Tag Archive leadership skills

business planning for leaders to ensure success by Richard Gourlay

Great LEADERSHIP is all about your VISION

Great LEADERSHIP is all about your VISION 

Having a Vision for your business is the most important leadership trait for a successful leader to have. For leaders to lead they must have a strategic vision for their business. A clear future state they want to achieve. One which provides not only an optimum place within their market they want to be; but one which inspires, motivates and drives the organisation to achieve.

Great leaders may be charismatic, they may even be likeable, but for them to be successful they must be able to communicate and inspire others through their vision. A vision is a future place within tomorrow’s market.

Leader’s must create a vision which is not only aspirational for themselves but motivational for the all stakeholders.

A recent survey of 1,439 chief executives and senior HR people from 707 organizations across the globe found that the outstanding trait of successful leadership is the ability to create and communicate a VISION. This is the single most important characteristic for success. Amongst those interviewed it scored an impressive 92% amongst such high level people in business. This demonstrates just how important a characteristic this is in creating a successful leader.

“Without a clear vision no leader can succeed today in business”

#business #planning #business #successfully by Richard Gourlay

Business planning is vital to succeed: start with your #Vision.

Creating a VISION

Creating a vision is not easy. Leaders are busy people fighting to keep their business on track, dealing with day-to-day issues and making decisions based upon facts and figures. That last point is therefore a real challenge for leaders in developing a vision. This is because there are no facts and figures about the future. The future, by definition is unknown. Instead leaders must rely upon a range of forecasting tools, gut feel or by benchmarking others to develop their vision of what the future might look like.

Each of these are fraught with danger and risk, both in terms of making decisions based upon inaccurate perceptions or damage to their credibility as a leader. Following others through benchmarking is always the safest option for leaders, but it limits them to be a follower within any market sector, rather than to lead it from the front within their sector.

Sustainable Competitive Advantage is about creating and sustaining leadership within a market, how Dyson trumped Hoover in achieving success.

Growth is painful, change is painful but nothing is more painful than staying stuck somewhere you don’t belong

Dealing with Change.

For leaders to lead, they must be able to deal with change. Change happens in-perceivably until it is obvious. Every day we grow older but it is only when we look back we see how we have aged. The same is true in any market. Even when change driven by disruptive new entrants, the change that enables new players to enter is caused by changes within a market. Change is everything, the key drivers which create new opportunities are areas which leaders need to keep aware of and proactively respond to.

Change is the only constant in any business. The market is always moving either through Macro factors or through Micro factors. Good leaders need to be continually monitoring both and understanding their impacts upon their business, their customers, their channels to market and value perceptions of their brand.

Leadership is about dealing with change.

#Change is always happening, the impact of change is huge but imperceivable day-to-day, unless leaders keep monitoring it.

Challenges for Leadership 

Failing to validate then create and deliver a clear mission towards the delivery of a vision, is the single biggest single reason chief executives fail.

Leaders have to carry people with them for their vision to be brought to life. Poor communication skills are at the heart of why visions fail to succeed. Leaders must be able to create, verbalise and rationalise to others their vision to generate buy-in and carry their senior people with them. For a vision to succeed leaders have to build relationships. This starts in developing trust in their future and develop a team culture all working towards that vision. The inability for leaders to invest in developing their vision often results in the lack of trust and development within the senior team.  This failure to develop leadership soft skills, is a major area leaders must invest in to improve their effectiveness as a leader.

Leadership is a balance between science and art. Creating a vision is often seen as an art, but for a vision to connect with senior stakeholders visions require a scientific rationale. It is the old adage we buy with the heart and justify with our head. A solid vision is both a visual message but one backed up with both direct and indirect evidence of that future state in which the leader’s vision sits.

Key Communication Skills

The importance of being financial and operationally literate to the CEO role is always seen as core leadership skills. These hard skills are often key drivers of leadership assessment. Which is why so many CEO’s come from finance and operations leadership backgrounds. Today these competencies are seen as important for any CEO role.

In todays’ business environment CEO’s are being selected based upon having a demonstrated track record of delivering strategic vision. The ability to inspire others through delivering a strategic vision is now being seen as the most important track record for successful leadership.

Succession Planning 

The importance of succession and smooth transition is becoming more important element for successful leadership. With the exception of the sudden changes, such as BP’s sudden need to be seen to change direction in response to disaster events, companies today are investing time and effort in succession planning. Well planned succession planning ensures long-term shareholder value and the ability of avoiding the football management culture of overnight change. The leadership teams ability to develop successors who are able to support and follow through a vision is becoming an integral part of the CEO role.

Business leaders all recognise that talent management plans, including succession management have become essential for sustained performance in today’s organisations.

If you want to develop your company’s position then there needs to be a clear vision for it. Vitally answering the questions where it is going and why? If your are looking for some advice on developing your company, its marketing, its sustainable competitive advantage then contact us at Cowden Consulting. Let us see how we can assist you, or read more about us in this blog or at Cowden Consulting.

Or learn how to plan your business successfully see our video to learn more:-  http://www.cowdenconsulting.co/uk

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Strategy: How to outcompete the competition; finding sustainable competitive advantage

 Sustainable Competitive Advantage 

Few companies can lay claim to the holy grail market position for any length of time, retaining a sustainable position within a market. Here are some that come immediately to mind: Ferrari, Rolls Royce, Hoover, Apple’s Phone, Boeing, Walkman, Sky, Microsoft Windows, are all good examples of global companies who have achieved that today.  Sustainable competitive advantage is the ability to create and sustain a position within a market. Sustaining a desirable market position provides long-term competitive posiitoning for that brand.

The competitive advantage most companies strategically aim for is to own the space of early adopter within an adoption curve. That position is where a brand is seen as a premium player, producing innovative new products and services and able to command and earn premium prices for those products. That premium position, finding, and holding the early adopter position in any market, is seen as the optimum competitive advantage position within any market.

By finding that competitive position, and often helping creating the market structure, a brand takes ownership of that the competitive position and often drives the development and evolution of the market.  A company can choose to operate anywhere within a market and make it competitive if they build their business model to a defined market position.

Making it Sustainable

Making a competitive position sustainable requires a brand to develop its ability to sustain its position over the long term. That sounds easy in theory, but in reality is hard. Short-term attitudes in growth and profit can easily distract a leadership teams focus. Failing to invest in sustaining their brand’s market position, or stakeholder demands short-term profit taking, are two of the most common pulls that destabilise a brands’ established market position.

The challenge for any leadership team with their business is to be able to see the market position they want within that market position. Sustainable competitive advantage, the holy grail of a successful business is not easy to find, straight forward to own or simple to sustain, and that’s why it is every leaders’ holy grail.

How to Outcompete the Competition 

In mature (and often saturated) markets developing a unique strategic position can give a business sustainable competitive advantage. A sustainable competitive advantage in any market is the holy grail for business owners. To be somewhere that your competitors aren’t, and to have something that cannot be taken away, is what every business leader wants to achieve in setting up in business, and  dreams of achieving. It is one clear defining way of out competing the competition is to develop a sustainable competitive advantage in a market.

Dyson Vacuum Cleaners

To be recognised as the market maker, such as Hoover, whose name is synonymous with vacuum cleaners, gave the Hoover brand unbelievable control of the market for most of the 20th century.  Hoover, the brand leader owned the global market, with an unparalleled history, and complete market dominance. The brand name itself became synonymous with the product category, everyone hoovered with a Hoover.

So what changed? A loss of focus and desire to continue to own the market coupled with the airplane ticket fiasco which opened the door to new competitors.  One man in particular James Dyson who grabbed the opportunity to replace Hoovers’ once held position in the market launching his own Dyson brand through technology shift of his cyclone bag less vacuum.

His passion, created from vacuuming at home and becoming frustrated, seeing the cyclone idea at a sawmill which then took 15 years, 5,127 prototypes to turn into a winning product. Today this winning product benefits upon 60% recommendation purchases and has allowed Dyson to spin his cyclone technology into hair and air dryers as well as washing machines.

Features of Strategic Competitive Advantage

What are the key features of sustainable competitive advantage for any company in their market, well here are the most commonly found top five:-

  • Charge a premium for its services; even low cost suppliers out price other low cost suppliers.
  • Lead the market through innovation; will get to market new ideas quicker or in a more dominant way to shift the market to your agenda.
  • Controls the key channels to market; from buying decision processes to pricing structures.
  • Owns the pace of change within the market; from technology development and consumer mind set, being the pace setter in the market.
  • Control of buyer activity; the significant majority of the Share Of Buy (SOB) and Share Of Space (SOS) decsions through its dominance.

Sustainable competitive advantage is an extremely difficult goal. Most successful brands only ever achieve the challenger market position, one that challenges existing perceptions within a market. Developing a sustainable competitive advantage requires an organisation to constantly challenge not only the competition but also itself, to sustain its desirable position within its market.

Creating dominant sustainability requires the leadership to create a clear vision of where the company is going and where the market opportunity exists.  It takes leadership with passion, dedication and drive for a brand to succeed in moving from a challenger brand to one which can dominate its market such as Dyson. For men like James Dyson, the advantage was that he was in the right place at the right time, with the right product.  That has enabled a technological shift in the market with his bag less vacuum and a move to smaller cable-less products dominate the innovator position within the market.

Learn More about Strategy

If you want to develop your company’s position then there needs to be a vision for it. Where it is going and why. If your look for some advice on developing your company, its marketing, its sustainable competitive advantage then contact us at Cowden Consulting to see how we can assist you, or read more about us in this blog or at Cowden Consulting.


Strategy The Leader's Role By Richard Gourlay

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Strategy the leader's role book by Richard Gourlay

Do you have a vision or are you just a dreamer?

Leadership starts with  a Vision

No matter how big or small your business is without a clear vision of where you are going owners and directors often fall into the classic trap of just managing from day-to-day. A business needs great leadership, and for that they need to create a clear business vision, which will make and deliver longterm leadership success. Customers have choice by Richard Gourlay , Cowden Consulting.

Envisioning the Future

Leadership is about investing time, envisioning the future and effort to see into the future and imagine how things could be, is as important for success as having real passion for the business and the determination to create something new. These three personal qualities of leaders are vital for successful companies and a vision statement, sometimes called “a picture of your company in the future”, but it’s so much more than that.

Vision Statement

Your vision statement is your inspiration, the framework for all your strategic planning. A vision statement may apply to an entire company or to a single division within that company. The vision statement answers the question, “Where do we want to go?” What you are doing when creating a vision statement is articulating your dreams and hopes for your business. It reminds you of what you are trying to build. A vision statement is for you and the other members of your company, not just for your customers or clients. Visionary goals should be longer term and more challenging than strategic goals. Collins and Porras describe these lofty objectives as “Big, Hairy, Audacious Goals.” These goals should be challenging enough so that people nearly gasp when they learn of them and realize the effort that will be required to reach them. Most visionary statements fall into one of the following five categories:
  1. Targeted – quantitative or qualitative goals such as Nike: “To bring inspiration and innovation to every athlete in the world” “If you have a body, you are an athlete.”
  2. Common enemy – focused on overtaking a specific firm, becoming the number one in that sector, such as Amazon: “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
  3. Role model – to become like another in a different industry or market, the mirror role, Victoria Beckham (Posh Spice) “Right from the beginning, I said I wanted to be more famous than Persil Automatic”.
  4. Internal transformation – creating internal vision, GE set the goal of “Becoming number one or number two in every market it serves”
While visionary goals may require significant stretching to achieve, many visionary companies have succeeded in reaching them. Once such a goal is achieved, it needs to be replaced; otherwise, it is unlikely that the organization will continue to be successful. The second most dangerous place for a company is to have achieved its only goal, the most dangerous place is never to have had one.

Creating Your Business Vision

Simple steps to creating your vision, ask some simple questions:
  • What will our business look like in 3 to 5 years from now?
  • What new things do we intend to pursue and how?
  • What future customer needs do we want to satisfy?
Write the answers down and focus on developing them into a coherent, motivational and purposeful message which can connect with everyone. Then Question:
  • Does our vision statement provide a powerful picture of what our business will look like in 3 to 5 years from now?
  • Is your vision statement a picture of your company’s future, which everyone can interpret into their role?
  • Does it clarify the business activities to pursue, the desired market position and capabilities you will need
If your statement answers these questions then you have a vision worth owning and sharing. A vision must be motivational to everyone inside an organisation. The classic apocryphal story to demonstrate the effectiveness of great visions is about the time President Kennedy visited NASA. During one trip he came across a cleaner sweeping the warehouse floor, and asked him what his job at NASA was. The cleaner replied “My Job is to put a man on the moon, Sir.” Now I don’t know if the story is true, but it’s inspiring. In a facility full of high-powered individuals and great minds, even the cleaner was completely on board with the strategy. While you may not be planning to put a person on the moon, we can learn a lot from the story. It may sound ridiculous, but every business needs to be a little like NASA.
Great visions can create an unstoppable company
Every organisation needs to have a clear vision, owned by everyone inside and outside it. An owned and shared vision creates and sustains great morale and internal strength for companies, which can become a powerful and unstoppable force in any market no matter how competitive. At Cowden Consulting we focus on ensuring companies can successfully compete in their chosen or desired market. Like to learn more then get in touch with at Cowden Consulting. Or learn more about creating your vision and how to lead your organisation with a clear strategy, but my book: click this link or the book cover below Strategy the leader's role book by Richard Gourlay

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Customers have choice by Richard Gourlay , Cowden Consulting.

Are you on a MISSION or just a dreamer?

One of the most important pieces of any good business plan is to define what you do and where you are going as a business. If you do not define what you do and where you are going then why should people work with you or for you? Defining your purpose as a business is the clearest statement of intent any director or owner of a business can make, and yet one of the most misunderstood and avoided pieces of any business plan. This is the mission statement which everyone in a company should be able to relate to and believe in.

Why is it avoided? In my experience directors are most often frightened of making a commitment of what they stand for so as not to alienate any existing or potential customers who may not fit the proposed mission statement. This contradiction, not wanting to say what the primary goal of a business or organisation is, means that many company’s try to be everything to everyone, ending up being meaningless to everyone.

Mission Failure

This failure to define a mission is also one of the biggest limitations companies and organizations have in creating clear blue water between them and other players in their market. It is why so many companies struggle to stand out and then expect someone in marketing to try to answer that question sometime later. Marketing does not define the purpose of any business or organization, they may influence it, but it takes leadership from the top for a mission statement to be successful.

Missions fail if they are not believed in by the employees and customers, or experienced in how an organisation looks to deliver its products and services. They are not just slogan on a wall or a website.

 

Mission Statement

A good mission statement is clear, unambiguous, engaging and relevant to all its key audiences: namely its leadership, senior management, employees, shareholders and customers. A mission and a vision (but more of that later) provides a central definition of what a business or organization delivers.

Creating a Successful Mission Statement

Here’s a quick-step guide to creating a mission statement.

  1. First identify your organization’s “strategic advantage” what makes you successful. This is the idea or approach that makes your organization stand out from its competitors; the reason that customers prefer you and not your competitors, what makes you unique, what are your core competencies?
  2. Secondly, identify the key measures of your success. Key success measures by which you can measure, Key Performance Indicators (KPI’s), typically pick 3 to 5 headline measures of performance.
  3. Thirdly combine your strategic advantage and success measures (KPI’s) into tangible and measurable goal.
  4. Define the wording, using clear language, until you have a concise and precise statement of your mission, which expresses your ideas, measures, and desired result.
  5. Now communicate the mission statement effectively so everyone owns the mission statement within the company, make it public and ensure it is owned from the top with passion.

Communicating mission statements effectively to everyone is a defining piece of making the mission live. After all the hard work in having one so often they are filed away, or framed and stuck on the wall and forgotten. Instead successful Mission statements are launched to everyone and owned.

I’ve run embedding program within companies to ensure that everyone inside businesses and organizations “own” the Mission and build it into their everyday activity.

If you don’t follow through then all the effort is wasted and the opportunity is lost, so remember to focus on making your mission statement memorable and relevant. The leadership also needs to own the mission statement and make it live throughout the company.

A Mission Creates Loyalty

If you do this businesses and companies can achieve significant improvements which can include: building higher loyalty from staff, higher levels of customer service; improved stakeholder and channel support and lower costs for winning new higher value customers. These are just some examples of the benefits from having and using a mission statement successfully at the front end, one other major advantage is that you have a foundation upon which to build your business plan.

Good Luck: Want to develop your growth plan, use my business planning tool kit, click here to Take the guess work out of your business success   or click this link to learn how to greta your own business strategy:-

Strategy: The Leader's Role by Richard Gourlay , a book for business leaders to learn how to develop and deploy their business success

Strategy: The Leader’s Role by Richard Gourlay

Richard Gourlay

 

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Successful Leaders Plan Their Business

Business Planning

Business planning often gets a bad press.  Yet those who do sit down and plan their business are so much more focused, confident, and successful than those who float along with the economic tide. Successful leaders plan their business, so they can focus on leading their team to deliver that plan.

Over the past ten years as a strategic planner we’ve worked with hundreds of business owners and seen how those that create a plan and implement it. Those that plan their business do so much better than those owners who try aimlessly lead their business on a wing, a prayer or a dream.  Successful leader’s plan their business, so that everyone knows where they are going what their role is in achieving that success.

Business planning in business is an important part defining success

According the latest BERR report, Small and Medium-sized Enterprises (SME’s) together accounted for 99.9 per cent of all enterprises, 59.8 per cent of private sector employment and 49.0 per cent of private sector turnover. SME’s really do matter to the British economy, and yet they receive little effective support from Government agencies despite being the backbone of the economy, employment, and innovation.

Why Business Leader’s Don’t Plan

“If you don’t make things happen, things will happen to you” Lanes Company

Having questioned business owners over the last decade the reasons why owners have not put a plan in place and then executed it, the excuses range from not having the skills, make the time, or have the conviction of their thoughts. Owners know they should have a plan ‘we had one when we first started, but have not looked at it since’ is a common theme. The other is being too busy fire fighting to realise that preventing fires starting, is the best way to not have to fight them.

Do business owners not see the value in developing a plan for their business? On the other hand, is the classic perception for business owners that frenetically staying alive is seen as being successful? For many not knowing how to plan is one major reason why people haven’t and don’t plan their business.  Where to start, and how to know what they are trying to achieve immediately puts people of planning.

Faults in Business Planning

Business planning is also often at fault here.  The most common reason new start up businesses create a business plan is to secure funding from banks, that’s when banks did fund business start-ups (now they just offer a high interest mortgage backed by the Government). Therefore, once people have received funding they no longer see the main advantages of planning (and the real advantages are not around money).

business planning for leaders to ensure success by Richard Gourlay

Business planning is not an accident it is intentional.

Business Planning Skills – Have some GOALS

“The discipline of writing something down is the first step toward making it happen.” – Lee Iacocca

Planning takes time, resources, (grey stuff) not the executive trip to some exotic away weekend planning, but some time allocated to review where you are as a business, how your sector and industry are performing and what you want to achieve in the future. Whether it is looking at the next year or planning the next five years, everyone who owns or directs a business is responsible for setting its direction. However, just having a plan in your head, with the classic defence of ‘its flexible at the moment’ is either ducking the responsibility or deluding themselves.

The only way to have a plan rather than a dream is to have it written down, turned (if it is not already) into an action plan which is resourced and owned by someone to deliver. Only then do businesses go forward in a deliberate purposeful way. Only then do the right things happen because you made them happen and only then can everyone, employees, shareholders, customers, channel partners and even other halves, see your dream, share your dream, deliver your dream. That’s when planning works. It is a written document, which lives within your company, and it doesn’t matter if you are a one-man (woman) band or running a multi-national Plc.

What Business Planning Delivers

“In the absence of clearly-defined goals, we become strangely loyal to performing daily trivia until ultimately we become enslaved by it.” – Robert Heinlein
focus in business for leaders to focus on

Have a business plan that works for your business as a leader

Planning provides focus in strategic direction.  It provides clarity of where the business is and where it is going as well as a vehicle for getting from where you are to where you want to be. Planning time out of the business provides time to reflect on personal and corporate goals, time to share and channel new ideas while reviewing existing activities.

Planning in a structured and open format develops clarity of purpose and a clear understanding of the organisational and individual skills people have and can use to leverage advantage. Bringing in outside views widens the planning horizon, a fresh perspective to drive businesses forward. This is why many successful businesses use non-executive directors or outside specialists to help drive their business forward. That is one reason why so many people volunteer to get support from people like the Dragons from Dragon’s Den, they are looking for expertise and advice which gives them confidence to go forward as much as the money.

 

Plan More For Success

British business owners need to plan more often to keep being successful. Good planning creates and sees opportunities as owners and directors lift their heads up from the daily grindstone. How often should you plan? Well it all depends on the speed of your market’s evolution, but even stable and stagnant businesses should review their business every year, and not just a light dusting (add ten percent and change the year) but strategically review what and how well they are doing.

It is only by looking for fresh opportunities and how to take best advantage of them, by planning your business around those opportunities, that companies successfully compete in today’s business environment.

Business Planning is not a four letter word

“An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage” Jack Welch

The old adage, compete or get beat, is more relevant today than it has ever been. The rise of the Internet means there are no secrets, competitive advantage lies with those who can see an opportunity and adapt fastest to take advantage of it. Those owners and directors who see and go for opportunities become the stronger ones.  That is where good strategic business planning provides it real advantage. That’s why successful leaders plan their business to achieve that success.

By orientating a company to where it can retain better, win new and develop existing customers companies that plan their success out compete in their sector, and equally importantly have everyone focused on where they are going. From the smallest to the biggest every business needs to have a plan that is written down, owned and guiding your business in the direction you want it to go.

Good Luck

Richard Gourlay

@richardgourlay

www.cowdenconsulting.com

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Strategic Business planning

The TOP TWELVE Business Planning Mistakes

The TOP TWELVE Business Planning Mistakes

 
Business planning is often talked about as a challenging process to go through.  Both to start a new business, or as the essential process of taking ownership of an existing business. Many business plans fail to achieve their objective, not because they represent a bad idea but because they fall into classic business planning pitfalls or fall over blinding obvious credibility cliffs.
 

The business-planning process is in itself a very worthwhile pursuit, they take a lot of effort and resource. A business plan’s primary purpose is to convey an idea with a view to achieving a specific goal, most typically in securing funding. 

What makes a good business plan is less clearly defined.

Always remember that a business plan needs to be tailored to its target audience. If you have different audiences you will need to be able to flex your plan to that audiences specific needs. That means shaping it, edit it and amending it to achieve your objective.

 
If you would like to know how to avoid these top ten pitfalls and credibility cliff edges then click on the subject titles which are links at any time to see my step-by-step videos on how to avoid these pitfalls and credibility cliff edges.
 
#business #planning #errors and how to #plan your #busienss #successfully by Richard Gourlay

Business planning is a vital activity for any business to succeed.

 
Here’s the top twelve business planning mistakes I come across most frequently:-
 

1. Lack of Viable Opportunity

Every business plan needs to describe the opportunity in detail. It must also detail how that opportunity can, and will by this plan, be exploited profitably, effectively and successfully.  A good business plan can visualise the opportunity and articulate the company’s ability to reach a viable opportunity, this is a credibility cliff.
 
Tomorrow is a difficult place to plan for, but being able to identify and make that opportunity viable is the most critical test any business plan has. It is also the most common reason they fail. Your executive summary and the wider plan describes the viability of the opportunity in terms such as:-
 
  1. What is the problem which people  will pay to have solved?
  2. Does your solution solve this issue for a specific target market?
  3. Why would someone buy your solution over someone else’s?
  4. Why are the benefits of your offering so compelling?
  5. Can you reach that target market with a compelling message quickly and directly?
 

2. Unbelievable / Unsupported Financial Numbers 

Where any assessment of a business starts and often finishes is at the numbers, specifically on the projected Income Statement or Profit & Loss. Projections are just that, but they are vital and must be based upon clearly stated assumptions. Many business plans are written with numbers which just do not stand up even to a first glance.
 
Dream numbers: in overestimating income and understating costs.
 
Your numbers have to make sense and be realistic, if you are a new start-up then they must grow rationally from nothing, but costs will be incurred before turnover is generated, these need to be realised and recognised in your financials.
 
 The financials must also make sense and be presented in a format which presents a clear case for the investment and the return you will deliver. Ultimately, they need to be credible, defensible and consistent.
 

3. No Accessible Route(s) to Market

 All opportunities are only prospective ones without evidence that the target market can be accessed profitably, this is a big cliff to fall over. 

Entrepreneurs are inherently product focused, concentrating their energies on ‘the winning idea’ to the exclusion of many other important elements such as how they intend to access their customer base, a classic cliff edge for any plan.
 
“Built and they will come” is a great dream but a poor plan.
 
A business plan must include a comprehensive, credible and costed analysis of how the company is going to access their target market in a cost effective manner. Too many plans focus on the product not the market opportunity, they focus on teh solution not the problem they are solving.
 
For that to happen your plan needs to really understand the target customers, their needs, and purchasing priorities. Turning historical data into information and drawing knowledge from it ascertain insight into their future purchasing habits. Only then can you demonstrate cost effective routes to market within a business plan.
 
 

 4. Executive Summaries Which Aren’t

Somewhere between a pitfall and a cliff edge, is the failure of the Executive Summary, to be either a summary or aimed at executives. The only part of any plan that will certainly be read is the Executive Summary and yet they rarely provide an effective summary of the business plan. A good plan highlights the key proposition of the plan and sells the proposal.
Too many Executive Summaries either throw everything down in a jumbled mess, making them pages long and randomly pulling facts together, or they are so bland they say nothing!What’s a good Executive Summary, one that states the proposition clearly and succinctly, a page is sufficient for any plan.
The Executive Summary should clearly explain the whole picture including what investment is required and what it will deliver. The point of an Executive Summary is to inform the executives, so many it punchy, outcome focused and only ever write it at the end.

5. Over Estimating Turnover  

Another associated key element of the plan which relates to this element is the estimations of projected turnover.
 
While every business plan talks in positive terms (hopefully).  The obvious and persistent danger is that the innate optimism of all entrepreneurs and their tendency to exaggerate every business opportunity. If you have no established routes to market then you need to identify the start-up period within your turnover and cost model. This has major implications for cashflow and on where investment will be needed.  Experienced investors will expect that you have taken into account. 
 
This pitfall is most easily managed using a realistic method for estimating income is to calculate the number of customers the business intends to capture and the average revenues. These two averaged inputs are easier to calculate and also to justify within a business plan.
 

6. Absence of Clear Objectives 

I could have put this pitfall at number one very easily. What is the main purpose of the plan? 

If the plan’s objective is to seek funding then it is vitally important to clearly describe the investment opportunity. While the plan describes the concept in detail, it must also address the primary purpose of the plan. So many plans fail to make it explicitly clear what the company’s needs to be successful or what the investment will mean to the company.
 
A good business plan answers the following key business planning questions:
  1. Why investors should investing in this business rather than anywhere else?
  2. When will they recoup their initial investment and how and when it can be realised?
  3. What is their expected return on investment?
  4. How the company has managed all aspects of risk? 
  5. Is the investment merely cash or do they need to bring other assets such as expertise to the table?
If you can answer these key questions, the intended audience will feel comfortable and be able to recognise that they fit the brief.
 
 

7. Non-Existent Cashflow Management

Particularly relevant to a new business, this is often an invisible cliff edge which business plans fall over on, is the ability of the business to articulate the differences between cash and profit. Running out of cash is the highest risk any new business or re-engineered business faces.
 
Good, positive, and conservative cash flow management is vital when businesses pursue investment opportunities where there are significant cash flows out, in advance of the cash flows coming in. This is the classic business plan cliff, which sends potential investors running.
 
If a business plan’s financial model is based upon selling on credit, then they receive the cash in the future, but need cask to pay expenses before that income hits their account, then they have a cashflow risk. This outflow of cash is the single biggest reason companies fail, its not margin, its rarely the product, it is invariably that they run out of cash.
 
 

8. Non existent Management Teams

Throwing a few CV’s into a business plan does not create a delivery team. Likewise a generic organisational chart with missing pieces and To Be Confirmed (TBC) is not going to inspire confidence  with investors to part with their cash.

Entrepreneurs can often sell an idea but they do not always inspire they can select a balanced team of people with the right skill mix, from the financial management to key leadership roles and the right operational team to deliver your ambitious plan.

Having a structured management team with operational structures is essential for success. Track records matter, as much as having clear roles and responsibilities laid out in delivering the operational plan which underpins the business plan.

9. Poor Evidence of Demand

A significant area of concern when planning is justifying the sales forecast or demand levels for a product or service. This breaks down into the two main elements used in forecasting: the use of historical facts and the dependency of subjective assessment.
 
Sales forecasting, is the vital tool to identify the basis of all projected revenue figures that can be considered credible in the wider context of the plan. Unless there is verifiable demand for the idea, the risks grow out of all proportion, particularly if the initial start-up or investment costs are high.
  
Minimising risk in a business plan is all about gaining an understanding the potential demand and how the company will with this plan create or drive that demand rather than concentrate on ‘the product or the idea’. This classic cliff edge is a silent killer for investors, they don’t believe in it.
 

10. Gaping Inconsistencies

An effective business plan needs to be consistent throughout as all the various strands are brought together into one single entity, the plan. It is pitfall which entrepreneurs gloss over, but investors relentlessly prod before committing to any plan.
 
If there are multiple authors of the plan the risks of inconsistencies will exponentially increase. Extrapolating data can also cause problems, using research data and then jumping from possible market size to sales potential and then sales forecast are classic pitfalls which need to be thought through.
 
Presenters of the plan must have a simple narrative that runs through their plan, using key facts and staying ‘on script’ so as to ensure that a cohesive story is communicated. The numbers must also be consistent with the broader content so that there are no contradictions between them.
 
 

11. Not Appreciating the Competition 

There is always competition. Yet the number of times the phrase “there are  no competitors” appears in plans is considerable.
 
It does not matter how unique the proposition is there will also be some other business competing for people’s money. While there may not be a direct competitor it will certainly be a transfer investment that customers will be making. The business plan must recognise where the customers invest is coming from. If competitors are not identified in a business plan then the only credible assessment is that the company has not been diligent enough in its research.
 
Also remember that no company lives in a vacuum, as soon as you launch (or before) the marketplace will change. What will the competitive landscape look like in a few days, weeks, months or years?  Can you create or establish significant barriers to entry for likely competition.  Otherwise it is likely that a successful market entry will be followed by better-placed competitors with greater resources, etc
 

12. Throwing Your Plan Out Too Soon

You never get a second chance to make a great first impression.Your plan needs to be right the first time and the content needs to be accurate, clear, concise and correct.
 
More often than not business plans need to be completed by a certain date and hence the final stages can be rushed, a classic pitfall.
 
Consequently, in many instances the final output does not do justice to the plan. Attention to detail at the end is vital, so ensure you have a completed plan with references and formatted correctly. Also ensure the content of the plan has been edited down to a digestible size, use appendices for details.
 
Get someone removed from the process to proof the plan. If a presentation is part of the process, it should reflect the Executive Summary.
 
 

In Summary The Top 12 Business Planning Mistakes are caused by:-

Business plans by definition have a purpose of communicating a course of action so make sure they do that primary role. Support inevitably means resources with the primary aim of the plan often being to secure financial investment. Explain what the investment will be used for and how it will be protected from these classic pitfalls.
 
Writing a successful business plan is all about preparation, about being as thorough in your research and planning as is possible. By avoiding the cliff edges and pitfalls above, the chances of the plan objectives being met increase substantially.
 
If you would like to know how to avoid these classic business planning pitfalls then why not click through to my step-by-step video: How To Take The Guess Work Out of Your Business Success, click here. Or read more about strategic planning and business planning in my blog, click here.

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