If there’s one thing that all business advisers, funders and investors can agree on, it’s the importance of putting together a strategic business plan.
From setting out your growth and development plans for the future to communicating your business vision, managing cash flow and identifying your exit route, the strategic business plan should underpin all of these activities and more.
Yet while that may sound like common sense, it’s a message that still hasn’t reached every business leader. And while many do draw up their process for progress, not all of them then follow their plan in practice.
The good news is that strategic planning is still regarded as an essential step by most of those in business. Price Bailey’s recent Inside the Minds of Business Leaders 2017 report, based on research carried out by Ipsos MORI with 200 business decision-makers across London and East Anglia, found that…
- more than half (53%) of businesses have a business plan to which they regularly refer
- a third of those with a plan (36%) review it on a monthly basis
- a third (34%) refer to their plan at least once a quarter.
However, it’s not all good news. The report also found that more than one in five (22%) don’t have a plan for their business, while 17% have a plan but don’t actually refer to it.
Why is planning so important?
We know that business decision-makers create and execute their business plans in a variety of ways. We also know that running a business can be a hugely demanding role, so it’s perhaps understandable that not everyone looks at their business plan regularly, while others tend to keep their plan largely in their heads.
But it’s clearly not the most effective approach. Those with the most considered strategic plans are likely to grow fastest, and the survey suggests that those without a business plan have grown less over the past year and have lower growth expectations for the future.
There is also a very real risk that those decision-makers without a plan spend much more time working in the business rather than on it.
By contrast, those who formalise their business plan, seek external advice when charting their strategy, and then execute the plan as effectively as possible, can spend time focusing on growing the business, rather than being embroiled in the daily business activity.
Exit stage right… or should that be left?
One key area of business planning often overlooked is the exit strategy. Our report found that less than a quarter (24%) of the business leaders surveyed had an exit plan in place, but planning for any sort of exit from the business – such as external sale, management buyout (MBO) or family succession – is a process, not an event.
How you intend to dispose of your business interests in the long term could even determine the structure of the business at the point it’s launched, so every business owner should consider exit planning to ensure the best outcome for all involved.
Getting plans in place
So when it comes to setting out your strategic business plan, where do you start? Even if your objectives are not fully developed it’s important that you have a structured plan to achieve those you have identified, so you need to set out where your company is, and where you’d like it to be.
Drawing up a draft strategy for that journey – which could include elements such as how you will establish and increase market share, how you could develop new products, and your ideal exit route – is likely to highlight other options and opportunities which can also be tested out, before finally putting your strategy into practice.
Once you have a plan, it doesn’t mean that it’s set in stone. You’ll need to monitor your business strategy, and refine it as part of an ongoing process. And as the business environment changes, you will need to adapt and update your plan accordingly. So the introduction of new technology and innovation, new regulations, stronger leadership and governance, and opportunities for mergers and acquisitions activities or joint ventures are all likely to mean that you will need to revisit your business strategy.
With those detailed plans in place, not only will your objectives become more achievable, but your business will also be more attractive to third-party investors – whether you want to raise capital for growth or sell your business.
What’s the next step?
Currently, many owner-managed businesses seem to struggle to find external advice that adds value. Building long-term relationships with parties that are interested in the whole lifecycle of your business is vital.
To find out more about strategic business planning and how we can help you through the lifecycle of your business – both how to grow your business, and how to plan your exit strategy – contact Simon Blake, Price Bailey Strategic Corporate Finance Partner using the form below. You can find out more about Inside the Minds of Business Leaders 2017 through our interactive digital report or download the full pdf here.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.