Monthly Archive for November, 2008

The ten-minute business plan

Published
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Business Link
on 14 November, 2008
in Strategy & Operations
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Our quick and easy ten-minute business plan is equally useful for those with or without an existing plan.

If you’re new to business planning, it’s a painless start. If you already have a plan, ten minutes might be all you need to reaffirm past thinking or highlight areas for review. Either way, it must be worth ten minutes. Right?

Before you begin

A few dos and don’ts:

Do decide who your audience is. Are you planning for internal strategic use, or to raise finance?
Do grab past financial figures and future forecasts if you have them.
Do get key staff involved if you want, and make it a practical team exercise.
Don’t look at your old business plan. Approach this with a fresh head.
Don’t worry about missing bits out. You can fill in the gaps later.
Don’t forget, it’s designed to take ten minutes, so keep every stage brief and to the point.

Your ten minutes start now

Spend two minutes making notes on each of the following points. If you like, have a break after each one to collect your thoughts on the next.

1. Your opportunity
Describe what your business does and why. Write down what makes your business unique, and why this translates into an opportunity. Define your market potential and the value you bring to customers. Express a vision for the future of your business.

2. Your objectives
List your key objectives, that are specific, measurable, achievable, realistic, and time-based. Exactly what do you want to achieve, and by when? Where should your business be in 10/5/3/1 years time? What are your key aims and measures of success?

3. Your strengths and weaknesses
Strength is good, but weakness turned into strength is even better. First list your strengths; the things you are really good at, the areas you are the most competitive. Then outline your biggest weaknesses and threats, and try to define contingencies if things don’t go to plan. Later you can devise strategies for improving your weak areas. (A business plan for external audiences might not focus so heavily on weaknesses, but even so - if you are asked it pays to have constructive answers to hand).

4.Your environment
Estimate your total market size, value and growth potential. List your competitors, and where they sit in relation to you in the marketplace. Describe your current customer base, and define your ideal costumer. Consider how environmental influences - such as an economic downturn - might affect all of these factors.

5. Your finances
Look at your current financial state, past performance and financial forecasts. Work out if you can fund your objectives as outlined above. Identify future capital requirements and periods of cashflow shortfall, and devise a plan for raising the finance you need.

Now relax

Ok, we admit, there’s more to business planning than this. In most business plans, you’d find strategies for achieving specific objectives and marketing goals. You’d talk about your management team, and delve deeper into market research and financial planning. And you’d tie everything together with an engaging and succinct executive summary.

But regardless of its weaknesses, our ten-minute business plan represents an easy-going, effective start for those without a business plan. For those with an existing plan, it’s a quick and easy review.

If you like, you could tweak this process to better suit your needs, and repeat it every few months. In doing so, you can ensure your business plan stays close to your business reality.

More info - Prepare a business plan

More info - Top tips for a better business plan

Tool - Conduct an online business review

HR focus - November 2008

Published
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Business Link
on 14 November, 2008
in HR & People Development and IT & eBusiness
. 0 Comments

This month we explore why e-learning is finding its feet in a large number of organisations, and propose an idea to motivate your employees through Christmas and beyond.

e-learning is finding its feet

A recent survey from the Chartered Institute of Personal Development (CIPD) found that 57 per cent of respondents use e-learning. In these organisations, e-learning accounts for around 12 per cent of total training time.

e-learning is finding its place in a large number of companies, even though it accounts for a relatively small part of their training schedules.

When asked “How effective do you think e-learning is as a learning and development intervention?”, 8 per cent stated “very effective”, and 64 per cent believed e-learning was “fairly effective”.

Respondents do not seem overly enthusiastic about e-learning, perhaps because people prefer to be trained by real people (the most common objection towards e-learning cited in a 2001 study by Skillsoft). Nevertheless, the CIPD survey found strong evidence that “e-learning is effective when combined with other forms of learning”, with 95 per cent of respondents agreeing with this statement.

It seems that both employers and employees value the function e-learning serves, but only as one element of a wider training plan. It does not (and may never) replace traditional training methods, but it does have its place in the training strategy.

e-learning offers numerous benefits. It is flexible, accessible anywhere at any time, scalable to suit small or large organisations, and in some cases customisable to fit specific needs. And crucially, it is cost effective; a factor which might in part explain its growing use.

But e-learning should not be branded the ‘cheap-but-inferior’ training solution. For one, it is a relatively new industry which can mature in response to customer need. And second, it can only improve in the future, thanks to ever-progressing web technologies, and the e-learning innovations that will inevitably follow. (As with most things web, you’ll undoubtedly start hearing the phrase “e-learning 2.0″ before too long.)

e-learning is already is finding its feet in many of today’s organisations. And as the industry further develops, spurred on by new technologies and innovations, e-learning should only get stronger.

More info - Distance learning and Internet-based training

IDEA: Make New Year’s resolutions with your employees

The Christmas break offers valuable time for reflection over the year that’s passed. And invariably such reflection turns to work. Perhaps because we are often asked “how’s work?” as we catch up with friends and family. What commonly follows such musings is the resolve to make a change.

Here’s an idea: Why not give your employees something positive to tell their friends and family this year, by planning a new year’s resolution to pursue together in 2009?

In September, we discussed what makes the perfect boss. Research finds that that although heartfelt gestures such as social do’s or early Friday finishes are well-received, employees value more tangible, career-minded gestures. Specifically, gestures such as a commitment to professional development.

So, let’s take our idea and focus it on areas that aid your employees’ professional development. Let’s take five from chasing what we need to do in 2008, and focus on what we’d like to achieve in 2009. It’s forward planning, meets professional development, meets staff motivation.

This process can take as much or as little time as you like. It could start with a one-line email, asking staff to prepare one or two realistic, achievable goals that they might resolve to achieve in 2009. Or it could start with a one-to-one conversation, questioning how employer and employee can work together to define and achieve new goals together.

The crucial point is to be realistic. New year’s resolutions are more often broken than kept, usually because they defy realism about what can be achieved. And of course, promising the earth and not delivering tends to demotivate and demoralise. Goals should be specific, measurable, realistic, and time-based (SMART). Moreover, it is important to define areas for professional development that meet both the individual employee’s needs and the employer’s corporate objectives.

In doing so, you can give employees a valuable resolution to pursue for 2009, and show them that you care about their professional development. You never know, when they are talking about their work with friends and family during the festive break, they might even name you as the perfect boss!

More info - Agreeing objectives (SMART)

More info - The perfect boss

Forecasting cashflow shortfalls

Published
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Business Link
on 14 November, 2008
in Finance and Strategy & Operations
. 0 Comments

A recent survey from the British Chambers of Commerce (BCC) shows that for most companies cashflow has been worsening since the middle of 2007. Reflecting on this news, The Economist describes cashflow as “the most vital measure of long-term business health”. Cash is king, and right now diminishing cashflow is testing the well-being of UK businesses.

Cashflow forecasting should be paramount on every business’s agenda. Not just because trends show worsening cashflow almost universally, but also because credit has become less readily available and more expensive. (A September snap poll by the FSB found that three-quarters of business borrowers had seen an increase in the cost of credit in the past year).

Fundamentally, the earlier you know about upcoming cashflow shortfalls the better. Time makes you less desperate, for one thing; financiers, whether they be investors or creditors, are not as friendly in the face of desperation. Conversely, forward-thinking, planned attempts to finance cashflow shortfalls put you in a stronger position to attract and broker the right deal. Other challenges - such as boosting cashflow by increasing prices or sales volumes - could also take time, and thus must be planned and implemented far in advance of actual shortfalls.

Forecasting a couple of months in advance affords little scope for significant changes to your financial or strategic plans. Six months may do, and twelve might be better. How far forward you go may depend on how accurately you can forecast (but even less than accurate forecasts are better than nothing as long as they are regularly revised). Or it might depend on what you your biggest challenges are; for example, if declining sales mean you must re-think your sales plan and pump more money into marketing, how long will that take? If the answer is 6 months, you should forecast into and far beyond that period, so you can track potential cashflow shortfalls which might arise during and after.

A cashflow forecast can also be used to forecast and test hypothetical scenarios. Try making a list of ’sensitive’ cash income. For example, income from customers that might themselves be influenced by economic downturn, resulting in loss or non-payment of their business. Or indeed, list products and services that you rely on which could become more expensive (fuel, for example). Then make a copy of your cashflow forecast and play with the numbers. Test scenarios, such as 10 per cent reduction in business, or a 30 per cent rise in energy costs or credit interest. Asking such hypothetical questions could allow you to foresee how exposed you are to changes, three, six or twelve months in advance of a shortfall arising. To illustrate: an astute house-builder might have tested the impact on their cashflow of a 15 per cent average drop in house prices, and used this intelligence to put in place contingencies to cover shortfalls, should the worst happen.

Testing hypothetical changes in cashflow could expose weak spots, but with that, it could inform strategic thinking. If your cashflow relies heavily on the stability of one particular variable - such as sales volumes or fuel prices - arguably your strategic planning should look for ways to manage such a vulnerability.

One potential danger of cashflow forecasting is doing so inaccurately or without adequate, regular review. If your long-term cashflow forecast is not reliable or periodically revised, you may believe your cashflow is sufficient when it is not. Shortfalls could then hit with unexpected bangs as long-term forecasts become immediately different realities.

More than ever before, cashflow forecasting is something to be mastered. The process provides a glance into your financial future, providing sufficient time to identify and solve problems before they arise. But without regular attention, a cashflow forecast could become a false security blanket. These two facts mean you must do it well, and do it often.

More info - Cashflow management: the basics (Including a sample cashflow spreadsheet)

More info - Review your financial position

When the world zigs, zag

Published
by
Business Link
on 14 November, 2008
in Strategy & Operations
. 1 Comment

Cut costs. Manage cashflow. Innovate. The first two of these activities might seem like natural priorities during economic downturn. But the third might be perceived as an impractical luxury. Innovation - the process of creating value from new ideas - might be viewed as an unwelcome and untimely risk.

The problem with that attitude: innovation does not always carry risk. And even if it did, risk offers the potential for reward. Either way… As the world’s businesses struggle in the face of economic downturn, it is new ideas, and new solutions to old problems, that will deliver opportunity. Smart companies - that recognise the importance of innovation - have the potential to come out of the downturn stronger and more competitive than they were before.

As businesses across the world prepare to batten down the hatches and weather the storm, why not think differently. Why not innovate. As an iconic Levi ad once said: “When the world zigs, zag”.

NESTA, an independent body with a mission “to make the UK more innovative” recently wrote that “during economic downturns innovation is the single most important condition for transforming the crisis into an opportunity… Economic downturns can have positive effects; they force companies to increase their efficiency, cut waste, and strive to do things in smarter ways.”

Grand examples from the past give virtue to the proposition of innovating during downturn. During the last recession at the beginning of this decade, Apple worked on iTunes, iPod and its retail stores. At the time, Apple was down and out. But these three innovations have since propelled the company to unthinkable heights.

This story is both inspiring and daunting. Game-changing inventions like the iPod make innovation look like a pastime reserved only for the wealthy or tech elite. On the contrary: innovation is not just about inventions or world changing ideas; it is about having the desire to create positive change in whatever we are doing. It is about a motivation to think differently, to think up new ideas that solve old problems, to refine what we do and the way that we do it, to make new things, and to make old things better. These values make up innovation.

In our current climate, perhaps ‘problems’ represent the greatest opportunity for innovation. Identify a problem, and try to solve it with fresh thinking. This two-step process could help cut costs, improve efficiencies, overcome obstacles, increase sales, or diversify. Sometimes, a collection of small, incremental improvements are all it takes to transform products, services and processes.

Talking about how innovation can help businesses now, in times of economic hardship, BusinessWeek’s ‘innovation guru’ Bruce Nussbaum offers three key things innovation can do. It can “simplify” operations, business models, products and supply chains. It can “differentiate” products and services to stand out from competition. And it can “change” things, from processes to products and services.

Innovation can aid not just short-term survival, but long-term development, growth and competitive advantage. In times of economic hardship, we must do things like manage cashflow and cut costs. But in many ways these tasks are reactive. Innovation is proactive. By thinking differently, we can innovate our way through the storm, and be better because of it.

More on innovation

Over the past two months we’ve been piloting a new, innovation focussed newsletter. Check out the first two articles below:

Why you should care about innovation
Five reasons why you should care about innovation.

What’s your agenda?
An innovation agenda turns desire into action, and brings focus and direction to your innovation initiatives.

Subscribe now

If you are not already subscribed and would like to read more on innovation in the coming months, please click here.

Email marketing

Published
by
Business Link
on 14 November, 2008
in Sales & Marketing and Strategy & Operations
. 0 Comments

Two words should play on your mind when email marketing: accountability and quality.

Accountability

Both email marketers and email distributors are more accountable for their behaviour than they used to be. Led primarily by consumer dissatisfaction at unsolicited (spam) messages, the email industry has developed systems capable of tracking and penalising email abuse. If you spam a lot, it is likely emails from your domain will languish in consumers’ spam boxes. Worse still you may have a hard time finding a reliable, credible email distributor, many of which are turning their backs on spammers.

Most email distributors now work hard to stop unsolicited emails from flowing through their systems. Once upon a time, higher email volumes equated to higher profit. But now, emails which are later flagged as spam by the recipient carry a cost to the distributor. Too much spam means the email servers they use may be blacklisted by spam filters. This is a costly headache for distributors, and could adversely affect other email marketers using their systems legitimately.

As a consequence, most credible email distributors are getting tough on rogue email marketers. Many insist that customers abide by the principles of “permission-based email marketing” - that every recipient has explicitly agreed to be contacted for marketing purposes. And to ensure that obligation is honoured, behaviour is monitored closely. If your spam count consistently rises above their threshold, you may be politely asked to take your business elsewhere.

In short, email distributors have been forced to be more accountable, and as a consequence have placed more accountability onto the email marketer’s doorstep.

Quality

A cynic might argue that forced accountability explains why email marketers are cleaning up their act. An optimist might argue in retort that, independent of that pressure, marketers have realised that unsolicited and indiscriminately targeted email campaigns are bad business. Not only are they becoming difficult to manage, they are deemed to be short sighted and not befitting of a customer-led marketing strategy. Quality and relevant email messages, targeted towards only those that want to receive them, represent the new ideal for email marketers.

Strong, relevant, clear messages that are well-designed and closely targeted carry with them a more positive response from consumers. Such a campaign tends to deliver better results in terms of open rates, click throughs, lead-generation and sales. And importantly, such campaigns are less irritable to consumers, meaning brands are not damaged and spam buttons are not clicked so readily.

The email marketer might take wisdom from two simple mantras… ‘Content is king’ and ‘Quality over quantity’. Content - the what you say (copy) and how you present it (design) - are important determinants of the quality and thus success of an email campaign. Content is king; and unsurprisingly so, when you think about it. Quality over quantity refers to both the quality and size of email distribution lists, and the frequency of emails an email marketer chooses to send. Accountability concerns and quality targeting should ensure that emails are both compliant and effective in terms of their relevance to the customer. Quality over quantity also questions the frequency of email marketing messages. As experience tells us, too many emails can make consumers apathetic and irritated.

As an aside - it is important to point out that email distributors are doing their bit to encourage higher quality email campaigns. Some industry commentators are hailing a new era of “email marketing 2.0″ inspired by next-generation web technologies. Back-end and front-end systems are improving, not just to control spam, but to attract new customers, who are demanding tools to build high-quality campaigns. Such developments have advanced a myriad of factors, including design, use of dynamic content based on user profiles, easier segmentation of data, tracking, and compatibility with browsers and CRM databases, to name a few.

In short, both email marketers and email distributors are striving to improve the quality of their work. This is good for everyone.

Moving forward

Both email marketer and distributor share the same two goals: both must be more accountable for their behaviour, and both must constantly improve the quality of their work to satisfy their customers and stay competitive. Accountability and quality are not just buzzwords, they are words to remember.

For the email marketer, this means two things. He must devise a strong email marketing strategy in keeping with a maturing industry. And he must find a distributor that plays its role too.

More info - Email marketing