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3.1 Getting Started 3.1(a) Assessing current performance
(i) Review your business performance
Once your business is established and running well, you may be inclined to let things continue to run as they are.
However, it's actually time to plan again. After the crucial early stages, you should regularly review your progress, identify how you can make the most of the market position you've established and decide where to take your business next. You will need to revisit and update your business plan with your new strategy in mind and make sure you introduce the developments you've noted.
The set of highlights described below takes you through this essential process, detailing the stages you should go through to assess how well your business is performing, highlighting your strengths and areas that could be improved and suggesting the actions you need to take to implement the improvements that you've identified.
* Why it's vital to review the progress of your business
* Assess your core activities
* Assess your business efficiency
* Review your financial position
* Conduct a competitor analysis
* Conduct a customer and market analysis
* Use your review to redefine your business goals
* Models for your strategic analysis
* Breaking down your strategic review
(ii) Assess the health of your business
This interactive tool helps you analyze key areas of your business' finance and administration with the aim of avoiding failure. It can help you work out whether your business could be in trouble, and shows how external business advisers can provide help and expertise.
If you identify and tackle any problems early, you will markedly increase the chances of your business surviving and being a success.
There is also a tool that will help where your business could encounter difficulties. Its conclusion should be used as an indicator only and should be discussed with professional business advisers.
(iii) Measure performance and set targets
A growing business needs to be closely and carefully managed to ensure the success of new investment decisions and expansion plans. However, many owner-managers find that as their business grows they feel more remote from its operations.
Putting performance-measurement systems in place provides an important way of keeping track on the progress of your business. It gives you vital information about what's happening now and it also provides the starting point for a system of target-setting that will help you implement your strategies for growth.
The set of highlights described below sets out the business benefits of performance-measurement and target-setting. It shows you how to choose which key performance indicators (KPIs) to measure and suggests examples in a number of key business areas. It also highlights the main points to bear in mind when setting targets for your business.
* The importance of measurement and target-setting
* Deciding what to measure
* Choosing and using key performance indicators
* Measurement of your financial performance
* Measurement and your customers
* Measurement and your employees
* Measurement against other businesses - benchmarking
* Measurement in the manufacturing sector
* How to set useful targets for your business
(iv) Successful entrepreneurship
All sorts of people can be successful entrepreneurs. Some are enthusiastic risk-takers, keen to chase opportunities and happy to learn on the job. Others have developed their management skills working for other people before setting up their own businesses.
No single personality type is right for every business. Different businesses demand different skills and attitudes. However, all successful entrepreneurs share a passion for what they do and the ability to inspire others to work with them. Your own approach will have a significant impact on the success of your business and whether it achieves its full growth potential.
The set of highlights described below looks at the different types of entrepreneurial personality and the kinds of business they suit. You can use this guide to understand how your own skills and attitudes affect the success of your business, and what changes you need to make.
* What your business needs
* Your entrepreneurial personality
* The artisan entrepreneur
* The hero entrepreneur
* The meddler entrepreneur
* The strategist entrepreneur
(v) Deciding whether to grow
Once your business has been running for a while you will reach a stage where you need to decide whether to grow. This is an important decision because business growth has both advantages and disadvantages.
To make this decision you need to know how your business is currently performing. This will help you to identify areas with growth potential.
Once you have identified where your business can grow, you need to decide how. How you grow your business will depend on what you are trying to achieve.
The set of highlights described below explains the advantages and disadvantages of growing your business, the different types of business growth, and what you need to do to make it happen. It also details some of the common mistakes that businesses make and how to avoid them.
* Where are you now?
* Do you really want to grow?
* Choosing how to grow
* The practicalities of growth
* Growing pains
3.1(b) Setting a vision for growth
(i) Assess your options for growth
It is important to evaluate whether you want to consolidate your business' position or find ways to grow. If you decide that your priority is growth then you need to plan carefully if you are to succeed. Growth has its risks, but the right strategy can deliver stability, security and long-term profits. Once you've assessed the current strengths, weaknesses, opportunities and threats to your business and how well it's equipped to handle them, you can move on to the next stage - building a strategy for growth. The set of highlights described below shows you how to evaluate the right strategy for your business, when to launch it and what finance options suit which businesses. It looks at the pros and cons of diversifying and what other considerations you must think of to ensure development is smooth, on time and on target. * The importance of business growth
* Consolidate your existing performance
* Options for growth: increasing market share * Options for growth: diversification
* Options for growth: partnerships, joint ventures, mergers and acquisitions * Assess which growth option best suits your business * The practicalities of growth
* Getting a return on your investment for growth * Financing your growth strategy
(ii) Strategic planning
Growing a business means taking many decisions about the way you want to expand your operations. Creating a strategic plan is a key component of planning for growth. It will help you prepare a realistic vision for the future of your business and in doing so can maximize your business' potential for growth. A strategic plan should not be confused with a business plan. A business plan is about setting short- or mid-term goals and defining the steps necessary to achieve them. A strategic plan is typically focused on a business' mid- to long-term goals and explains the basic strategies for achieving them. The set of highlights described below sets out the basics of the strategic planning process. It explains how to go about drawing up a strategic plan, it highlights some important issues to bear in mind and it shows how to turn from planning to implementation. * The purpose of strategic planning
* The three key elements of strategic planning * Getting started with strategic planning
* Build your plan on solid strategic analysis * What a written strategic plan should include * Some important strategic planning issues to consider * Implementing a strategic plan
(iii) Prepare a business plan for growth
Planning is key to any business throughout its existence. Every successful business regularly reviews its business plan to ensure it continues to meet its needs. It's sensible to review current performance on a regular basis and identify the most likely strategies for growth. Once you've reviewed your progress and identified the key growth areas that you want to target, it's time to revisit your business plan and make it a road map to the next stages for your business. The set of highlights described below will show how you can turn your business plan from a static document into a dynamic template that will help your business both survive and thrive. * The importance of ongoing business planning * What your business plan should include
* Drawing up a more sophisticated business plan * Plan and allocate resources effectively
* Use targets to implement your business plan * When and how to review your business plan
* Here's how I managed rapid growth
(iv) The challenges of growing a business - and how to meet them
Growing businesses face a range of challenges. As a business grows, different problems and opportunities demand different solutions - what worked a year ago might now be not the best approach. All too often, avoidable mistakes turn what could have been a great business into an also-ran. Recognizing and overcoming the common pitfalls associated with growth is essential if your business is to continue to grow and thrive. Crucially, you need to ensure that the steps you take today don't themselves create additional problems for the future. Effective leadership will help you make the most of the opportunities, creating sustainable growth for the future. The set of highlights described below highlights the particular risks and mistakes that most commonly affect growing businesses and outlines what you can do about them. * Keeping up with the market
* Planning ahead
* Cash-flow and financial management
* Problem solving
* The right systems
* Skills and attitudes
* Welcoming change
(v) Best practice
As your business grows, you will need to change to adapt to new circumstances. You can experiment with different ways of working to see which suits your business best. But this approach is inefficient and may lead you to make inappropriate decisions. A far more effective way of making changes is to look at how successful businesses operate and to introduce their ways of working into your business. Evaluating how your operations compare with the most effective and profitable enterprises, and then using their most successful elements - the "best practice" - in your own business, can make a big difference. The set of highlights described below explains what best practice is and how identifying it and introducing elements in your business can bring significant benefits. * What is best practice?
* Management best practice
* Best practice in people management
* Improving business operations through best practice * Best practice in sales and marketing
* Encouraging innovation
* Using IT to achieve best practice
* Get government support to implement best practice in your business (vi) Make best use of standards
Standards can help you ensure your products, services or business systems meet fixed specifications or quality benchmarks. Their use is voluntary, but can bring a range of business benefits. They can help you: * build or grow the market for your products and services * make sure products are compatible and interoperate with other related products * boost credibility with customers and suppliers * manage your business more effectively
* make the most of your innovations
The set of highlights described below sets out what standards are and how they can benefit your business. It also covers the management system standards that can help you run your business more effectively. * What is a standard?
* How can standards help my business?
* Standards for best business practice
* European standards and your products
* How to show your products meet legal requirements (vii) Quality management standards
Customer satisfaction is essential for any business. Working to recognized quality management standards can help you to meet customer expectations. Quality management standards provide a framework for a business to manage its processes and activities. They can help a business improve its efficiency by providing a best practice model for it to follow. To meet a quality management system standard you need to set up a system to improve the key processes you use to provide your products and services - allowing you to deliver consistently on your promises. The ISO 9000 series is the best known set of standards against which you can measure your quality management system. Achieving it could be a good investment for your business, giving you an edge over competitors. Equally, many large businesses and public sector organizations only offer lucrative contracts to suppliers with ISO 9001 certification. The set of highlights described below explains how businesses can benefit from setting up a quality management system and sets out how you can achieve certification against a quality standard. * What are quality management system standards and how can they benefit you? * The ISO 9001:2000 standard
* The ISO 9004:2000 standard
* The Balanced Scorecard
* What will it cost?
* How to implement a quality system
* How to get your quality system certified
(viii) Corporate social responsibility
Your business doesn't exist in isolation, simply as a way of making money. Your employees depend on your business. Customers, suppliers and the local community are all affected by you and what you do. Your products, and the way you make them, have an impact on the environment. Corporate social responsibility (CSR) takes all this into account. It isn't about being "right on", or mounting an expensive publicity exercise. It simply means taking a responsible attitude and following simple principles that apply whatever the size of your business. The set of highlights described below explains how you can exploit the benefits CSR can bring to your bottom line. * Corporate social responsibility and your business * The business benefits of corporate social responsibility * Understand the environmental impact of your business * Deal responsibly with customers and suppliers * Work with the local community
* Measure the effectiveness of your corporate social responsibility * Exploit corporate social responsibility
(ix) Get the right advisers for growth
No matter how experienced you and your employees are, you cannot expect to have all the skills and knowledge your business needs, particularly as requirements change as your business grows. For growing businesses, continually facing new problems and opportunities, the need for advice can be even greater. The set of highlights described below outlines the different kinds of advisers and how they might be able to help your business. It also explains how to find the right advisers and manage your relationships with them. * Understand what different advisers can do for you * Decide what you need from an adviser
* Find the right adviser
* Draw up an agreement with your adviser
* Manage the relationship with your adviser
* Identify and manage problems with your adviser * End your relationship with an adviser |