Friday, 28 November 2014

5 steps to a business plan that you can actually use





On December 2nd 2014, my third ebook: Planning and budgeting - Advice for business owners and finance managers will be published for ipad, iphone and kindle and will be available from amazon.com.

 A good business plan drives the business towards its specified goals by addressing activities, accountabilities, resources and timescales – within a framework of explicit assumptions. 
1. Focus



The business plan should focus on how the company will maintain and improve the existing business as well as any new initiatives.



More detail does not equate to better budgeting accuracy and the same applies to the business plan. Passing the sense check and covering key elements is more important.

  

2. Strategies and objectives


The best business plans set key short and long term objectives and outline strategies for accomplishing these.

Some hints: 

  • Business plans should link activities and actions to the strategies so that you are able to measure the actions and the results of those actions. 
  • Actions usually involve resource and cost so this will help you to ensure that the budget reflects the plans.
  • Answer questions such as where do we want the business to go, how will we get there and what is the fall back plan if things don’t work out as expected?
  • Use a SWOT analysis to identify the key activities that the plan needs to address.

3. Measurement


The activities and actions included in business plans should be mensurable so that you can monitor the level of success in achieving them.

  • Measurements do not need to be financial only. For example a goal could be improved sales via the activity of investing in customer care and customer feedback can be the measure for customer care. 
  • Time line the activities and actions so that you can budget them by month.
4. Responsibilities


Assign responsibilities and accountabilities to the planned actions so that you can empower people, measure performance and can reward them for success.



Ensure that all staff allocated with responsibilities in the business plan are involved at some level in producing the business plan.


5. Risks and assumptions


Good business plans address risks, including the risk that the underlying assumptions become invalid. 
  • As well as identifying risks plan for activities and responsibilities for mitigating those risks. 
  • Check that the business plan is affordable.
  • Run scenarios so that if results fall below set criteria the business is able to respond. For example, if sales fall below £Y in region A the alternative plan is to consolidate that geography with region B.

What is stopping you?

As a first step, why not pick the phone up and call John or email him and arrange to meet up.

John's website is: http://www.nomizon.co.uk


His credentials: http://www.linkedin.com/in/johntoppin

Friday, 21 November 2014

Categorising risk




On December 2nd 2014, my third ebook: Planning and budgeting - Advice for business owners and finance managers will be published for ipad, iphone and kindle and will be available from amazon.com. This blog entry is a sample from the ebook. There are 20 topics like this one covered in the ebook. 



Risk can be viewed from the point of view of low to high impact and low to high likelihood. The impact and likelihood of most, but not all, risks tends to differ from business to business.

For example, a fire in most business office premises might be high impact but low likelihood whereas in a factory this risk may be high impact and high likelihood. Alternatively in some businesses the risk of employing illegal casual labour may be highly likely and have a relatively high impact but may be low likelihood low impact in other businesses.

Analyse the risk you identify in your business by impact and likelihood, high, medium and low. Focus on high impact high likelihood risks first, then any risk where either impact or likelihood is high etc.

The impact of a risk can sometimes, but not always, be measured and a monetary value allocated.

Do not ignore risks where the impact is difficult to measure as the impact may nevertheless be very significant. For example, the damage caused by a former key employee who removes customer information when leaving the business could be difficult to measure but have very serious consequences.

Unlike impact, the likelihood of any given risk occurring depends on a number of factors which can change over time. Likelihood of a given risk can depend on how good the relevant controls are in the business.

Well trained staff, operating to relevant and effective procedures will reduce the likelihood of many business risks for example, the likelihood of undetected falsification of expenses or fraud.

Change usually increases the likelihood of risk. This could be change in personnel or process or a new product being introduced.

Think of the business as a whole when considering risk. Talk to key management responsible for areas such as operations, production, distribution, sales and HR. The risks your business faces can be analysed by headings such as operational, regulatory or legal, financial assets and liabilities, IT, markets, people and strategic.

Once you have categorised the risks in your business you will be better prepared to consider how each risk may best be dealt with, whether via insurance, avoidance, improved procedures or training.



As a first step, why not pick the phone up and call John or email him and arrange to meet up. 

John's website is: http://www.nomizon.co.uk 

His credentials: http://www.linkedin.com/in/johntoppin

Friday, 31 October 2014

Understanding procurement specialists



On November 4th 2014, my eBook: Profitability - Advice for business owners and finance managers will be published for ipad, iphone and kindle and will be available from amazon.com. This blog entry is a sample from the eBook. There are 20 topics like this one covered in the eBook. 


Procurement’s remit is to ensure the quality, value and continuity of supply of goods and services from suppliers; it is not to reduce prices until suppliers go out of business. If you understand them you can make it easier for procurers to approve business with your company.

Procurement managers like transparency. If they don’t understand your business or its pricing they will find it difficult to recommend a buy. 

Ever-changing analyses and revisions to data will not impress them and it reduces the trust they can place in you and your company.

For example, if you include overhead apportionment in your pricing be prepared to reconcile these with your accounts and share this with procurement if asked. They may attempt this to check you are not over recovering your overheads at their expense.

Invest in the time to explain your business, its financials and pricing to procurement. 

Back up what you say with evidence so they feel confident enough to recommend that their company spends its money with yours.

Contract terms and budgets are usually discussed before a buying decision is made. Don’t submit your company’s charges or agree contractual terms before details of the scope of work are determined, including quality, quantity, delivery, timing and warranties.

Performance measurement metrics are often defined at this point for any elements of payment by results. If this is the case protect your company by ensuring bonuses are not dependent upon factors outside its control. For example, an advertising agency should not agree to bonuses linked to the overall sales performance of its client.

Ensure both parties understand what is not included in the charges as well as what is included. in them. If you don’t do this your customer relationship and your company’s finances will suffer.

Treat procurement as an integral part of the customer/supplier team. This includes involving procurement in resolving disagreements.

Give precise estimates of charges in advance, define the grounds for pricing adjustments and provide clear breakdowns. Don’t be reticent in asking for extra charges when justified and raise any cost issues at the earliest opportunity. Your sales staff may be uncomfortable in asking customers to pay more but you shouldn’t be.

Periodically articulate the value your business has added to your customer to its procurers using case histories and examples.

As a first step, why not pick the phone up and call John or email him and arrange to meet up. 

John's website is: http://www.nomizon.co.uk

His credentials: http://www.linkedin.com/in/johntoppin

Tuesday, 21 October 2014

How to benchmark what you pay your staff?




You certainly ought to be benchmarking what you pay to any specialists you employ against your competitors as well as against regional averages. The reason of course is that your specialists will be doing precisely that and may be tempted away.

There is a surprisingly wide range of sources of pay benchmarking data so you will almost certainly be able to benchmark almost any type of specialist role in virtually any industry.

If it is absolutely crucial for your business to ensure it benchmarks pay with up to date, statistically valid and relevant data then it would probably be well worth paying for.  Google “Bespoke pay surveys” and you will find a number of organisations that offer bespoke salary and benefit surveys specific to your business. For a less expensive alternative, Google “Pay surveys” and you will find a number of organisations that will provide benchmark data based on large scale samples of pay and benefits.

Of course, not all companies will want to pay for salary benchmarking. If that applies to your business what do you do?

Many industry bodies will survey members and issue pay and benefits benchmarking data to them. There is sometimes a relatively small charge for copies of these surveys. Check if your company is a member of an industry body.

Specialist staff are frequently members of professional bodies and they will certainly conduct pay surveys. Again, there is sometimes a relatively small charge for copies of these surveys.

There are some “free” pay benchmarking services available on the web but watch out as some of these draw on American based data.

Specialist recruitment agencies will issue annual pay and benefit surveys, usually for no charge. They are often extremely detailed.

Some trade press produce pay and benefits surveys.

Retain a press clippings file from the trade and local press situations vacant.

If using “free” information, always use 2 or preferably 3 sources as these are less reliable than paid for survey.



As a first step, why not pick the phone up and call John or email him and arrange to meet up. 

John's website is: http://www.nomizon.co.uk 
His credentials: http://www.linkedin.com/in/johntoppin

Thursday, 25 September 2014

Cash Crisis Management





On October 7th 2014, my ebook: Cash Flow - Advice for business owners and finance managers will be published for ipad, iphone and kindle and will be available from amazon.com. This blog entry is a sample from the ebook. There are 20 topics like this one covered in the ebook. 



If your cash flow is under severe pressure there are some simple steps that you can take to regain control of what appears to be a downward spiral.


The first step is to stop and think. Then start to gather information about the cash position.


·      List all of the payments you need to make to suppliers, payroll, the tax man, the landlord etcetera and schedule them by due date.


·      Prioritise the payments. There will be many that you can delay and some you can’t, such as payroll, phone bills etc. Schedule the payments by week due.


·       List any unbilled sales.


·       Produce an up to date detailed debtors aging.


You should now know the cash going out of the business and how much you can expect to come in. This will enable you to prepare an eight week weekly rolling cash flow forecast.


You need to act on boosting cash inflows. Call your customers to accelerate cash collection.


Start calling for the largest and oldest debts and work in to the smallest and most recent so that use of your time is maximised.


Consider offering an early payment discount to secure cash sooner.


Turning sales into cash starts with invoicing. Consider invoicing in advance or partially in advance. For example, invoice 50% on commencement of work or placing of order and the balance on completion.


Invoice frequently during the month rather than at month end. This can bring cash in up to 30 days earlier.


At the same time how can you stem cash outflows? Go back to your prioritised payment list and approach selected suppliers and creditors for extended terms.


Ask for extra time to pay PAYE and VAT. Your landlord may agree to a rent holiday or to being paid rent monthly instead of quarterly in advance.


If you agree extended terms, make sure you honour them so that you do not lose credibility with your suppliers.


Delay incurring expenditures and cut costs.


As a first step, why not pick the phone up and call John or email him and arrange to meet up.

John's website is: http://www.nomizon.co.uk

His credentials: http://www.linkedin.com/in/johntoppin