Barriers To Business Planning

The problem with business planning

For many companies business planning is seen as a yearly or infrequent activity. Tasked with the challenge of growing the business, contracting the business, looking for diversification opportunities etc the question for the team is “How Do We”. Now hopefully all of the management team will be involved in the planning process and each of these people will have a different approach to engagement, whether it be it kinaesthetic, visual or aural.

Standard business planning decisions

After extensive research (and there has been huge quantities of research conducted on the business planning process) it is suggested that

• for most businesses approx 85% of the decisions to be made are generic,
• with only 15% of the decisions being specific to the company,
• Of these 80 are generic decisions that often need to be made within a business,
• The business decisions fit within the scope of Operations, People, Finance, Sales & Marketing and Strategy.

Make a Better Decision And Ensure It Happens

Giving the broad scope of trying to grow a business with the 80 generic business decisions to be made how do you make sure that you find the optimum solution to the business decision and importantly make sure that when it is in the plan it actually gets completed.
How many of you have been through the planning process and completed a list of actions only to find that at the end of the year the team have perhaps started on a few but made very little progress on the plan?

A Method To Help Your Company Make Better Business Planning  Decisions

What if

• There was a unique engaging way of working through the planning decision process through an ‘activity’ decisions that allowed for improved decisions to be made. Overcoming the issues of ‘I hadnt thought of that’
• Once decisions made, then goals created and tasks assigned
• A clear business planning action task is created (so if its not in the plan it shouldn’t be completed)
• A interactive on-line plan was developed as part of the process that clearly identifies
  • Planning actions and accountability
  • Prioritisation of actions
  • Visually where progress is / isn’t being made
  • How to improve the quality of solutions and decisions that you make

10 factors you need to consider to avoid the common reasons for businesses failure

1. No business plan – makes perfect sense If you are heading on a journey and you have no idea where you are heading it makes it incredibly difficult to navigate
2. Lack of operating goals and objectives – So you have your end destination in mind but haven’t set any criteria for how quickly you want to get there, the methods you will use
3. Under funded – You have aspirations but insufficient cash. This lack of cash will significantly inhibit the activities and frequency and type of activities you can perform
4. Failure to measure goals and objectives – If you don’t carry out business measurement’s how can you have any idea as to whether you are achieving your effectively
5. Failure to pay attention to cash flow – Without cash a business cannot perform. Its all very well having a great product or future orders in the pipeline but if you cant afford to fund the business activities through lack of cash then you will go out of business. Lack of attention to incomings and stock are key cash flow elements
6. Underestimating competition – Most companies have competitors. These competitors may be direct, indirect or future forms of competition. Competitive forces don’t stand still they adapt and change
7. Poor people management skills – The adage that a companies  employers are its most important asset is often mentioned. What if the directors / managers don’t have the requisite skills to guide and manage these people accordingly
8. Not cost competitive – Unfortunately for most businesses they will face competition. Many will choose to compete on price without being the most cost competitive (There is nearly always someone who can build it / deliver it  / fulfill the order at a lower price). Therefore companies need to identify where / how they can compete on issues other than price.
9. Failure to understand the industry and the target customer
10. Poor or no marketing – With no means of differentiation and no focus on customers or products the ultimate destination is failure

If any of the above factors relate to your business then it could be worthwhile changing and developing or asking for help.

Are Your Competitors Responding To Sales Enquiries Like This?

For a client  who manufactures a technical automotive product we recently conducted competitor market research. Eleven direct competitors were contacted with a request to purchase a specific comparable product. During the research these five key findings were identified.

1. Fast Response

• From receipt of the enquiry only 30 % of the competitors responded within 48 hours (with one providing a very professionally presented response within the same working day)
• Two of the respondents quickly asked for more information in order to accurately specify
• The remainder of the competitors did not respond to the first request and needed prompting

2, Quality of proposal / quotation

• 3 of the proposals were outstanding and offered our client immediate ideas for how to improve the way they presented information within a written document. From the actual content (both written, illustrations and imagery) through to how the technical specification was structured and how pricing information was structured
• 2 of the proposals simply copied the information provided within the request and added a pricing element
• The remaining proposals were of very poor quality and purely featured pricing information with no other support information to justify why that supplier should be chosen

3. Follow up

• Staggeringly only one company followed up after submitting their proposal. I find this quite amazing and for our client provides them with a great opportunity to modify / improve their process. As they are selling a technical product there are lots of opportunities to follow up promptly to make sure that the customer fully understands the proposal and talk through in an informative way the technical elements
• What a great opportunity to be different (or among the minority) by simply following up your proposal.

4. Discounting

• Without even questioning on price two companies offered a substantial discount structure within their quotations. In the case of one of the competitors they already had the lowest unit price irrespective of discount so appeared to be giving away margin
• Perhaps if they had followed up they might not have needed to consider discounting

5. On-Line enquiry

• Two of the competitors were originally contacted by using their preferred online enquiry form. In both cases neither competitor responded and they had to be contacted by alternative means
• If you have an online enquiry form how often do you check for incoming enquiries and do you have formalised process to ensure requests aren’t lost / missed

Competitor Analysis – In summary

• How much do you know about your competitors?
• If you had more accurate and up to date information on your competitors, would this help you gain sales and generate additional profits.