At KPMG we encourage privately-owned businesses of all sizes, to conduct a formal strategic planning process. For some, building a business strategy to underpin new expansion plans or even refining an existing strategy can be a daunting task. But with guidance and know-how, we can work with you to create a business plan that can be the foundation of future commercial success.
We often hear of businesses which have put significant effort into constructing a strategy document and subsequently fail to even acknowledge its existence until they feel obliged to create another one a year or two down the track. Often the business has changed during that time which means the plan may no longer be relevant. It can appear to be a thankless task.
Why does this happen? Our experience is that the planning process is actually more of a writing process for many businesses. In other words, the process becomes more about box-ticking and filling to produce the document rather than focusing on the actual planning. The point is that planning is about the process of exploring your opportunities and the written document is simply a summary of your outputs.
In our experience the most common mistakes made by leaders of privately-owned businesses in their planning process are:
- a lack of a crystal clear vision for the business that everyone in the company is committed to
- incomplete understanding of the target market
- insufficient understanding of the competition, and competitive advantage
- a lack of a financial strategy and visibility of potential financial outcomes of the strategy.
Creating a vision
In simple terms this is your dream for the business, and is often directly linked to the personal dreams and aspirations of its shareholders (in the case of closely-held businesses). This is important as it sets the context for any planning exercise. In fact it impacts (or should) on every business decision made.
According to US Company Disney, a successful vision accomplishes six goals:
gives a sense of the future
guides decision making and strategy
creates a shared purpose
provides guidelines that determine behaviour
connects to values.
At KPMG Business Advisory, we believe creating a clear vision will help accelerate you to achieve your business goals. We can assist you to identify and refine your vision to be the guiding purpose of your business.
Understanding the market
It’s important that the business is market-led. This means you are providing a solution to a problem, not finding a problem to which you can apply your solution. Really understanding your target market is critical to answering such questions as – am I meeting a need? Is there sufficient scale in my target market? Creating a successful strategy is not just having the right answers, but having the right questions to begin with. This is where we can help.
"KPMG provides my business with an invaluable pool of resources, knowledge and guidance. Whether it relates to the day to day running of the company, its strategic direction or prioritising opportunities that arise, they have a specialist to assist us every time. I love how user friendly, professional and thorough they are and also that are ready to be blunt about actions they recommend, if needed.
We are a small company of 18 full time staff and yet we feel important to KPMG.
They really engage with the business and bring useful sector knowledge and vital skills to bear on achieving our goals. If you are concerned about value for money – don’t be. I highly recommend KPMG"
Sue Fleischl - owner, The Great Catering Company
Understanding the competition
We often hear business owners speak of their competitors’ proposition as inferior in almost every respect to their own. Interestingly, the competition also has this view of their own market position, and each bases their strategy on these assumptions.
It is important that those involved in the planning take an objective view of the competition and competitive advantage, and bear in mind that sustainability of competitive advantage is crucial.
History shows us that fixation on your current competitive advantage can be a one-way street to oblivion. Your competitive position needs to constantly evolve so you can stay ahead and grow your market. We’d be delighted to assist you to objectively evaluate your competitive outlook (Evaluate Business).
Financial strategy and financial visibility
Financial strategy and financial visibility is a vital element of the planning process. Too often privately-owned businesses do not consider the financial implications of their planning which can result in unnecessary financial stress down the track.
Lack of visibility around cash flow is one of the most common reasons behind businesses running into difficulty. Our team is highly skilled in this area and ready to help you get the visibility you need regarding the impact of your business plan.
Get help or guidance now with all aspects of your business planning. Talk to us today or request an interview to discuss the first steps.