Mistake no.1:
Not having a business plan and a budget
Every FTSE 100 company—and every division of a FTSE 100 company—has a business plan and a budget. These companies understand the critical importance of knowing where they want to go and establishing clear objectives and action plans to get there.
Most small businesses, however, do not have a business plan and budget; they sometimes feel that such structure ‘holds them back’. Or some feel they opened their own business to get away from such corporate ‘formality’.
I believe there is a direct correlation between having a business plan and ending the year with higher sales growth and greater profitability. If you can create a written business plan—and then review it regularly and measure your progress against it—you will experience markedly better business results.
Many small business owners do not know how to create a business plan and budget. A well thought out business plan for a company doing under £5m in annual sales does not have to be long. In fact, some of the best plans I have seen for small companies are just a few pages. At a minimum, I think the business plan should contain the following:
• Mission and vision statement
• SWOT analysis
• Key objectives
• Action plan
• Budget
The mission and vision statement are aspirational and describe what you would like the business to be and accomplish over the next few years.
The SWOT analysis lists the company’s strengths, weaknesses, opportunities, and threats. Typically these are bullet point lists that outline the areas where the company excels and outperforms the competition; areas that need improvement and where the competition may outperform them; areas or markets or new products that offer great opportunity for growth; and those significant areas of concern that could limit the company’s ability to grow and thrive.
The key objectives are the four to eight key goals you would like the business to accomplish in the coming year. Typically, if a plan has more than six to eight key objectives, the likelihood of achieving those objectives can be lower; small businesses generally do not have the uncommitted manpower to achieve a large list of key objectives. These objectives should be ‘SMART’ objectives: specific, measurable, achievable, realistic, and time-based.
Many small business owners do not know how to create a business plan and budget.”
The action plan outlines how the objectives will be achieved. They cover what activities will be implemented, by whom, and how often. The best action plans include deadlines and timetables to complete tasks and activities.
The budget estimates sales volume by month, as well as expenses. Assuming you and your team implement the action plans, you estimate how sales volume will grow, as well as what those activities will cost, along with all of the other expenses necessary to operate your business. If you are unhappy with the bottom line that your budget shows, you go back and modify that action plan to improve the results.
The best business plans are developed with the involvement of key staff. Not only do you benefit from their knowledge of the customers, production challenges, and front-line issues, you also develop their ‘buy in’. The plan becomes ‘their plan’, not ‘your plan’.
The best organisations regularly review their plan and compare their actual results against it, both from an activity standpoint and the financial results. I recommend posting goals and progress in a visible area of the company, to share this important information with your team.
Mistake no. 2:
Not scheduling time to focus on business development
Very often, small business owners can fall into the trap of doing what is urgent, rather than what is important. In the sign and graphics business, this can cover getting jobs in and getting jobs out, dealing with equipment or employee issues, and getting side-tracked by suppliers sales people. The day speeds by, but no proactive business development activities get addressed. The owners of growing businesses have the same number of hours in a day as everyone else. How do they achieve what they do? They make time for important business development activities. Essentially, they schedule the time. They create the time by planning ahead and scheduling the time, in advance, on their calendar.
Very often, small business owners can fall into the trap of doing what is urgent, rather than what is important”
I prefer to group proactive business development activities into two categories: marketing and selling. Both are important. Marketing methods that work well for sign and graphics businesses include targeted direct mail, leveraging and using social media, search engine optimisation of the company’s web site, pay-per-click campaigns, PR, and writing articles for business publications. Selling activities include prospecting, sales calls, net-working, and presenting seminars at networking events.
Mistake no. 3:
Keeping unproductive or below average employees
Sometimes small business owners feel the need to fill a vacant position quickly; in a five person business, being down one head count is being down 20 percent of your work force. Rushing to recruit someone rather than ensuring you recruit the right person for the job can lead to morale problems, poor productivity, or re-making orders.
When you have a poor performer on staff, it lowers the morale of the better performers and can lead to them becoming less productive”
When you have a poor performer on staff, it lowers the morale of the better performers and can lead to them becoming less productive. No one enjoys dealing with a poor performer, but once you do the rest of your team will appreciate it. No one likes to carry someone else’s share of the load. Be aware, however, of current employment law legislation and requirements for disciplinary procedures; this is something I recommend you seek help with from employment law specialists or the Advisory, Conciliation and Arbitration Service (ACAS).
Hold yourself accountable to focus on training and counseling for improvement. Do not put off dealing with an under-achiever. If the performance improvement occurs, you have a better employee; if not, deal with it in the interests of the business.
Mistake no. 4:
Not making the company a learning organisation
The best organisations—even small businesses—have developed a culture of learning. There is ongoing training, cross-training, and employee development taking place consistently. When something goes wrong, in addition to fixing it, in the learning organisation, conversation and coach-ing takes place to ensure everyone learned from the mistake so that it is far less likely to happen again.
When something goes wrong, in addition to fixing it, in the learning organisation, conversation and coach-ing takes place to ensure everyone learned from the mistake so that it is far less likely to happen again”
The approach we adopt is we work together with our franchise partners in developing their business plan and budget, and review their financial statements, bringing the value and understanding we gain by reviewing hundreds of financial statements. We have a robust marketing programme consisting of integrated direct marketing, sales and marketing collateral, SEO, pay-per-click, email marketing, PR, and more.
Our outside sales programme teaches franchise partners to be effective sales managers and teaches selling skills to their outside sales people. In addition to our annual conventions and regional training meetings, we have a complete online learning programme for every position within our centres.
Try to avoid these mistakes and look for the impact on your sales and profitability.
