Some essential business practices which are often neglected, can help to deliver both growth and survival.
Boost business relationship manager, Alan Woods, highlights the values of business and financial planning for SMEs and the importance of writing ‘the story about your business’.
The full impact that the COVID-19 crisis has had on business will not be known for some time. We can say with some confidence that the majority of businesses are likely to survive, but some certainly won’t. There will be a variety of reasons why one or the other happens, not least loss of market and lack of cash. Indeed, some business owners are unfortunately, already, taking the opportunity to finally call it a day and close their business.
What is known, is that the crisis has uncovered issues and practices which, in normal times, are often not seen as being important, or at the very least, are left to be dealt with when time allows, which is more often, rarely.
These are the things which we, as Boost business relationship managers, encourage owners to deal with to grow their businesses. They have gone from being desirables to essentials almost overnight for many businesses and include:
Gain a good understanding of the company’s finances
Many SME businesses don’t talk to their accountants until the year end and have a relationship that is only based on a belief they serve to minimise tax liabilities. There is much more that accountants can offer to help to ensure the continued financial health of a business.
These are matters that shouldn’t just be left to the company’s accountant to explain at the end of the financial year when draft accounts are being prepared. They should be estimated and planned in advance as key measures against the actual performance. Consider:
- An income statement forecast for the year ahead
- A cashflow forecast
- A forensic understanding of areas of expenditure
- Up-to-date stock valuations
- Ready access to and an understanding of historical company accounts.
Plan for the business going forward
A plan for the business is a piece of work that is live and regularly reviewed. It includes:
- A statement on the purpose of the business – the vision
- Key objectives – to cover the vision
- The way in which the objectives will be achieved – a strategy
- Operational tactics – which may change to adapt to changing circumstances.
A business plan as a document, based on the plan outline above, can be readily presented to a potential lender or investor. It describes the key points and adds information such as the background and interests of shareholders.
The plan for the business should include all main activities of any business: marketing, sales, operations, finance and administration.
Less than 5 per cent of SME businesses have a plan or are in the habit of planning, but those that do tend to be in a better position to adapt, survive and achieve strong growth. Identifying opportunities and how to take advantage of them in a chosen market, assessing the many risks to the business, both external and internal, should form part of the planning process.
When businesses do get around to planning, many start with a SWOT analysis: (Strengths, Weaknesses, Opportunities, Threats), which is of some use if nothing else is done; but this tool was designed to bring a range of information together, gathered through a variety of other powerful techniques and not as a technique in itself.
They are the sort of techniques that can be accessed via Boost through coaching, mentoring and seminars/webinars.
Prepare your business story to tell
It is fair to say that even those businesses that are in the habit of planning could be forgiven for not having included a global pandemic in their risk analysis. That is more the remit of government. It is not known whether any government scenario planning led to the actions which served to lend support to businesses in the UK.
However, what is known from our experience in helping businesses through this crisis in past weeks, is that those businesses who sought to access that support, particularly the Coronavirus Business Interruption Loan (CBILS), were asked for a lot of information. The information requested was predominantly legal and financial of course, but additionally in some cases, information related to the broader activities of the business.
The banks have come under fire for not delivering quickly enough on the CBILS applications, given that there is a government-backed 80 per cent guarantee behind the scheme, thereby reducing their risk. Surely though, it is not unreasonable for an investor or lender, in any circumstances, to request details of the company, or what could be termed as its story, to give them confidence in support of their decision. A story which is told through the business plan and its accompanying financial records.
A story explaining the vision, goals and intentions of the business owner and one which is essential for the long- term growth and sustainability of any business. A story which is very rarely written down because it is something that the majority of business owners and directors normally don’t find the time to write. Something that is normally a desirable, but which in non-normal times like these, has become an essential.
One of the most positive findings to come out of our contact with hundreds of businesses through Boost support during the COVID-19 crisis, is that many businesses are now finding time to write that story, to do some planning and to gain a better understanding of their finances.
This has led to many looking to find more effective ways of marketing, operating and even diversifying. This will hopefully not only ensure survival but become the means to future growth.
Long may it continue. #AskForHelp
Alan is an experienced business consultant specialising in developing strategies for SME business growth, with particular expertise in strategic planning, change management and process improvement.
He is part of Boost’s dedicated #AskForHelp team ready to assist businesses impacted by the coronavirus. The team can offer resilience tips as well as connect you to specialist advisers who can help you manage today’s unique challenges.
You’re not alone in this. If you need help to write ‘the story about your business’ #AskForHelp.
Call 0800 488 0057