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Financial planning, Investment and Self Managed Super Fund Article
It's time to plan for planning

By Matt Fogarty

1st December 2005

This article may be out of date.

As we commence 2006, it is time for a few well-earned celebratory drinks and a pat on the back.

Reflecting on your achievements for 2005, did you meet your objectives?   Did you know what these were and, most importantly, were they documented in your business plan?

Amazingly, with all the supporting evidence about the increased profitability and performance of businesses that have an up-to-date plan, many principals still aren’t taking the time to cement their future direction and budgets for the coming years.

Your business plan is one of the most important documents a business can have, and now is the perfect time to reflect on the year that was and plan for the year that will be!

Benefits of a business plan

There are numerous benefits of having a documented business plan, however, for many, the process of developing the plan can provide the most benefit by forcing you to look objectively at your business.

Unfortunately, many consider this too big a task or they are under the impression their business is already operating at close to its full potential so they need not bother writing a plan. It is those with this latter opinion who are generally in most need of a structured business plan.  Typically, a business plan can provide greater:

• clarity of the business objectives
• understanding and ability to measure business performance
• accountability of individuals
• clarity when formulating strategic decisions; and
• structure and guidance to keep the business focused on its core objectives.

What’s in a business plan?

As no two businesses are the same, no two plans are the same.  A business plan does not need to be 75 pages long and there are no set rules for what has to be included.

There are, however, some notable guidelines that you should follow, such as:

1. Executive Summary – Although positioned at the beginning of the plan, this section is often the last written.  It is a high level summary of the contents and can often be in point summary.  It is designed to provide a quick overview to those wanting an understanding of the general direction of the business.
2. Vision and Mission Statement – It is important from the outset that you (and the members of your business) have a clear understanding of what the business stands for and its direction for the future. Your Vision can be a simple phrase or a few words.  Similarly, a Mission Statement need only be a paragraph or two.  You and your staff should be able to recite these two statements from memory.
3. SWOT Analysis – That is, the Strengths, Weaknesses, Opportunities and Threats to the business.  Typically the Strengths and Weaknesses relate to internal influences and the Opportunities and Threats are the external factors. This analysis is important as it allows you to identify those areas requiring attention to mitigate adverse events or capitalise on future opportunities.
4. Qualitative and Quantitative Objectives – This is about identifying the objectives that you want the business to achieve both from a financial and operational perspective.  These may include increase revenue, profitability, FUM, IFP and client retention, and  improve staff performance, delivery of service offers, customer satisfaction, etc. The key point to remember is that objectives or KPIs are only worth setting if you can measure them. There is no point chasing something you can’t see!
5. Targeted Strategies – Once you’ve established your objectives, the key is to detail the strategies that are going to assist you in achieving those objectives.  This is essentially the ‘how to’ of your plan.

It is important that when considering your strategies that you keep them manageable and realistic.  Strategies can be long and short-term.

These are just a guide to get you started.  If you’ve invested the time examining all aspects of your business, it would be worthwhile to include as much relevant information as needed.

Turning thoughts into action

Once you’ve documented your objectives and strategies, it is time to put thought into action. The best way to do this is in the form of action plans.

Action plans simplify strategies into manageable tasks that can be delegated amongst your staff. This not only engages staff in the planning process and helps generate their buy-in to the strategies, but also provides a starting point for managing performance and establishing benchmarks for incentives and rewards.

Future planning

Malcolm X once said:  The future belongs to those who prepare for it today.  This quote is extremely relevant to this discussion and summarises the power of planning.

Those who use this ‘quieter’ period wisely are likely to be the ones who are organised, productive and more profitable in 2006.

In the end, if you find it too difficult or don’t feel you have the time, consider engaging someone to help with your planning.  An independent party can provide clarity and an unbiased opinion – which can be invaluable when considering your future.

Matt Fogarty is a partner with The Encore Group, a specialist practice management consulting firm. Contact Matt on (02) 8425 7504 or matt.fogarty@encoregroup.com.au

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