Set out a routemap for your firm’s future

If you fail to plan, you are planning to fail!” – wise words from Benjamin Franklin, one of the founding fathers of the US. He’s right and it’s one of the reasons why an industry has grown up to support firms of all sizes wanting to plan for their future.

But for smaller enterprises, where time and management bandwidth may be in short supply, the issue of strategic planning may be ignored. So where should a small business start when developing a strategy?

The business plan

Leanda Hickman, marketing and operations manager at the Forum of Private Business, thinks the starting point should be establishing where the business wants to be in fixed time-frame. “A business plan is one of the most important documents a business will ever own as it ties together ideas, targets and plans for the future as well as giving space to consider if those ideas are realistic and workable,” she says.

As part of the process, she explains, thought must be given to five key areas: ideas and research; business viability; the purpose of the business and how it communicates; predicting the future; and the development of a clear strategy with a plan for growth over time.

Salvador Amico, a partner at accountancy firm Menzies, thinks that the process also means planning for an exit: “Every business will have a different perspective on what they want to achieve, but most will be driven by the same goal which will focus on an exit strategy in the medium to long term future. This could mean selling the business to realise the value that has been created over time, selling the business to a management team or passing the business down to the next generation of family members.” Either way, Amico says the goal needs to be formally stated.

If the plan requires the acquisition of another business, Amico says it should be done with care, appropriate due diligence and “a very clear understanding of how the acquisition will impact on the existing business”. The hope will be that the acquisition will bring some synergies, for example, a client base that can be absorbed within the capacity of the original business with minimal investment in production equipment or people. 

Whatever the goal, it’s important, says Hickman, that the plan is easy to read. “The objectives need to be clear. Part of this means being comprehensive and concise with predictions, but without any contradictions.” For example, she says that when displaying figures relating to expenditure and planning forecasts “check and check again as the figures in the plan must match those that appear in the financial forecasts – all too often they do not match, and the business plan will then lose its credibility.”


Naturally, says Amico, predicting the future is incredibly difficult, but nevertheless, he says “all businesses should have a short- to medium-term view. This could take the form of a high-level three-to-five-year plan that is then broken down into an annual plan.” Short time-frames mean that owners can understand the impact that growth will have on the resources within the business. Logically, he says the two key resources that will have the greatest impact are cash and skilled people. “Without cash, it is hard to invest in equipment and technology that ensures a competitive edge. Without skilled people, the business will find itself unable to cope with growth over the longer term.”

And with this in mind it’s easy to see why Hickman suggests businesses draw up a PEST (political, economic, social and technological) analysis. She says that a PEST creates a framework for reviewing the business in the light of external factors that may affect it in the future. “Being continuously aware of trends and changes in the business environment gives a competitive edge. A business plan displaying a PEST analysis will demonstrate that the overall bigger, long-term picture has been taken into consideration.”

Adding another viewpoint to the process, Amico says to look further afield. His advice is to use industry bodies to obtain benchmark information as “a comparison of the business performance against its peer group can provide some valuable insights.”

The next step

Having good management processes in place right is central to making a business run more efficiently and smoothly. All elements of the business – marketing and sales, finance, recruitment and staffing, product development and product sourcing, legal compliance, and administration – need to be drawn in; each will have a bearing on how the performance of the business will be monitored and measured against objectives and targets. It’s equally fair to think how staff should be monitored too.

Amico believes that maintaining a disciplined approach to planning is essential. “Monthly reporting showing how the business is performing against the original plan is important. Also, business owners should ensure that the original plan remains realistic over time and takes into account any new information or knowledge that is acquired.”

As to who monitors the plan, Hickman says that realistically it can only ever be the controlling minds of the business. But she cautions firms to monitor new processes because “if it [the process] becomes unachievable or realistic you have to stop and move on otherwise it can end up using unnecessary funds.” Blithely following a failing plan can rapidly move a business from being cash positive into a debt position.

Practically, as Amico points out, “over time, planning will become more accurate as experience is gained and knowledge acquired about the underlying performance of the business.” He thinks that regular monitoring of business performance against the plan will quickly establish whether the original plan was realistic or not.

Keeping tabs on the plan

Businesses are profit-making entities, and so the financials are critical, and there’s a need for data on funding requirements, sources of finance, and actual expenditure.

Hickman explains that costings should note the capital expenditure required for the purchase of equipment and working capital requirements. She advises firms to “outline any personal monies that might be available to fund the strategy; create a cashflow forecast and estimate how much cash will be available in any particular month (with a profit and loss forecast); and also keep an up-to-date balance sheet that details the likely trading position of the business in the future to identify potential debts and likely future financial strength.”

If the plan is not working

It should be obvious that any manager worth their salt ought to regularly review their strategy. Says Hickman: “You’ve got to be SMART in your planning and realistic in your approach.” 

SMART, for the record, is an acronym for an approach that has five elements: specific, measurable, attainable, relevant and time-bound.

Be ‘specific’ so the objective is clear and unambiguous and explains to the project team exactly what’s expected. The process has to be ‘measurable’ so that progress can be assessed in meaningful terms against the objective. It must be ‘attainable’ in that the objective is reachable; this necessitates that it must be realistic. Just as important, the process must be ‘relevant’ – the objective has to matter to the firm. And lastly, the process must be ‘time-bound’ so that the objective provides a reasonable time-frame for expected achievement.

Communication is everything

Without the proper information, stakeholders – staff, banks, investors, suppliers and customers – can easily jump to conclusions. This is why Amico says a plan should be dealt with at a senior management level. He says: “In many SMEs, the owners and managers are the same people, but explaining the plan to the wider employee base can achieve greater buy-in if done correctly.”

According to Hickman a well written plan will be able to do many things. She says “it can be used to obtain leads and referrals as well as names and details of investors that can be targeted; it can be used to pitch to an investor or bank; and it can be shared with a potential business partner if you are looking for a stakeholder in the business.”

Lastly, those wanting to strategise for the future needn’t think they’re on their own. As Hickman notes, “there are many software packages that are available to help with business planning and processes. Look at membership organisations like ourselves [the Forum of Private Business] who have resources available to help through the grey areas of running a business.” Business plans can also be discussed at business hubs, networking events, and also in forums.

Case study: Optichrome

According to John Heywood, managing director of Surrey-based printer Optichrome, his business strategy is driven almost entirely by customers and by what he believes they will need in the future. As he says, “there is no point investing time, effort and money in ‘great ideas’ if the customer doesn’t want it, and the business doesn’t benefit.”

Each January the board meets to set the strategy and agenda for the following 12 months and the next five years. It also reviews progress against the previous year’s plan and objectives. Says Heywood: “We agree strategies for investment needs, organisational changes, recruitment, staff training and development, potential acquisition targets, changing customer requirements, sales and marketing and social media.”

He adds that the company tries not to get distracted by vanity strategies and investments – “all strategies must have a clear objective that will deliver a financial gain… we run a business not a print works.”

Heywood understands that he needs to be of a certain size to provide confidence to his customers and to attract the top talent. He also believes that “any strategy should be flexible, and one should never be afraid to admit that you got it wrong, or that you may need to alter direction, or in extreme situations even re-think your entire strategy.”

Interestingly, Heywood says he has seen too many short-term industry trends and high-profile initiatives lead to business failures. “Some might accuse us of indecision, but we are dedicated to the long-term goals... short-term wins are nice but don’t excite us.” He adds that Optichrome’s preference is to invest in niche, sometimes obscure equipment and software to provide an edge when it comes to attracting and retaining customers, adding that “we all have very similar plant these days that can consistently produce excellent quality in a short time... so we need to find things that make us different”.

Putting the components together

A strategy plan can take on any one of a number of forms and sizes. That said, they all have a number of standard components.

Mission statement This is an all-embracing overview that details what the business is about and what it wants to accomplish in the long term. It also outlines how the business will seek to achieve the goals it sets. Fundamentally, it’s a declaration of why the business exists.

Vision statement This is meant to contain a brief overview of where the business expects to be in the medium to long term, that is to say, an outlook beyond the next five years. 

Values statement or guiding principles This section covers off the ethos of the business – how it’s run and governed with detail on its core beliefs. These are the principles that are set in stone and which never change.

Strengths and weaknesses Quite simply, this shows to the reader that the business has examined its position in the market against its strengths, weaknesses, opportunities, and threats.

Competitive advantage This relates to the unique selling point (USP) of the business – what makes it special so that customers want to buy from it rather than from its competitors.

Long-term strategic objectives Detail that goes beyond the medium time-frame and illustrates what the business needs to focus on to meet the goals that have been set.

Strategies In essence, this gives the reader guidance on all of the methods and processes on how the business will achieve what it’s set out to do.

Short-term goals This is an expression of the targets that the business needs to meet in the short to medium term (within two years), which allows it to meet the strategic objectives that have been set. By definition they need to codify what is sought, when by, who is responsible and in a form that is measurable.

Action items/plans This section guides the reader so that they can understand how the goals of the strategy will be met. It effectively turns the strategy into a series of stepped executables that are dealt with in the short terms (again, sub two-year time-frame).

Report card An overview that keeps track of project performance and business performance against the targets that have been set. The normal benchmark period is monthly.

Financial assessment This section reports, using historical record and likely future positions to plan and predict the future of the business. The aim here is to assess and control business financial performance. Change needs to be measurable.

Common traps

As with anything in life, there are common traps that are easy to fall into when writing a business strategy document. 

Why now? Not every business needs to have a strategy plan. While it may be a worthwhile document, it’s going to take up management time and resource, which could be better deployed elsewhere. To an extent, everyone involvement in managing the business needs to buy into the process or it’ll be wasted effort. So – what is the driver demanding a strategy plan?

Garbage in garbage out Any decision you make will be based on the information you have to hand. Use bad information and it’s guaranteed that you’ll end up making a bad decision. Don’t use assumptions – use only solid data which can be verified.

Don’t ignore the outcome If you don’t want to follow what the strategy document uncovers then don’t undertake the process. It’s fair to say that the process may well end up taking thought processes in an unexpected direction.

Don’t be unrealistic Creating and writing a business plan takes time and resource if it’s to be done well. Don’t rush the job; find a way of doing what you need with the resources that the business has.

Don’t lose sight of action It’s very easy for planning to lead to prevarication and time wasting. If something needs to be done, especially if it’s been highlighted by the plan, take steps to make changes. Don’t let pure process get in the way.

Internal order Apart from those that want to develop or move in a different direction, some firms wanting to strategise do so because there’s a problem that needs fixing. However, if this is the case it’s much better to fix the problem before creating a new strategy. Existing problems won’t go away and may just lead to issues that turn critical later on – especially if they involve conflict.

Be original Technology has made it very easy for writers to cut and paste information from elsewhere into their strategy document. The problem here is that even if the information is taken from a similar business every business is different – there is no one size fits all. Following industry best practice is worthwhile, but that’s where the copying must stop.

Remember your business Every business will have its own culture and methods of operating. There are countless examples of where business have swallowed another only to find culture clash has undone any of the gains made by the acquisition. And so it is with a strategy plan – planning shouldn’t undermine what is known to work and it shouldn’t break an organisational structure.


© MA Business Limited 2020. Published by MA Business Limited, St Jude's Church, Dulwich Road, London, SE24 0PB, a company registered in England and Wales no. 06779864. MA Business is part of the Mark Allen Group .