Business management

Adapting your business plan for growth

How can you update your business plan to help your business survive and thrive?

As the commercial landscape has changed dramatically, businesses’ first task should be to review their business plan and decide whether they need a new plan that will allow their business to scale. They can then identify the best opportunities for growth while responding to changes in consumer behaviour.

This requires careful evaluation and monitoring of short-term and long-term needs, alongside continuous benchmarking to measure the sustainability of the business. Reviewing what worked in the past and assessing if that strategy is still appropriate to the next stage of growth is crucial to future-proofing the business: post-pandemic, the strategies that took you from A to B may not be as effective at getting you from B to C.

Get to grips with revenues and budgets

To have a clear vision of the road ahead, businesses need to be on top of their budgets and forecasts, and know exactly what cash will be needed to achieve and sustain the next phase of growth. Business plans and budgets are there to help you set objectives and targets, and organise resources.

“When forecasting, historic performance is a good starting point,” says Riina Trkulja, founder and managing director of Accounts Assistants. “Historically, if sales doubled every month, it is likely that over time that growth will level off at between 5% and 20% per year as your company matures.”

Prioritising sales while maintaining margins – a good gross margin might be 50% to 70%, depending on the industry – is essential. However, the main focus should be on net profit and cash, parameters that will determine the survival of the business, particularly during extended periods of uncertainty, and reducing unnecessary operational spend. Ultimately there is a balance to be struck, making savings where possible while being prepared to make investments where necessary.

At this stage, it is important to review customer types, spending levels, and profitability to ascertain whether or not these have been altered as a result of pandemic-specific spending. “Consider what your 12-week plan looks like rather than a 12-month plan and review this on a rolling basis,” says Emma Mills-Sheffield, founder of business consultancy Mindsetup. 

Watch the cash flow

Fast-growing companies often overlook the importance of collecting client debts quickly enough, disrupting their cash flow, and forcing them to resort to borrowing to fund their business. Efficient cash-collection processes are even more important during a growth phase and must begin at the point of sale before invoices are raised.

When signing new supplier contracts, the advice from Faye Watts, business adviser, coach, and tax partner at FUSE Accountants, is to avoid getting tied in for anything longer than 12 months.

Be as agile as possible and implement a strategy that allows you to respond to the current frenetic state of the marketplace

PJ Farr
Founder at UK Connect

“The current climate is quite unpredictable and can take unexpected twists and turns, so in the case of leases, negotiate a break clause,” she says. “Taking on long-term commitments that you can’t honour could result in penalties and management time that at this stage of business growth would be better spent elsewhere.”

Monthly management accounts with key KPIs will help highlight any budget variances, key threats and opportunities, while regular operational and board meetings should address any risks and issues with potential solutions.

Set the right pace

A business plan that sets out an overly ambitious pace of growth can undermine a company’s previous success. Trkulja says: “A recruitment company that I worked with had flourished in its current location and decided to open in two new cities simultaneously, signing two new leases and hiring two new teams. When management wasn’t able to dedicate sufficient time in all three locations, one of the offices closed after 18 months due to continued losses. A better strategy would have been to open one office at a time, waiting until it was profitable, and learning from any mistakes before opening the second.”

Stay agile

Having multiple revenue streams reduces reliance on one market while still supporting growth, so it pays to explore any opportunities to diversify. 

For tech firm UK Connect, coronavirus was a catalyst for growth. The company was thriving before the pandemic, but focused on only one niche: the construction sector. The crisis prompted them to explore other sectors that could benefit from their telecoms, wireless, and technology services.

Founder PJ Farr says: “Since the first lockdown we’ve started working with the MOD to establish wireless infrastructure at a reactivated training camp, which led to further defence projects and the establishment of a new rapid-response service, suitable for any industry needing emergency telecoms and wireless services, even in the most remote locations.

“My advice to growth firms is to be as agile as possible and implement a strategy that allows you to respond to the current frenetic state of the marketplace. This way, your business will evolve and expand as you ride the shifting socio-economic current.”

Include employees in the plan

A flexible and engaged ‘can do’ workforce is pivotal to next-stage growth. A business is only as good as its people and therefore needs to nurture and support them so that they are prepared to respond positively and creatively to sudden, last-minute changes. Employees should also be made aware of their monthly or quarterly targets and the potential consequences if these are not achieved.

Transparency is a key leadership trait, especially when steering a business and its team through a crisis, but it is equally important during scale-up, as changes take place and new opportunities and challenges arise. Clear and regular communication with employees is essential. 

“If everyone in the team is aware of the targets and goals, they will have a better understanding of the decisions that are being made and how they can contribute,” says Mills-Sheffield.

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