Several characteristics are common among successful business people. They are, for example, generally risk-takers and rule-breakers, but perhaps the most common is goal setting.
In the context of a business, goals are often (or should be) written down in a formal business plan, which is simply a document that defines what you are planning to achieve, why you think that is achievable and how you will go about it. It may also contain background information about your business and the team that will help you achieve those goals.
It will, or should, absolutely always contain "the numbers" or key financial information and will also contain information about what the risks are and how to minimise them.
Sounds simple? Well, that depends on what your business goals are and who else is involved in helping you achieve them. If your business is assuming a major change or you are planning a new venture, then it is almost essential that you produce a detailed three-to-five-year plan.
If you are looking to finance this by borrowing money then you can be sure that potential investors will want to see a detailed plan including realistic profit and loss accounts, balance sheets and cash flow forecasts. Potential investors need to see the true potential of your business idea clearly laid out in hard facts and numbers.
Even if you are not looking for external investment, whatever the size of your company it is still worth writing a business plan. Why? Simply because it enables you to stay organised, make better shortand long-term decisions and ensures that you stay focused on your stated goals. In addition, the very act of writing a business plan often creates new ideas.
So, depending on your audience, your business plan can be either pretty simple or very detailed. It must, however, involve detail about how you will develop your business, when you will do it, who will do it, how much will it all cost and how much you will make.
Typically a business plan starts with a short executive summary, basically an overview of your business. It is best to write this after completing the whole plan. Then you should write a short description of the opportunity - who you are, what you plan to sell and to whom you will sell it.
Next comes the marketing bit - and this should be pretty comprehensive. You should identify the benefits of your products and services, your unique selling proposition, the price you will charge for your products and services and how you will package it. You then need to specify how you will get it to the market, what and how you will communicate to your potential customers, who your competitors are and why customers should come to you rather than them. Definitely an exercise that clarifies and focuses the mind.
Having written about the market, you then need to address your team. Do you have the right skills to capitalise on the opportunities you have identified? Perhaps you need to recruit specialist skills or retrain existing staff. You also need to consider when this training will be accomplished and how much it will cost, and what happens if your key personnel leave. How will you reward staff? You have to consider all reasonable scenarios and have a plan to implement should they occur.
The next stage in a business plan is to look at the operational issues. For example, do you need larger premises, do you need to invest in capital infrastructure or new IT systems and can your production or retail systems cope?
The financial section of a business plan is arguably the most important. Here you are translating everything into hard numerical facts - your financial forecasts. These need to be as accurate as possible or, in other words, very intelligent guesses. But beware, do not be over-optimistic. Err on the side of caution, particularly when it comes to the unknowns such as sales figures.
If you are seeking to borrow money for the venture, it is at this stage that you will identify how much finance you need.
It is a good idea to finish the plan with a consideration of the risks involved in the venture. Not only must you identify the real risks, you must assess the chances of the risk occurring and if it does how you will minimise the impact on the business. On a more upbeat note, you can also summarise what you consider to be the critical success factors in the business - how you will know it is successful.
Writing a business plan can sound complicated. It can take a long time and often requires that you have a tremendous amount of information at your fingertips. Invariably it creates a long list of research and to-do jobs, but this "donkey work" is crucial in any case in the day-to-day running of your business.
You will end up in the great position of knowing your business inside out. The process can also be simplified by using one of the many commercially available business plan templates - your bank might even be able to supply one and its business manager may assist you in completing the plan.
All plans, of course, are subject to change. It is best to treat a business plan as a living, breathing document that needs to be adapted in the light of changing circumstances.
Even if you just treat it as a tool to outline action items, next steps and future activities, your outfit should outperform those without a business plan. Successful business people set goals and have a business plan. There can be no better recommendation than that.
Neville Stein is managing director of the Ovation business consultancy.