By Mark Marlow
There is the adage “fail to plan is a plan to fail”.
Of course, failure is not inevitable, but more likely invites the question; what am I missing in not having a plan I believe in?
A business plan that you, as the business owner, believes in, has a higher probability of success, especially if you understand it and revisit it regularly to check how you are going in achieving your business goals. A good business plan focuses you on what it is you want to achieve, and you can check how you are moving towards those goals and amend your plan to suit at regular intervals.
A business plan to many, is a document you prepare for a bank to get a loan for the business. If such a plan is not your vision, then whilst it is a prerequisite for the bank to have, it is of no use to you as the business owner except to prop your door open.
In my experience, a business plan, must be the owner’s vision of where their business is going and the steps and pathways they will take to achieve the goals set. It is important to believe in and understand the plan so it must be realistic and flexible enough to change where needed. The huge bonus is that it allows you, as the business owner, to demonstrate to others why they should support your business, whether they are your employees, bank, creditors, or other shareholders where applicable.
Such a plan is also helpful with regards to turning around a viable business. As an example, a customer who has stopped ordering from you because they have closed. You are likely to have been relying on those orders to achieve your goals, if you have a business plan that you believe in, when you find out about the closure, you would immediately review your plan. Perhaps the impact of the customer closing leads to temporary insolvency, you might guess it will if you have no plan but with a plan you believe and understand, you can immediately put into action a remedy to overcome this, or if it is fatal to the business, take steps to minimise losses from future trading that will see debts incurred in a now non-viable business.
I have seen this work and have been approached by Directors who see the immediate impact of some internal or external issue on their business. In some instances, if the plan sees a positive outcome, the use of an insolvency tool like a Voluntary Administration (“VA”) or Small Business Restructuring Plan (“SBRP”) can assist to restructure a business impacted by factors like that mentioned above. A good business plan not only sees the owners recognise the problem, but it allows them to do something in a timely manner.
A VA or SBRP is a good plan and it helps to sell your vision to all stakeholders. It is particularly effective if it clearly shows your vision for the business and how creditors taking a reduced amount for current debts owed might be beneficial to them in the future. A business plan enables you to have a clearer vision across your business and it allows you to articulate it to your vital stakeholders. Whilst there is no guarantee they will buy into your vision, it will certainly help.
So, in all circumstances a good plan that assists you to focus and provide a clear direction for your business will be beneficial.
The key issues are: –
- Where is my business at present?
- Where is my business going?
- How will we get there?
- How will we monitor the plan?
If you are a business owner or advisor who would like to discuss a VA or SBRP, please do not hesitate to contact us.