Financial independence, key person risk and being too busy to grow their business are some of the most common stresses facing SME businesses in Australia today.
Formal business planning is squarely in the ‘too hard basket’ for many business leaders (72%) and this is holding them back when it comes to financial independence, growth and financing, and planning for retirement – with many SMEs without a retirement date and no succession plan (90%), or worse, they don’t know what income and assets they need at retirement (88%).
So says a comprehensive face to face study conducted over 12 months with more than 500 SME business leaders.
To access the research report findings and commentary please contact us on 02 4907 7222.
Why aren’t businesses doing strategic planning for growth? We found 66% of participants in this study are too busy working in their business with no time to work on their business.
Here are some key business planning tips for SMEs, across the key areas of Strategy, People, Processes & Cash, to take the mystery out of planning and to help business leaders to take charge.
1) Everything is relative – Even if you do planning – how do you know it’s going to work? Benchmarks are fundamental indicators of success and without knowing how your business and activity currently performs against other SMEs, you could be flying blind. Ask your adviser about helping you with benchmarking your business against others.
2) What are you solving for? You need to determine what your end game is – where are you going and why? What do you need to get there? What’s holding you back? What does your vision look like in terms of what you sell, to whom, when, where and how.
3) Do you have the processes and systems in place to implement a plan? Identify your key processes, highlight what needs to change to grow where and how you want, then develop the processes and enlist your team to troubleshoot and own them.
4) How much money do you need? Revenue for cashflow, profit target, capital for growth. How much is enough and what’s the best sources of finance for your business? What do you need to secure it? How healthy is your credit history? All of these factors are important if you are looking to secure outside investors or fund your growth through debt. Your accountant can help you to put sums around your plans.
5) Do you have the right skills and experience in-house to implement a plan? If not, where can you find them? Do they need to be in-house or can you use a virtual CFO, marketing team or cloud accounting solution? If you need experienced resources for sales or development then what will it take to get them and how much will it cost?
6) Have you thought about what it will take to align your staff so you can get the 1+1=3 effect? Make sure you have champions for each aspect of your plan or it will fail. Hold people accountable through alignment and integrating the plan into every day activity. Do you need a reward system to get the best out of your staff? Something simple may not cost you a lot of money but could create a step change in your business culture.
7) What are your indicators for success? Every plan needs to have indicators of success and clear timelines. These help form KPIs for your team and will demonstrate outcomes to investors and owners when the time comes.
8) Reassess and refocus. Use real time financial and management reporting to steer incremental change. Cloud Accounting solutions are your go to. Set yourself a timeline for assessing success periodically and refocus where you need to in real time. Cash flow is king regardless of the size of your business. Don’t let your focus on expansion blind you to the need for strong cash flow and money in the bank.
There is always plenty to think about when you run your own business. Sharing the load with a trusted adviser will help you to put perspective on your vision as well as reality around your plans. A Board of Advice is a term used widely when it comes to business advisory and it can be a useful step for you to consider if financial freedom is your goal. Enlisting a structured Board of Advice with those who you trust to give you honest and informed insight could mean the difference between feeling stressed by the treadmill, and seeing your vision blossom.