Beware Of The Cookie Cutter Business Plan Part 2 By Dean Craven

Dean Craven from Business Growth Systems and FashionCapital mentor advises that ‘one-size does not fit all’ when it comes to compiling your business plan, here he explains the Strategy phase…

Strategy

When small businesses hear the term “strategy” they often feel an immediate sense of ‘overwhelm’. Their business planning activities often have a near horizon; the actions that need to be completed to meet an upcoming deadline or sales target.

This level of day-to-day planning is obviously vital; after all you don’t want your business to be drifting from one week to the next hopeful that it will meet your income expectations.

However, a greater level of forward planning gives you more a of a sense of purpose and control of your destiny. With a basic set of targets, or KPIs, you will gain useful data about what works and what doesn’t. You will see if your estimates have been at all accurate, and start to understand why they might not have been.

In essence, you will now be building a business rather than trading to earn a salary.

Did you know…You can break down business planning and “strategy” into a series of logical steps to be much less onerous than it might feel at first.

For many decades the three phases of business planning have been stated as:

• Where are we now? [Discovery]
• Where do we want to be? [Strategy]
• How do we get there? [Execution]

In the first of these four articles, I discussed the Discovery phase and its component steps.

In this article I will look at the Strategy phase and how to lay down the foundations for a successful execution of your plan.

Take-aways from your Discovery

The outcome from your Discovery phase will have been a statement of:

• What your objectives are
• Who your customer is
• What makes your product and brand so special
• Whether you are likely to make money if your customer buys at your price point
• The processes and systems you will need to create a successful and sustainable business
• The resources you will need to create a successful and sustainable business
• And…. whether your business has all the right structural elements in place to create that successful and sustainable success story to deliver your ingoing objectives.

Part of the Discovery phase was also to establish where the gaps appeared and highlight them in yellow, ready for future action.

Documenting your Business Model

The lists and notes you made in the Discovery phase can now be transcribed to a more structured format. Once fully documented – these elements will create a blueprint for your business AS FAR AS YOU CAN REASONABLY expect to understand it at the current time.

In essence we have established the “WHY” and the “WHAT” that needs to be done. The Strategy phase establishes plans for “HOW” we will make things happen in the Execution phase by creating a coherent model interlinked actions and plans.

 

These blueprints are also called business model canvases and a range of free templates are available on the interweb!

 

My own version is here as an example. Please contact me if you’d like a copy to work on your own blueprint.

 

You shouldn’t expect that all pieces will be entirely in place before you can move on. As you will see below, some other the thoughts you had initially listed may be changed during the Strategy phase.

As a result your business model, the associated checklists and the blueprint should be reviewed on a regular basis, as a valuable working document.

Once the objectives have been achieved for that blueprint a new one will be required….. taking through the lifecycle from StartUp through StepUp to ScaleUp…. at which point you should be “Shark Tank Ready”.

Testing your Business Model blueprint

When you look at the whole blueprint there are many decisions you have already considered, for instance:

• Who is my customer? (The pivotal question)
• How do I engage with them? (Marketing strategy)
• How do I convince them to buy? (Marketing and Sales strategies)
• How do I create my product (Procurement and Manufacturing strategies)
• How do I service and delight my customer? (Operations strategy)
• How do I collect enough resources to make it happen (Management and Finance strategies)
• How do I ensure I make a profit? (The bottom line of all strategies)

Before committing to particular strategies in all these areas you should consider the model in light of a SWOT (Strengths, Weaknesses, Opportunities and Threats) review.

 

 

 

By Syassine – Own work, CC BY-SA 3.0,

https://commons.wikimedia.org/w/index.php?curid=31368986

 

 

 

Conduct this step critically and honestly. For instance if your keys strengths lie in design, but your machining skills are moderate, consider partnering with a gun machinist rather than trying to do everything yourself.   Or, if your creative strengths are countered with number-blindness, partner with someone to look after the business side of your venture.

I am a strong proponent of concentrating on where you have passion and skill, and let other specialists look after other parts of your business.

I try to consider the SWOT analysis in the light of… Measure twice and cut once … It provides the opportunity to sense check what you would like to happen and what you realistically need to do to make it happen.

Selecting and confirming your strategies

A good way of thinking about completing the Strategy phase is to envisage the sequence of decisions to be made. To start from your product / market fit with a revenue target to be achieved and then apply a process of If this then …

Revenue = Price x Units sold

(So…. How many units at what price will you need to sell?)

(If you reduce the price you will need to sell more units)

(If you increase the price will your customer still buy it?)

(If you need to sell more units – who will you sell to, and what markets are they in?)

If this then …

What is your market strategy?

Local – hand delivered / markets

Local through your own premises

National

Export

[Note: The more markets you try to service the more complex your operations and the higher your selling and distribution costs will be.]

If this then …

What sales channels will you employ?

In person sales – with travelling reps

In person sales – at a bricks and mortar outlet

Online sales – own site

Online sales – platform (i.e. Amazon or eBay or Etsy for instance)

Online sales – targeted portal (i.e. Beyond Bespoke or Beyond….)

If this then …

What will be your production strategy?

Made for stock

Made to order

Bespoke

In-house made

Outsourced

If this then …

What will your fulfilment strategy be?

Delivered ex-works

3rd party fulfilment

Wholesale

Consignment

Drop-shipping

Also…..

Which functions will you manage in-house v’s outsourced?

Sales

Marketing

HR

IT

Finance

Design

What other partners and collaborators need to be engaged?

Who will be on the management team? And what roles have you agreed?

How will you fund the various activities in your Strategic Plan?

Self-funded

Friends / Family

Grant funding

Bank loans

External investors (equity shareholders)

Strategic partners

In Summary:

Strategic decisions can be made in isolation or in combination. You can try mapping out various options to see which combination works best for your values, your customer and your profit line.

You can have lots of fun building your business like a lego-set! The business blueprint will help to show the various decisions make sense altogether, and where your Execution plan will need to focus to fill gaps.

[Tip: You probably won’t get it right the first time].

The main things to bear in mind as you go through these options are:

1. Will the customer experience be enhanced by my decisions?
2. What will the cost implications be for each decision ?

All businesses try to find the right balance between the quality of the customer experience and the profit you will end up with.

Once you have settled on the strategic plan components try and imagine the timescale that you want to achieve what you have set out.

What are your revenue targets for the three-, two- and one-year horizons?

What are the volumes of unit sales that will be needed to achieve those targets?

Break the first year target down to quarterly and monthly figures to give the first rough-cut KPIs to measure and focus on.

In the next article we’ll focus on Execution. We’ll get this plan off the page and on to an action plan that you can use to make your dreams come true.

Until then, Happy Planning!

Dean Craven