewhere like a hotel for instance, then we may lose our booking and quite possibly our deposit.

In short we would use up unnecessary and precious time (and we would lose money).

Now, as the saying goes "Time is Money", so overall we would be losing even more money by not planning our route.

It is an established fact that, everything we do in life usually works better if we have a plan, and so it is with businesses, so how do we go about creating a plan for our business?

In simple terms we need to look at it three ways:

Our Objectives - Where is the Business Going?

Our Strategy – How the Business will get there?

Our Resources – What do we need to help us to get there?

For example: Ask yourself these questions:

What are your Personal objectives (owners)?

What are your Business objectives (owners, directors)?

Are there any conflicts between the Business and Personal Objectives?

What products or services do I want my business to offer?

Where do I want my business to be in three years time? What will I need to do (activities) to make that happen?

What skills, resources and support will I need to get there?

We then need to set realistic targets to meet our Objectives, this might be in the form of turnover or profit of the business over a given period or it may be to gain a specific market share or it might simply be to provide you with enough money to pay the bills but remember the more profit you make the more bills you can pay!

Next we need to look at what we think our Income will be and what our Costs will be. Sometimes it is easier to plan our costs first as these may be easier to identify. We can then use what is called the breakeven rule to see how much revenue we need to bring in to cover these costs and become profitable. It is very important to make these projections realistic. Having run sales organisations for many years I have learnt that sales people usually provide forecasts that are either over optimistic or over pessimistic. The first can lead to unfulfilled expectations and potential cash flow problems as a result of the optimism, and the second to a potential shortfall in resources for unexpected business which can result in letting your customers down! The only projections that truly count are Realistic ones!

A good way of doing this is by creating a simple cash flow document which will not only allow you to plan your business finances but will allow you to monitor on a month by month basis how fit your business is! This technique will also allow you to identify problems early, make the necessary changes and stay "business fit"! Obviously having sound computer skills can help with this process but even without being a computer wiz you can put a very simple cash flow together with pen and paper and some lined paper.

So we now have a simple Business Plan complete with our considered objectives and some cash flow projections.