Do you know how your business is currently performing? Do you have a good understanding of your cash flow?
During the most challenging times of 2020, especially through the lockdowns, many business owners panicked because they didn’t have that all-important picture of how their operation was stacking up at the time.
On the other hand, those that had solid processes in place ensuring they had thorough awareness and understanding of all aspects of their business, including cash flow and profit and loss, were well-placed to adapt to challenges. These were the businesses using resources such as Xero well. They ranged from tradespeople with software add-ons such as job management systems, to retailers who knew exactly what they had in stock and the precise numbers of what they sold each day.
Whatever your business, that kind of information helps you to understand what impacts your operation, and supports you in making good decisions.
Having a robust business plan in place with clear goals, and understanding the vision for your business, is also critical to helping you achieve the goals you have for your business, and to help navigate through the tough times. Your business plan should set out where you should be, providing clarity around where you are now, where you want to be, and how you will get there.
However, even the best business plans can fail.
One major cause of this is lack of focus. If you expect things to change because you have a business plan, you are going to be disappointed. You must be focused on your plan and aware of what you are doing to keep it moving forward.
For example, the owner of a building company might have a plan that includes some staff moving into site management roles, so the owner can focus more on overall management. You then need to look at training programmes, planning for those people being out of the business at certain stages for training, and scheduling time specifically for you to do training alongside them. You have to be very deliberate about how you spend your time.
Often people simply get so caught up with the day-to-day jobs that the plan stays in the desk drawer. Blending working towards your goals with your everyday work is important. If you don’t focus on goals and do the things you have set out to move your business forward, then you will not achieve them.
Another reason we see business plans fail is co-owners or directors not being on the same page as one another. There may be a plan but no clear discussion or vision for the business. A major part of effective business planning is having those conversations about what everyone wants, reaching consensus on that, and sticking to it.
Accountability is a good tactic for encouraging organisations to follow and act on their business plan. Seeing a business advisor monthly or quarterly provides an opportunity to talk about the important events and developments in your business, and to review how you are tracking towards your goals.
Sometimes progress may have stalled for valid reasons, like an employee departing. You can still talk about how it will be managed if it happens again, preventing it from being a roadblock to progress. Equally, if something in the business has exceeded expectations, then you can discuss how best to capitalise on that. Accountability and having support around you is important to make sure you reflect on your business fully. That should resonate with business owners who have goals they want to achieve.