You know how, when you get a song in your mind, it keeps coming back and back. One such song for me comes from an old black and white film I saw many years ago. It’s set in Scotland, and the song is used as background for much of the film.
I know where I'm goin'
And I know who's goin' with me
It’s an old Scottish or Irish folk song, but it always comes to mind when I think about business planning, and its importance. I’ve written about planning a couple of times recently:
In those blogs I emphasised the importance of the planning process in knowing where you’re going.
“Plans are useless in the sense that the year ahead will always have some unexpected twists and turns, an X-factor that neither you nor anyone else was able to predict. Products change, prospects change, market environments change.”
“Planning is indispensable because in formulating your plans, in looking at what was completed in the year gone (and why and why not), and what you need to create and change in the coming year you will have examined and analysed all the information you have on your business. Hopefully you will also have looked at what is happening in your marketplace, your local economy, and with your competitors.”
Part of the planning process is aided by various planning tools such as SWOT and Scenario Planning. It is the former I would like to discuss. There’s a good reason for that; I’ve seen SWOT used poorly, and so it doesn't give the results it should.
I’ll get to that shortly, but first let’s have a look the individual components of SWOT; Strengths, Weaknesses, Opportunities and Threats.
The first thing to get clear is that Opportunities and Threats are external to your business. You don’t have control over them, whereas you do, or should have, control what happens in your business - that makes up your Strengths and Weaknesses.
Opportunities are created by events, trends or possibilities for action that promise to:
Threats are created mostly by events, trends or competitor actions that can:
Strengths are those competencies of your business which allow you to take advantage of opportunities or counter threats. They may come from:
Weaknesses are those things your business does not do well which prevent you taking advantage of opportunities or make it vulnerable to threats.
Now I get to the problem I see so often when people prepare business plans – They identify all possible Strengths and Weaknesses of their business, and the Opportunities and Threats facing them, and neatly list them in four boxes.
And there they sit. They usually discuss how they might resolve any of the points, but do so only in consideration of each of those four boxes, in isolation. But of course, in reality, they are not four individual boxes. They impact on each other.
Organisational Strengths can be applied to take advantage of Opportunities and counter Threats, the other part of SWOT analysis. Organisational Weaknesses might prevent taking up the Opportunity or prevent an effective counter to a Threat.
There is one final step to take arising from your SWOT analysis. You will no doubt end up with a longish list of goals, but you can’t achieve them all at once, so you have to prioritise them; to identify the most important.
I feel another Matrix coming on – a “Critical Goals Priority Matrix”, which looks at the Urgency and Impact of achieving each goal.
Actual client example
Now you will know where you’re going, and who is going with you!
When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, they are sometimes held back by lack of knowledge of what is possible. A lack of focus of potential improvements leads to a lack of control over their business, and eight times out of ten that lack of control comes down to a lack of knowledge of what is happening in the business, and what their peers are achieving.
For more than 29 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand where and how they may change their business to be a leader in profitability, productivity, and competitive advantage. I assist you analyse:
• The strengths, weaknesses opportunities and threats of your business
• Determine where you want to be – clear, achievable goals, and
• How you are going to get there – strategies to achieve your goals
This is sometimes known as the NOW – WHERE – HOW model.
If you would like to discuss with me how you might do that, book a Strategy Consult here.
© Copyright 2017 Adam Gordon, The Profits Leak Detective
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?