With 2020 just around the corner, it’s time to start preparing for next year’s success right now
Hands up if you remember The A-Team? Those former members of a fictitious United States army special forces unit who graced our screens during the 1980s always had a plan. I’m not saying they had the greatest business acumen, but Hannibal did have a point when he said: “I love it when a plan comes together.”
Without a goal and clear strategic idea of where your business is going, you may never get there. So with 2020 just around the corner, it’s time to start planning for next year’s success right now.
Managing a successful franchise usually requires a different skill set than the day to day work and it comes down to the understanding of figures, forecasts and, as always, careful business planning.
Perhaps you’re looking at expanding next year? To secure any business borrowing, it will be necessary to provide a bank with a detailed business plan. This is a document setting out goals for the future and the strategy to reach those objectives. It will need to include information on cash flow, budgets and projections, but also an analysis of strengths, weaknesses, opportunities and threats.
Business plans should be realistic and achievable, using existing financial records to help with forecasting. They should also detail milestones and set out a road map indicating thresholds when, for example, additional staff can be taken on or when the business can afford to expand further. A well thought out and comprehensive plan helps avert risk for the business owner and is also essential for the lender to evaluate projections for steady, achievable growth.
The starting point with any business plan is analysis of existing figures. So step one of the process of expansion is to ensure accounts are up to date.
Key performance indicators are also an essential part of business planning. They are an effective way of driving success through a business and when examined and addressed correctly can even turn a failing business around.
Monthly turnover, cost of sales and gross profit will always be the most important key performance indicators as, at a glance, you get a good idea of how a business is performing at a high level. There will be some more specific metrics that are tracked behind these, which might include variable and fixed costs such as staffing, training, recruitment, heating, cleaning and marketing.
The big question, however, is what can you do to support those big hitter KPIs? What else can you monitor on a subsidiary level that will reinforce those three metrics?
Part of business planning should also involve looking at strengths, weaknesses, opportunities and threats - a SWOT analysis. One threat next year may be related to the political situation with Brexit. Consider how this could potentially negatively influence staff recruitment and retention or customer spending.
So whatever 2020 holds, whether you’re starting out or looking to grow, you will benefit from a plan especially designed for your organisation.
James Thomas is commercial manager at d&t, an award-winning chartered accountancy and business advisory specialist