Happy New Year and welcome to 2023. I hope that this year brings new challenges and opportunities for you to live the life that you are meant to live. Furthermore, I hope that it is a year in which your business thrives.
Today, I would like to talk about preparing a business plan for your business. The business plan I am referring to is not the one that you submit when seeking funding. Instead, it is the plan that you set out for your business for the year. The plan should include your goals for the end of the year and the strategies you plan to implement to achieve them.
In my coaching, I use a tool called design thinking to set out and prepare business plans. I find this methodology particularly useful because it:
- Encourages creative thinking and helps generate new ideas.
- Allows for quick testing and gathering of feedback.
- Focuses on the needs of the customer.
- Promotes teamwork and collaboration.
- Helps make better decisions based on data and feedback.
Let’s consider the following scenario:
“Alexa runs a tech company and has been struggling with cash flow for some time. She knows that she needs to take action to improve her financial situation, but she’s not sure where to start. She decides to use design thinking to come up with a plan to improve her cash flow.
First, Alexa defines the problem by talking to her employees, customers, and suppliers. She finds out that one of the main issues is that her company is not getting paid on time by some of its customers. This is causing a cash flow problem.
Next, Alexa moves on to the ideation stage. She comes up with a variety of ideas to address the problem, such as offering discounts to customers who pay on time, implementing a new invoicing system, or hiring a collection agency.
After that, Alexa chooses the most promising ideas and creates a rapid prototype of them. For example, she creates a mock-up of the new invoicing system using a prototyping software or paper, pencil. This mock-up includes the design, layout and the functionalities of the invoicing system that sends automatic reminders to customers when their payments are due.
Then, Alexa tests her prototype by showing it to her employees and customers and asking for their feedback. She finds that the new invoicing system mock-up is well-received and that it could help her company get paid on time. This feedback allows her to identify any issues that needs to be addressed without having to invest a lot of time and resources into fully developing the invoicing system.
Finally, Alexa implements the new invoicing system and sets up a plan to monitor its effectiveness. She also sets up a goal to increase the percentage of payments received on time from 50% to 80% in the next quarter.(SMART Goal setting)
As a result, Alexa sees a significant increase in the percentage of payments received on time and the cash flow of her company starts to improve. She also noticed that the new invoicing system helped her company to get paid faster, and the team’s morale improved. Alexa is pleased with the results and is confident that her business is on the right track.”
To summarise, when preparing your business plan, follow these 5 steps:
- Define the problem: Understand the challenges or opportunities facing your business by talking to employees, customers, and suppliers.
- Ideate: Come up with ideas for solving the problems identified in step 1.
- Prototype: Choose the most promising ideas and create rough versions of them.
- Test: Gather feedback on the prototypes from employees and customers.
- Implement: Based on the feedback received, choose the best ideas, and create a plan for making them a reality.
When setting goals to execute remember to be SMART:
- Specific: A goal should be clear and specific, so that it is clear what needs to be achieved.
- Measurable: The goal should have a measurable outcome, so that progress can be tracked, and the goal can be achieved.
- Achievable: The goal should be realistic and achievable, given the resources and constraints.
- Relevant: The goal should be relevant and aligned with the overall mission and vision of the organisation
- Time-bound: The goal should have a specific timeframe, so that progress can be tracked and the goal can be achieved within a certain period.
Design thinking can be applied to every problem within your company, because at the heart of it, it’s just a way to solve problems. So go on, try it!
Before you implement your solutions, your might need a financial plan to go along with it, and that’s what I will cover next week.
I hope that you find this helpful and consider using this approach to develop your business plan for the year.
Remember, even not having a plan is still a plan.
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