Just like that the New Year is upon us, I certainly hope you all had a great break with family and friends.

In my final column for 2023, I discussed the idea of utilising the Christmas break to establish business goals for the upcoming year. Now, I want to delve into the process of translating those business goals into reality by constructing a strategic plan for your business.

A business plan serves as a vital tool for any business as it formalises the goals set for the year. The approach to creating a business plan can vary based on its purpose and the size of the business. But for me, any good business plan, particularly strategic planning, should revolve around four fundamental pillars: business, market, people, and risks.

Business

To build a plan you first must fully understand what your business does. Are you a service provider or a manufacturer? What skills or goods do you offer to generate revenue? Answering these questions is crucial, as a clear definition of your business can lead to a better understanding of how to enhance your top line. This could involve expanding existing product/service offerings or introducing new ones.

Key questions to consider:

• What are you selling?
• Who are you selling to?
• How can you increase your top line, whether through price/margin improvements or an uplift in sales volumes (organically or via new sales)?

Taking the time to reflect on the core business aspects and its revenue drivers you will naturally learn potential avenues for growth.

Market

Understanding the market in which your business operates is integral to consider for your business strategy to continue business success in the future. Regularly reviewing the market environment is crucial, since the market you operate in will continuously evolve. For instance, the recent developments in artificial intelligence and its potential impact on your specific market. 

Key things to consider:

• Begin by clearly defining the market you operate in, then take a closer look at the specific niches/smaller markets your business currently engages with or should consider entering.
• Identify the key competitors in your market, including both direct and indirect competition. Additionally, stay vigilant for any new entrants that might be entering your market that you may need to be aware of.
• What competitive advantages do you possess over your rivals? If there are none, consider whether there are opportunities to establish new advantages.

A regular assessment of the market you operate in and who operates in it will keep you aware of any potential threats to your business, and allow you to evolve your business to be a market leader.

People

Businesses are fundamentally about people. In my banking experience, we always emphasised putting people before businesses. It was a belief rooted in the understanding that, without a solid team of individuals, especially in the event of losing key members, businesses could experience a rapid setback.

Key points to ask yourself:

• Who are my key people? Additionally, is there a risk if a key person leaves, and should we have a contingency plan?
• Do I have the right people in the right roles?
• Who else could be beneficial to support the future growth of the business?
• Do we have the right mix of people in governance, management, finance, operations, and customer service to make our business perform at its best?

I highly recommend that all businesses look at this area to ensure a well-balanced team, a crucial factor for maximising business performance.

Risks

Knowing the possible risks for your business is really important. It's just as crucial to have plans in place to deal with those risks. Even though it feels great to see your hard work paying off in business, it's equally important to be ready to handle any big challenges that might pop up.

Key questions to ask:

• What are the key risks to my business, be it financial, competition or regulatory?
• What potential new risks could arise, such as developments in products/services or market changes.
• Am I exposed to customer concentration risk? In other words, does a single customer contribute a significant portion of revenue, to the point that their departure would have a substantial impact on cash flow?

Once you identify the main risks to your business, you can create plans to address them if needed. Implement these plans as swiftly as possible to reduce the potential impact on your business.

Final thoughts

Taking the time to create a business plan focusing on these key areas of your strategic plan is a significant step toward sustaining and expanding a successful business, in my opinion.

If time is a constraint, consider conducting a SWOT analysis (assessing Strengths, Weaknesses, Opportunities, and Threats) for your business. It provides a quick yet effective way to gain insights into your business and market dynamics. While you may need to explore key themes later on, it offers a snapshot of your business at any given moment.

If really in doubt, or something is keeping you awake at night, don't hesitate to reach out to us at BDO. We're here to assist and leverage our experience to support you.