Plan for success

In Better Business, Business Together, May 20226 MinutesBy Roylance WatsonJuly 1, 2022

“Good fortune is what happens when opportunity meets with planning” – Thomas Edison.

I racked my brain on where to begin for my first piece with New Zealand Trucking, and I thought the best place was at the start. The first thing that all businesses should have is a business plan.

It is a myth that business plans are just for fancy start-ups and people looking for investors. It doesn’t matter where you are in the lifecycle of your business, there are always big benefits to forming one. It’s also not something that should be done once and then left in a drawer never to see the light of day again – it should be reviewed and reworked, at least annually.

Hands up those who own a business and find that they are still up into the late hours of the night doing ‘paperwork’ (in quotation marks because I’m a firm believer that there should be no paper, but that’s a story for another day) or some other form of work? Have you been told or often thought that you need to start working on your business and not in your business? Owning a business, or managing a business for that matter, does not mean you have to work a million times harder or longer than everyone else – you just need to work smarter. After all, a genuinely successful business should provide the income to support the lifestyle you want and the discretionary time to enjoy it. The first step to achieving this is forming a business plan.

A good business plan will outline the tone for the business, why it exists, who you are serving and what makes you different. You will also define your ideal customer so that you can target exactly what you want and not be delivering to a customer that is undesirable (yes, you shouldn’t necessarily take on all customers that come your way).

It will also help you set the values that you and your employees want, a great tool for managing employees and helping to create a desirable culture.

You will set a vision – what you want the business to look like in five years’ time and what you’d like the business to deliver to you personally as owners. It is not all about money. We talk about the three freedoms: financial freedom, time freedom and mind freedom (the ability to sleep at night).

In my experience, I have come across many businesses that are on a treadmill and have no idea why they aren’t doing any better. Often, they haven’t defined the correct KPIs that will lead to success in their business and, therefore, their hard work and the hard work of their employees is not taking them in the right direction. Setting your KPIs is critical and if you don’t currently know what they are, determining them should be documented as a most critical challenge. I helped a client with KPIs, and he was able to gain 2.5 times more profit from the same turnover.

You need to set a budget for the year and report against this budget – I could geek out and talk about this for hours but trust me on this one.

Lastly, you will look at opportunities, vulnerabilities and your most critical challenges to help you form an action plan and assign people to each task. Remember that you have a 65% chance of achieving your goals if you share them with others and a 95% chance of achieving them if you ask people to hold you accountable. So, communicate your plan, keep addressing it, and have someone hold you accountable.

A business plan is also a great way to look back and reflect on what you have achieved in the previous year. I am a business owner myself, and there’s nothing more rewarding than sitting down at the end of another tough year, feeling a bit defeated, and realising that a lot was achieved. A fresh wave of motivation runs over me, and I am instantly ready to face another year.

We are our own harshest critics, and a business plan can help you stay on track and be kind to yourself.

Roylance Watson is a chartered accountant and associate at Vazey Child Chartered Accountants in Hamilton.
Phone: (07) 838 5988