Step two in creating a usable business plan: ideas to move your business forward. And write it down, says Robert White
Too often when clients say something is (or isn’t) going according to ‘plan’ it soon becomes clear that this plan is a very movable feast. It’s time to tackle writing the business plan.
So the form: The language should be clear, detailed and economical. Don’t waste words on figures, use diagrams or charts to express them. Reflect on whether it should be soft and people based, hard and economic or – more likely – a combination of the two. Make it something that can be dipped into – visually accessible, attractive and something that expresses your brand and its values. After all, it will be shared beyond your office.
‘Between Where am I now? and What am I planning for?, the middle of the plan links the present and future. It lays out what you are going to do to move your business forward and how to do it’
And what about the content? ‘Where am I now?’ and ‘What am I planning for?’, dealt with last month, are your beginning and end. The middle links the present and future. It lays out what you are going to do to move your business forward and how to do it. Ask others’ advice, perhaps experts or colleagues. Do practice members have suggestions? You’d be amazed the sense of ownership that can be generated by a simple act of inclusion.
Treat it as an exercise to get you to think around things, to look ahead and test the permutations so you can see what effect a decision might have. How could it open up as a possibility – or might it close down or expose you to risk? If so, at what level?
Step by step
Introduce influences as well as standards to guide you. Break down and evaluate the factors that will affect your progress. This is the time to use the data and ideas you have collected to compare with your findings about where you are.
If setting up a practice, you might begin by looking at the very basic balance of the cost of working and flow of income. Begin by breaking everything down into the smallest elements possible. Split hard fixed costs into rent, council tax, utilities etc. Soft costs include staff numbers and equipment purchase which you can compare to rental. Begin to look for scalability – perhaps in the size of space you are looking for initially and where it should be.
Most issues can be viewed two ways: cost versus benefit and risk versus reward. Do not confuse them as they are two very different measures. Considering location and type of space, cost versus benefit means setting the cost of renting against the ability to recruit and retain the right staff, or a job-winning venue in which to make amazing presentations to clients.
Risk versus reward would assess things like the length of lease. Suppose it is a long lease (not something we advise), where you have to provide a guarantee. The balance of security and certainty of rental and tenure has to be set against the personal exposure. The counter to this may be a negotiated position where you pay more money but have a break clause after each year and no personal guarantee.
Then take cashflow and analyse it the same way. Cash is the life blood of a business and I am a huge fan of a cash-positive position for architectural practices. It gives you power when negotiating new contracts and planning work to hold working capital. Generating and building it is based on the timing of money in and out – as well as making a profit, of course. So your business plan needs to include not invoice dates but real payment and cost dates, with averaged monthly figures. And real fees that reflect the amount of work you will do.
To make this work set up contracts that stipulate as a minimum payment dates or tighter terms with your clients. Break stages down into partial upfront payment (particularly for new or foreign clients who you have less knowledge or legal hold over) or monthly or even fortnightly payments. It is worth looking at small reductions (a few percent) to get large payments made on time particularly if you run an overdraft, incurring interest and charges. Map it out and weigh up the benefits against cost.
This is the point to start sharing your business plan in whole or part and get some feedback. A business should always write its own business plan as a lesson in delivering on ambition, but as business consultants we do a lot reviewing, comparing and providing perspective. Your accountant can offer a similar review of financial issues. If the plan is about profile-raising look to a friendly journalist or client. If it is a technical area, such as migration to offsite IT storage, seek some peer review to test any advice you might be receiving. ‘Measure twice cut once,’ as carpenters say.
So the route to your objective is becoming clearer. The process will make you think. You will question decisions – which is good. But don’t get hooked up on perfection. It is meant to be a plan for a real world business project, not a model of the ideal.
Next month we will look at how, using interim goals and objectives, you can turn a raw business plan into a tool that will become a reference point, part of the office culture and support structure.
Robert White is partner at White Partners