Develop and Implement a Business Plan | My Assignment Tutor

Learner Guide Develop and Implement a Business Plan BSBMGT617 Table of Contents BSBMGT617/01  Develop Business Plan 1.1 Review and evaluate pre-existing strategic, business and operational plan, if available 1.2 Analyse and interpret business vision, mission, values and objectives 1.3 Consult with key stakeholders 1.4 Review market requirements for the product or service, profile customer needs and research pricing options 1.5 Develop performance objectives and measures through consultation with key stakeholders 1.6 Identify financial, human and physical resource requirements for the business 1.7 Consider any permits or licences that may be required for new activity 1.8 Write business plan 40 Key Points ‘True’ or ‘False’ Quiz 42 BSBMGT617/02  Monitor Performance 2.1 Communicate business plan to all relevant parties and ensure understanding of performance requirements and timeframes 2.2 Ensure skilled labour is available to implement plan 2.3 Test performance measurement systems and refine, if necessary 2.4 Ensure timely reports on all key aspects of the business are available, user-friendly and balanced in terms of financial and non-financial performance 2.5 Report system failures, product failures and variances to the business plan as they occur 59 Key Points ‘True’ or ‘False’ Quiz 61 BSBMGT617/03  Respond to Performance Data 3.1 Analyse performance reports against planned objectives 3.2 Review performance indicators and refine if necessary 3.3 Ensure groups and individuals contributing to under performance are coached, and provide training where appropriate 3.4 Review system processes and work methods regularly as part of continuous improvement 69 Key Points ‘True’ or ‘False’ Quiz Summary 72 Bibliography BSBMGT617  Develop and Implement a Business Plan1 ELEMENT 1: Develop Business Plan Performance Criteria Element 1 1.1 Review and evaluate pre-existing strategic, business and operational plan, if available 1.2 Analyse and interpret business vision, mission, values and objectives 1.3 Consult with key stakeholders 1.4 Review market requirements for the product or service, profile customer needs and research pricing options 1.5 Develop performance objectives and measures through consultation with key stakeholders 1.6 Identify financial, human and physical resource requirements for the business 1.7 Consider any permits or licences that may be required for new activity 1.8 Write business plan BSBMGT617  Develop and Implement a Business Plan2 Element 1: Develop Business Plan Develop Business Plan Review and Evaluate Pre-Existing Strategic, Business and Operational Plan 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. It’s easy to focus only on the day-to-day running of your business, especially in the early stages. But once you’re up and running, it can pay dividends to think about longer-term and more strategic planning. This is especially true as you take on more staff, create departments within the business, appoint managers or directors and become distanced from the everyday running of the business. Reviewing your progress will be particularly useful if you feel: Uncertain about how well the business is performing Unsure if you’re getting the most out of the business or making the most of market opportunities Your business plan may be out of date, e.g. you haven’t updated it since you started trading Your business is moving in a direction different to the one you had planned The business may be becoming unwieldy or unresponsive to market demands. It is also useful if you have decided that your organisation is ready to move on to another level. Setting the Direction A clear business strategy will help to answer any concerns and show practical ways forward. Questions you might want to ask include: What’s my direction? To answer this you need to look at where you are now, where you want to go over the next three to five years and how you intend to get there. What are my markets – now and in the future? Which markets should I compete in, how will they change and what does the business need in order to be involved in these sectors? How do I gain market advantage? How can the business perform better than the competition in my chosen markets? 3BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan What resources do I require to succeed? What skills, assets, finance, relationships, technical competence and facilities do I need to compete? Have these changed since I started? What business environment am I competing in? What external factors may affect the business’ ability to compete? How am I measuring success? Remember, measures of performance may change as your business matures. It’s doubtful whether you will be able to answer these questions on your own – involving your professional advisers, your fellow directors and your senior staff will all help to make your review more effective. Analyse and Interpret Business Vision, Mission, Values and Objectives A good starting point for your review is to evaluate what you actually intended to do your strategic plan. The strategic planning is an organisation’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy. In order to provide an informed and effective evaluation, the Strategic Planning Committee and the Board should undergo training in evaluating the strategic plan. Next, annual planning should be started early – like the day after the previous review. Data should be gathered on an ongoing basis by compiling activities and outcomes from quarterly reports, board documents, board meeting minutes, and action plans. The overall goal of evaluating a strategic plan is to determine how well it has been implemented (including, who, what, when, where, and how activities were accomplished). The process should include two phases: 1. Ongoing monitoring of trends that may be impacting the progress, or lack of progress, towards goals. This will include identifying individual goals and objectives that are progressing well according to the plan, and those that are falling short, and suggesting any actions or adjustments that may be needed for the plan to succeed. 2. A final evaluation after the plan is concluded to determine overall success and impact. Evaluation procedure should include: Who is responsible for reporting, gathering, and evaluating data How data is collected What data needs to be collected BSBMGT617  Develop and Implement a Business Plan4 Element 1: Develop Business Plan A timeline for completion Quantitative and qualitative measurements The ongoing monitoring effort should answer: ○○ Are the activities being implemented as planned? Why or why not? What is facilitating or impeding implementation? ○○ Did all activities fit within the plan objectives? ○○ Are there goal areas, objectives, or strategies that are receiving less attention than others? ○○ What do the results indicate as to how to improve? ○○ Is there a need to change the plan? The final evaluative report should focus on: What did we do (i.e. performance)? How well did the plan perform? Which goals and objectives were met? What actions were successfully implemented? How well did we do (i.e. quality)? Were the goals and objectives relevant to the ongoing needs of the organisation? Was it adaptable in the face of change? Did it matter (i.e. impact)? Did the plan meet the needs of the organisation? What was the measurable impact upon stakeholders? Business Goals To remain successful it’s vital that you regularly set time aside to ask the following key strategic questions: Where is the business now? Where is it going? How is it going to get there? Often businesses are able to work out where they want to go but don’t draw up a roadmap of how to get there. If this happens, a business will lack the direction needed to turn even carefully laid plans into reality. At the end of any review process, therefore, it’s vital that work plans are prepared to put the new ideas into place and that a timetable is set. Regularly reviewing how the new plan is working and allowing for any teething problems or necessary adjustments is important too. Today’s business environment is exceptionally dynamic and it is likely that you will need regular reviews, updates and revisions to your business plan in order to maintain business success. 5BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Continuous Improvement In addition, a simple planning cycle can greatly enhance your ability to make changes in your business routine if necessary. Good planning helps you anticipate problems and adapt to change more easily. Conduct a Competitor Analysis When you have been running your business for a while, you will probably have a clearer idea of your competitors. Gathering more information may cost time, money and effort, but there are many benefits to knowing more about what your competition is doing. What you need to know The type of competitor information that will be really useful to you depends on the type of business you are and the market you’re operating in. Things you want to know about your competitors include: Who they are What they offer How they price their products What the profile and numbers of their customers are compared to yours What their competitive advantages and disadvantages are compared to yours What their reaction to your entry into the market or any product or price changes might be. You will probably find it useful to do a SWOT (strengths, weaknesses, opportunities, threats) analysis. This will show you how you are doing in relation to the market in general and your closest competitors more specifically. A SWOT analysis helps identify the strengths, weaknesses, opportunities and threats in a given situation. In this case we are looking at sales potential. The SWOT Analysis will allow you to visualise both external and external factors that can have an impact on your business in a very simple way. This tool can help you examine the external factors which affect your business, opportunities and threats, and the internal factors, strengths and weaknesses. There are three main ways to find out more about your competitors: What they say about themselves This can be found in sales literature, advertisements, press releases, shared suppliers, exhibitions, websites, competitor visits, organisational accounts. BSBMGT617  Develop and Implement a Business Plan6 Element 1: Develop Business Plan What other people say about them You could find out more about their sales people and customers, or look at local directories, the Internet, newspapers, analysts’ reports, market research companies. Commissioned market research If you need more detailed information, you might want to commission specific market research. Review Your Financial Position Businesses often fail because of poor financial management or a lack of planning. Often the business plan that was used to help raise finance is put on a shelf to gather dust. When it comes to your business’ success, therefore, developing and implementing sound financial and management systems (or paying someone to do it for you) is vital. Updating your original business plan is a good place to start. When reviewing your finances, you might want to consider the following: Cash flow This is the balance of all of the money flowing in and out of your business. Make sure that your forecast is regularly reviewed and updated. Working capital Have your requirements changed? If so, explain the reasons for any movement. Compare this to the industry norm. If necessary, take steps to source additional capital. Cost base Keep your costs under constant review. Make sure that your costs are covered in your sale price – but don’t expect your customers to pay for any business inefficiencies. Borrowing What is the position of any lines of credit or loans? Are there more appropriate or cheaper forms of finance you could use? Growth Do you have plans in place to adapt your financing to accommodate your business’ changing needs and growth? 7BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Assess Your Business Efficiency Many new businesses work in a short-term, reactive way. This offers flexibility – but can cost time and money as you move from getting the business going to concentrating on growing and developing it. The best option is to balance your ability to respond rapidly with a clear overall strategy. This will help you decide whether the actions you take are appropriate or not. At this stage you should ask yourself if there are any internal factors holding the business back, and if so, what can you do about them? Consider the various aspects of your business in turn. Premises ○○ What are your long-term commitments to the property? ○○ What are the advantages and disadvantages of your current location? ○○ Do you have room to grow, or the flexibility to cut back if necessary? ○○ If you move premises, what will be the cost? Will there be long-term cost savings and improvements in efficiency? Facilities ○○ If you manufacture products, how modern is your equipment? ○○ What is the capacity of your current facility compared to existing and forecast demand? ○○ How will you fund any improvements? ○○ How do you compare with your competition? Information technology ○○ What management information and other IT systems do you have in place? ○○ Will these systems cater for any proposed expansion? ○○ Will they really make a difference to the quality of product or service your business provides? If they don’t, can you change them to make sure they do? ○○ Do you make best use of technology such as wireless networking and mobile telephony to allow for more flexible working? People and skills ○○ Do you have the right people to achieve your objectives? ○○ Do they know what is expected of them? ○○ Do you operate a training and development plan? ○○ Do you pay as well as the competition? ○○ Do you suffer from high staff turnover? Are staff motivated and satisfied? BSBMGT617  Develop and Implement a Business Plan8 Element 1: Develop Business Plan Professional skills ○○ Do you have the right management team in place for growth? ○○ Do you have the skills available that you need in areas such as human resources, sales and IT? ○○ Do your staff need new or improved skills or to be retrained? Revisiting Your Markets A business review offers you the opportunity to stand back from the activity outlined in your plan and look again at factors such as: Changes in your market New and emerging services Changes in your customers’ needs External factors such as the economy, imports and new technology Changes in competitive activity. Asking your customers for feedback on your business’ performance will help to identify where improvements can be made to your products or services, your staffing levels or your business procedures. At the same time, it is important to remember that while reviews of this kind can be very effective, they can give your business the flexibility it needs to beat off stiff competition at short notice. It is important to think through the implications of any changes. In the new phase of your business you’ll need to plan your finances and resourcing carefully at all times. Conduct a Customer and Market Analysis When you started your business, you probably devised a marketing plan as part of your overall business plan. This would have defined the market in which you intended to sell and targeted the nature and geographical distribution of your customers. From that strategy you would have been able to produce a marketing plan to help you meet your objectives. When you’re reviewing your business’ performance, you’ll need to assess your customer base and market positioning as a key part of the process. You should update your marketing plan at least as often as your business plan. Next you need to evaluate what you actually do – your core activities, the products that you make, or services that you provide. Ask yourself what makes them successful, how they could be improved and whether you could launch new or complementary products or services. 9BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan It’s useful to address these questions: How effectively are you matching your goods and services to your customers’ needs? If you’re not quite sure what those needs are, you could carry out further market or customer analysis. Which of your products and services are succeeding? Which aren’t performing as planned? Decide which products and services offer both a high percentage of sales and high profit margins. What’s really behind the problems of a product or service? Consider areas such as pricing, marketing, sales and after-sales service, design, packaging and systems during your review. Look for ‘quick wins’ that give you the breathing space to make more fundamental improvements. Are you reviewing costs frequently? Are you keeping a close enough eye on your direct costs, your overheads and your assets? Are there different ways of doing things or new materials you could use that would lower your costs? Consider ways in which you can negotiate better deals with your suppliers. Answering these questions will give you the basis on which to improve performance and profitability. Expert Input You may find at this stage in your business’ development that you need external skills to help you with the changes you have to make. In this case you might consider: Employing skilled consultants in areas where you cannot afford to develop in-house skills Appointing an experienced non-executive director who can provide a regular, impartial assessment of what you are doing Using a management consultant to help you identify how you can strengthen or change your management structure to grow the business. BSBMGT617  Develop and Implement a Business Plan10 Element 1: Develop Business Plan Business-Analysis Models There are a number of useful business-analysis models that may help you think more strategically about your business. SWOT Analysis A SWOT analysis is a tool for identifying internal strengths and weaknesses in your business as well as external opportunities and threats. As you go through the tool and think about how you can use it, you will see that it’s not just for looking at the business as a whole, but as a starting point for developing strategies for sale teams, service departments and individuals. ○○ Strengths The best place to start when you are looking to develop a sales plan is to understand what your sales team is good at. You want to take advantage of what you do well and build on it. So let’s take a look at your strengths. 1. What is it that your sales team does better than anyone else in the market? 2. What do your current customers see as a benefit they get from working with your sales people? 3. What strength does your current product line offer that your competitors can’t? 4. Do you have unique sales processes, products, or services that set you apart? These are sample question you may want to answer, but try to come up with questions of your own. You want to ask about your USP (unique selling proposition) that you see as a strength or your ability to service your accounts with one day service. When you look to uncover your strengths, ask others within your organisation to come up with strengths they feel the organisation has and don’t forget to ask for help outside the organisation. Talk with you current customers and ask what they like about your organisation, talk with vendors, or anyone else that can help give you a clear picture of your organisation’s strengths. ○○ Weaknesses Every sales team has them and you need to identify them early and take action. It is pointless to sit back and hope things will get better or that weaknesses will miraculously disappear. They don’t. You have to face them, gain an understanding of why the weaknesses exist and look for ways to strengthen them. So write them down. 1. What does the competition see as your biggest weakness? 2. What do your current customers see as a weakness in your sales style, product, or service? 3. 4. When you look at your ‘Lost Sale’ report, why did you lose those sales? What is it that you try to avoid? 11BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Understanding your weaknesses provides you with a road map of the areas within your organisation you must work on, and areas that you must limit exposure to until they are strengthened. Remember that your strengths and weaknesses are both internal factors that you as a sales manager could have direct control over. Once you understand what they are take every action possible to build on your strengths and eliminate your weaknesses. ○○ Opportunities Opportunity is usually all around us, but in the hustle of day-to-day business we walk right past it. It can come when a competitor stumbles, a new technology appears, the perfect new manager walks past your door, or a new law impacts on your customers. So let’s look and see what opportunities you see. 1. What do you see as a good opportunity that will strengthen your organisation? 2. In what segment of your market are clients consistently making purchases? 3. What high margin products or services can you expose to a broader market? 4. 5. Have you noticed a change you can exploit in your market? Is there a market you can enter with greater profits potential? As you look at opportunity it’s important that they move hand-in-hand with your strengths. It’s not a good opportunity if it doesn’t fit your organisation. ○○ Threats Threats like opportunities are external factors that have a major impact on your business. As you manoeuvre your business around the challenges of the market place you have to understand where danger exists or you will find yourself in trouble. So what are the threats to your business? 1. Does more that 25% of your sales revenue come from less than 10% of your customer base? 2. 3. 4. 5. What reoccurring challenges do your sales people face? Is there a competitor that consistently beats you in the marketplace? How much bad debt are you carrying? Are sales meeting expectations? Threats, like opportunities, are external factors that you must constantly look for, examine and find ways to deal with them. The SWOT Analysis is one of the best tools you can use to help sales managers develop a true understanding of where you are and where you need to be, before you try to take things to the next level. This exercise is also a great way for you and your team to develop consensus and a way to understand exactly where your organisation stands before starting to chart a new course. BSBMGT617  Develop and Implement a Business Plan12 Element 1: Develop Business Plan SWOT Example Strengths What is working well? What is making a difference? What value do we bring to our customers? What do we do really well? What differentiates us from our competitors? Weaknesses What is not working as well as it could? What is not making a difference? What processes need to be improved? What hinders our sales? What do our customers dislike? Opportunities What needs to be improved or changed? What should we stop doing? What should we start doing? What is missing that we need to be doing? Threats What is threatening our business? Are there customer or technological threats? What are the economic threats that could impact on us? What financial threats could impact on us? Costs? Revenues? Debt? Cash flow? “Progress has little to do with speed, but much to do with direction.” Author Unknown 13BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Porter’s Five Forces relating to Competition Michael Porter has identified five forces that determine the intrinsic long-run attractiveness of a market or market segment. The marketing manager seeking to develop an edge over competitors can use this model to better understand the industry context in which the organisation operates. From ‘The Five Competitive Forces That Shape Strategy’ by Michael E. Porter, Harvard Business Review, January 2008 1. Segment Rivalry A segment is unattractive if it already contains numerous, strong, or aggressive competitors. It’s even more unattractive if it’s stable or declining, or if competitors have high stakes in staying in the segment. These conditions will lead to frequent price wars, advertising battles, and new-product introductions and will make it expensive to compete. For example, pharmaceutical organisations when a patent expires on a drug 2. New Entrants The most attractive segment is one in which entry barriers are high and exit barriers are low. (Few new firms can enter the industry, and poorly performing firms can easily exit.) When both entry and exit barriers are high, profit BSBMGT617  Develop and Implement a Business Plan14 Element 1: Develop Business Plan potential is high, but firms face more risk because poorer-performing firms stay in and fight it out. When both entry and exit barriers are low, firms easily enter and leave the industry and the returns are stable and low. The worst case is when entry barriers are low and exit barriers are high. Here firms enter during good times but find it hard to leave during bad times and the result is chronic overcapacity and depressed earnings for all. Examples include airline companies. 3. Substitute Products A segment is unattractive when there are actual or potential substitutes for the product. Substitutes place a limit on prices and on profits. If technology advances or competition increases in these substitute industries, prices and profits are likely to fall. Examples include vitamin producers. 4. Bargaining Power of Buyers A segment is unattractive if buyers possess strong or growing bargaining power. The rise of retail giants has led some analysts to conclude that the potential profitability of packaged-goods organisations will become curtailed. Buyers’ bargaining power grows when they become more concentrated or organised, when the product represents a significant fraction of the buyers’ costs, when the product is undifferentiated, when buyers’ switching costs are low, when buyers are price sensitive because of low profits, or when they can integrate upstream. To protect themselves, sellers might select buyers who have the least power to negotiate or switch suppliers. A better defence consists of developing superior offers that strong buyers cannot refuse. Examples include woolworths and Coles. 5. Bargaining Power of Suppliers A segment is unattractive if the company’s suppliers are able to raise prices or reduce quantity supplied. Suppliers tend to be powerful when they are concentrated or organised, when there are few substitutes, when the supplied product is an important input, when the costs of switching suppliers are high, and when the suppliers can integrate downstream. The best defences are to build win-win relationships with suppliers or use multiple supply sources. Oil organisations who are at the mercy of the limited amount of oil reserves and the actions of oil-supplying cartels such as OPEC. Critical Success Factor Analysis Critical Success Factors (CSF), also known as Key Result Areas (KRA), are the areas of your business that are absolutely essential to its success. By identifying and communicating these CSFs, you can help ensure your business is well-focused and avoids wasting effort and resources on less important areas. By making CSFs explicit and communicating them with everyone involved, you can help keep the business and project on track towards common aims and goals. 15BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan As a common point of reference, CSFs help everyone in the team to know exactly what’s most important. And this helps people perform their own work in the right context and so pull together towards the same overall aims. CSFs are strongly related to the mission and strategic goals of your business whereas the mission and goals focus on the aims and what is to be achieved, CSFs focus on the most important areas and get to the very heart of both what is to be achieved and how you will achieve it. Here are the steps: 1. Establish your business’ mission and strategic goals. 2. For each strategic goal, ask yourself ‘what area of business activity is essential to achieve this goal?’ The answers to the question are your candidate CSFs. 3. Evaluate the list of CSFs to find the absolute essential elements for achieving success – these are your Critical Success Factors. As you identify and evaluate candidate CSFs, you may uncover some new strategic objectives or more detailed objectives. So you may need to define your mission, objectives and CSFs repeatedly until you clearly define your intention. 4. Identify how you will monitor and measure each of the CSFs. 5. Communicate your CSFs along with the other important elements of your business strategy. 6. Keep monitoring and revaluating your CSFs to ensure you keep progressing towards your aims. Indeed, whilst CSFs are sometimes less tangible than measurable goals, it is useful to identify as specifically as possible how you can measure or monitor each one. To make sure you consider all types of possible CSFs, you can use Rockart’s CSF types as a checklist. ○○ Industry These factors result from specific industry characteristics. These are the things that the organisation must do to remain competitive. ○○ Environmental These factors result from macro-environmental influences on an organisation. Things like the business climate, the economy, competitors, and technological advancements are included in this category. ○○ Strategic These factors result from the specific competitive strategy chosen by the organisation. The way in which the organisation chooses to position themselves, market themselves, whether they are high volume low cost or low volume high cost producers, etc. ○○ Temporal These factors result from the organisation’s internal forces. Specific barriers, challenges, directions, and influences will determine these CSFs. BSBMGT617  Develop and Implement a Business Plan16 Element 1: Develop Business Plan Let’s look at an example. Consider a retail store ‘Bodgy Brothers’ Bakery’, whose mission is: ‘To become the number one bakery in Small Town by selling the highest quality, freshest bakery, from oven to customer in under 4 hours on 85% of our range and with 98% customer satisfaction.’ The strategic objectives of Bodgy Brothers’ Bakery are to: ○○ Gain market share locally of 25% ○○ Achieve fresh supplies of ‘oven to customer’ in 4 hours for 85% of products ○○ Sustain a customer satisfaction rate of 98% ○○ Expand product range to attract more customers ○○ Have sufficient store space to accommodate the range of products that customers want. In order to identify possible CSFs, we must examine the mission and objectives and see which areas of the business need attention so that they can be achieved. We can start by brainstorming what the Critical Success Factors might be: ObjectiveCritical Success FactorsIncrease competitiveness versus otherGain market share locally of 25%local storesAttract new customersAchieve fresh supplies of ‘oven toSustain successful relationships withcustomer’ in 4 hours for 85% of productslocal suppliersSustain a customer satisfaction rate ofRetain staff and keep up customer-98%focused trainingExpand product range to attract moreSource new products locallycustomersExtend store space to accommodate newSecure financing for expansionManage building work and any disruptionproducts and customersto the business Once you have a list of CSFs, it’s time to consider what is absolutely essential and so identify the truly Critical Success Factors. And this is certainly the case for Bodgy Brothers’ Bakery. The first CSF that we identify from the list is relationships with local suppliers. This is absolutely essential to ensure freshness and to source new products. Another CSF is to attract new customers. Without new customers, the store will be unable to expand to increase market share. A third CSF is financing for expansion. The store’s objectives cannot be met without the funds to invest in expanding the store space. 17BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Critical Success Factors, Missions and Goals for Bodgy Brothers’ Bakery Mission To become the number 1 bakery in Small Town Critical Success Factors Gain market share locally of 25% Achieve fresh supplies of ‘oven to customer’ in 4 hours for 85% of products Sustain a customer satisfaction rate of 98% Expand product range to attract more customers Have sufficient store space to accommodate the range of products that customers want. Goals Gain market shate locally of 25% Achieve fresh supplies of ‘oven to customer’ in 4 hours for 85% of products Sustain a customer satisfaction rate of 98% Expand product range to attract more customers Extend store space to accommodate new products and customers Consult With Key Stakeholders The process of consultation is an extremely important concept in the context of managing an organisation. Organisations exist to create value for stakeholders and consultation is a process by which the management of the organisation aims to better understand the needs, wants and expectations of stakeholders, so that value can be created. Key stakeholders may include: Business partners or financiers Customers Shareholders Staff Technical experts or advisers. Consultation is an active process in which organisation management opens formal and informal communication channels between the organisation and its stakeholders. BSBMGT617  Develop and Implement a Business Plan18 Element 1: Develop Business Plan These formal and informal communication channels might include: Open meetings e.g. stakeholders are invited to come to an open meeting or a series of meetings Surveys e.g. stakeholders are invited to complete a survey (paper or online type) Focus group e.g. a select cross-section of stakeholders, small in number, are invited to attend a meeting or series of meetings Invitation to send a written response e.g. stakeholders are invited to submit comments in writing on a proposal or plan Informal meetings e.g. organisation management might mingle with people at an event and canvass certain ideas to see what response they get. The purpose of consultation is three-fold: 1. To invite stakeholders to provide advice to the management of the organisation about their needs, wants and expectations. In other words, tell the organisation what value it wants and how it can provide this value. 2. To invite stakeholders to comment on plans which have been created by organisation management to provide this value requested by stakeholders. 3. To quell any criticism that organisation management have not taken account of, and to demonstrate that management are listening to the needs of stakeholders in developing strategic and operational plans. There is a widespread view that if a plan is conceived without proper consultation with stakeholders then it has far less chance of successful implementation. There is a clear need for anyone responsible for the formulation of a plan to consult with all persons who will be affected by the plan. For example, a budget for any area of organisation operation should not be set without consultation with people who work in that area of operation. Likewise, management should not construct a plan for a new program without consultation with those people who will be using that program. Setting an operational plan without consultation disadvantages the organisation because: A lack of consultation fails to take advantage of all available knowledge and expertise A lack of consultation makes people feel left out and creates negativity toward the emerging plan. 19BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Review Market Requirements for the Product or Service, Profile Customer Needs and Research Pricing Options Product or Service Products and services have a life cycle. Older, long-established products or services eventually become less popular, while in contrast, the demand for new, more modern goods or services usually increases quite rapidly after they are launched. Because most organisations understand the different product / service life cycle stages, and that the products or services they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow. The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products. 1. Introduction Stage This stage of the cycle could be the most expensive for an organisation launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector. 2. Growth Stage The growth stage is typically characterised by a strong growth in sales and profits, and because the organisation can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for organisations to invest more money in the promotional activity to maximise the potential of this growth stage. 3. Maturity Stage During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products, so businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage. 4. Decline Stage Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for organisations to make some profit by switching to less-expensive production methods and cheaper markets. BSBMGT617  Develop and Implement a Business Plan20 Element 1: Develop Business Plan It’s possible to provide examples of various products to illustrate the different stages of the product life cycle more clearly. Here is the example of watching recorded television and the various stages of each method: 1. 2. 3. 4. Introduction – 3D TVs Growth – Blueray discs/DVR Maturity – DVD Decline – Video cassette The idea of the product life cycle has been around for some time, and it is an important principle manufacturers need to understand in order to make a profit and stay in business. However, the key to successful manufacturing or service delivery is not just understanding this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle. You need to review where your product is on the cycle and make adjustments to keep current. Customer Needs Understanding customers is the key to giving them good service. To give good customer care you must deliver what you promise. But great customer care involves getting to know your customers so well that you can anticipate their needs and exceed their expectations. To understand your customers well, you need to be attentive to them whenever you are in contact with them. The potential rewards are great: you can increase customer loyalty and bring in new business through positive word-of-mouth recommendations. There are three main ways to understand your customers better. One is to put yourself in their shoes and try and look at your business from their point of view. The second way is to collect and analyse data in order to shed light on their buying behaviour. The third way is simply to ask them what they think. Understanding customers requires you to take a hard look at the points at which your customers have contact with your business. These include meetings and visits, phone calls, correspondence and deliveries. Do your premises look scruffy, is your receptionist unfriendly or do your phones ring off the hook? All these things can make a customer feel disappointed. The most common customer complaint is being kept waiting. If you’re slow to return calls or fulfil orders, then you’re in danger of losing customers. Above all, customers want you to deliver what you have promised and surpass their expectations. 21BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan As a small business, you can offer a personal service. If you remember a customer’s name and recall your last conversation with them, you will have brightened up their day. They will also tell their friends what a great service you provide. Understanding your customers and improving your service must be a priority throughout your business. Everyone from the front desk to the delivery staff should focus on exceeding customer expectations. Using Data to Understand Your Customers Your database or customer relationship management system (CRM) holds valuable information about your customers that will help you to understand their needs. Investigate the data you hold on your customers, it can tell you a lot. Look for patterns so you can see when your customers typically make orders. You can also use the data to analyse your performance. Check how quickly you’re responding to orders or delivering goods. CRM systems are more sophisticated than simple mailing lists. Because they hold information about customer behaviour and preferences they can improve customer satisfaction and retention. They can help you to identify customer needs more effectively, allowing you to up-sell and cross-sell, increasing profitability. Conduct a customer satisfaction survey and you will make your customers feel valued. You will also gain valuable insights. But don’t ask for feedback if you are not prepared to make changes. When you do make improvements, tell your customers what you have done as a result of their feedback. Customer surveys can tell you things you may not know, including human factors such as staff behaviour. Not everyone complains when they are dissatisfied. Instead, they tell their friends about their bad experience and take their business elsewhere. Unless you proactively consult your customers, you may never discover where you are going wrong. As well as asking for feedback, set up a customer contact program to ensure you keep in touch with your clients. A good customer contact strategy will allow you to listen to your customers and tell them more about what you offer. Pricing Options Few businesses conduct any type of regular analysis of pricing performance. In order to review and decide the best approach to pricing, managers need to ask themselves up to five questions: 1. The first question is: Where is this product or service on the life cycle? You need to understand what the normal customer reaction to buying would be according to how much access and knowledge they have of the product or service. BSBMGT617  Develop and Implement a Business Plan22 Element 1: Develop Business Plan 2. Then probe how customers value the product: Is there a significant disparity among customers in their valuations of your product? If the answer is no,managers are probably better off retaining control and continuing with a single fixed price. 3. However, if there are significant differences in the way different customer groups value a product, there are potential advantages to customer participation, which leads to the second question: Can my organisation document these differences in valuation with confidence? If the answer is yes and the key drivers of valueare known and observable, managers hoping to squeeze more revenue out of the market can go ahead and personalise prices. However, if the value drivers are not known or are difficult to ascertain, managers may want to develop a price menu that encourages customers to reveal their valuations through their choices. 4. In practice, many organisations lack the necessary know-how to implement personalised prices or design clever price menus. If that’s the case, managers should consider a third question: Do customers understand what our product is worth to them? If managers fear that the answer is no and that customers arenot sufficiently educated about the product, then they need a pricing model such as negotiation that allows organisations to interact with prospective customers. 5. On the other hand, if customers are already familiar with the offerings of the organisation yet have different valuations for them that are hard for the organisation to identify up front; managers need to advance to the final question: Is demand for my product likely to outstrip its supply? If the answer is ‘yes,’ then it may make sense to run an auction, which is meant to identify the people who place the highest valuations on your offerings. If the answer is ‘perhaps,’ however, managers need to be wary about entering into a situation in which demand uncertainty puts excessive downward pressure on prices. In other words, they need to get a sense of demand before settling on a price. In this context, a name-your-own-price auction model could be appropriate. If the answer is ‘no,’ an organisation may want to explore a pay-as-you-wish model — particularly for products such as digital goods, where there are hardly any incremental costs associated with selling additional units. When there’s plenty of supply and varying customer valuations, organisations want to motivate customers to reveal their true valuations — valuations that are otherwise hard to observe and measure. Pay-as-you-wish grants customers the autonomy to express their individual preferences. Price setting, or more formally, price orientation, concerns the methods that organisations use to determine final selling prices. Organisations differ wildly in their approach to this. How could organisations go about rethinking their pricing strategy? The first area that may require a fundamental rethink is the way organisations set prices. Many organisations have a significant opportunity to differentiate themselves from competitors by learning how to create, quantify, communicate and capture customer value by implementing customer value-based pricing strategies. 23BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan A second area concerns price realisation — that is, the process of translating list prices into profitable pocket prices. Here, many organisations lack the information systems, negotiation capabilities, and incentive schemes, controlling tools and sales personnel confidence leading to superior price realisation. Small improvements in any of these areas lead to quantifiable results very quickly. CEO involvement is a critical requirement for ensuring that changes in an organisation’s pricing strategy lead to a true change in the organisation’s culture. At the same time, the CEO must ensure that these changes are not seen, as too many failed initiatives are, ‘just another project.’ CEO championing, bundled with organisational confidence, new capabilities and transformational change are key catalysts to obtaining pricing power. If you sense that your organisation is leaving good money on the table and struggling to convert product differentiation into revenue and profits, then you should consider enlisting the help of unlikely partners: your customers. To be sure, the thought of working with customers on a critical business activity such as pricing can be unnerving for managers. However, in the same spirit that organisations today are recruiting customers to improve product design and marketing communications, managers need to recognise that it’s those who purchase an organisation’s products or services who ultimately determine what they are worth. While customers need not have sole discretion over these activities, they can certainly provide important input. It’s critical to recognise that outsourcing pricing to customers isn’t an all-or-nothing proposition: managers can select pricing models ranging from complete oversight to complete delegation. The trick is to choose an approach that is suited to the characteristics of the market you’re in and that limits the costs, real and potential that may arise. Pricing models, especially those that have emerged, thanks to advances in information technology, are often difficult to interpret and even harder to compare. As a result, many businesses have a hard time deciding which approach to pricing plays to their market strengths. Should they try to maintain control over pricing? Should they collaborate with their customers? Or should they let customers call the shots? To clarify the choices, we outline three general philosophies to pricing: 1. Organisational-Imposed Pricing For most businesses, the default approach is to have a single fixed price and sell to anyone willing to pay that amount. Although there may be different views within an organisation about how to arrive at the ‘right’ price, there is no question that the organisation has full control under this approach and that customers are bystanders. In practice, however, using single fixed prices is economically inefficient. To the extent that there are variations in how different customers value products, selecting one number implies that those prepared to pay more in effect receive a discount; those willing to pay less (but who are still profitable) are turned away. BSBMGT617  Develop and Implement a Business Plan24 Element 1: Develop Business Plan One way to address this inefficiency is to introduce variability into pricing. This is the domain of personalised prices, in which data analytics help organisations identify characteristics of the purchase environment or the customer’s profile and behaviour that impact willingness to pay. Woolworths uses a shopper’s geographical location to fine-tune prices. But the success of personalised prices depends on at least three factors. First, organisations need abundant, high-quality data. Second, they need to overcome the organisational challenges that are likely to surface; dedication to advanced analytics may require changing management styles and human resource policies. And third, organisations should be prepared for pushback from customers claiming that the approach isn’t fair. Although personalisation can lead to lower prices, just as it can lead to higher prices, setting prices based on contextual and customer information can be controversial. Coca-Cola, for example, encountered criticism for proposing to vary prices based on outdoor temperatures. Practically speaking, few businesses have thought through the downside of this approach to pricing. The second route to greater pricing efficiency is to create a price menu. This involves managing multiple price points and giving customers choices. Managers have two options: first, they can develop a portfolio of products that are different on one or more dimensions — a ‘good-better-best’ assortment; second, they can offer one basic product but configure the price menu around a set of purchase requirements that benefit the organisation. Volkswagen Group uses the product portfolio approach to market an array of cars under brands that include Volkswagen, Audi, Porsche and Lamborghini. Customers can select the combination of brand, price and features that yields the greatest amount of net satisfaction for them. From the organisation’s perspective, the trick is to put together an assortment that not only achieves the highest sales volume possible but also maximises revenue by motivating customers to select the car that’s priced closest to their willingness to pay. Organisations pursuing the purchase-requirement approach give customers the opportunity to pay lower prices when they meet certain requirements such as buying sooner, in greater quantity or more frequently. Such behaviours are intended to add to the bottom line. The issue for customers, of course, is whether the potential savings justify the cost or inconvenience of doing what’s required. For organisations, a big concern is cannibalisation: giving discounts to customers who in fact would be willing to pay the full price. The reality is that price menus can be frustrating for customers. If customers struggle to make sense of an assortment of choices and are unsure which product suits them best, they may think that the seller isn’t being forthright and is trying to manipulate them to buy more than they want or need. This reaction is fairly common with services such as mobile telecommunications, banking and energy. Similarly, if customers feel that meeting the purchase requirement is out of their control, then they react against the seller in an attempt to reassert their autonomy. 25BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan 2. Collaborative Pricing As organisations become more interested in interactive approaches to pricing, there are three collaborative models worth noting: Auctions Auctions encourage prospective buyers to bid against each other for the right to make a purchase. Auctions are commonly associated with the sale of antiques, collectibles, fine art and other unique items. However, this model has become increasingly popular in other familiar settings. Google uses auctions to encourage advertisers to bid for a higher rank in the sponsored links section of search results. Procurement departments use business-market auctions to increase price competition among suppliers; governments use auctions to license scarce resources such as mineral rights to the private sector. Name-Your-Own-Price Auctions Name-your-own-price is a particular type of auction that warrants a separate mention. Here individuals suggest the purchase price and organisations accept, reject or counter with a higher price. Buyers take the initiative: they approach the organisation, demonstrate interest and rule out all but a small range of agreeable prices. Second, transaction details can be opaque if the organisation relies on an intermediary to shield its or the product’s identity. Indeed, channelling sales through online retailers allows organisations to trim inventory without cannibalising their full-price sales through conventional channels. Negotiation Pricing through negotiation is the most interactive collaborative model. Negotiations are common in business markets, where face-to-face consultative selling makes sense, and also in some consumer markets. For example, in financial services, banks publish standard interest rates for their loan products, but they give branch managers latitude to adjust loans on an individual basis. In the hotel industry, room rates are set, but individual hotel directors can negotiate with travel agents, tour operators and other important intermediaries. Generally speaking, negotiations are more private and less structured than auctions, and the tenor of the interpersonal relationships shapes the outcome. A negotiation, therefore, is more than a mechanism for setting prices; it is a process by which parties learn about each other and, potentially, about the product for sale. Of course, it is also an opportunity for the different parties to exert influence and gain the upper hand. In the end, customers with good negotiating skills can have a significant say in the final price. Customer-Imposed Pricing Under pay-as-you-wish, the organisation delegates responsibility for pricing to the customer. Customers can pay any amount they desire (even zero), and sellers are committed to honouring their obligation. BSBMGT617  Develop and Implement a Business Plan26 Element 1: Develop Business Plan Wikipedia, the popular online encyclopaedia, has used this model since it was founded in 2001. But pay-as-you-wish pricing gained visibility in October 2007 when Radiohead, an English rock band, released the digital download version of its In Rainbows album without a set price. The obvious limitation of pay-as-you-wish is that customers may be tempted to undermine sellers with unreasonably low prices. One way organisations can mitigate this risk is to set a price floor. Generous, a new pay-as-you-wish social e-commerce platform, offers exactly this feature. Another option is to suggest a payment amount or to develop guidelines to nudge customers toward a higher figure. The right kind of customer participation in pricing offers organisations important advantages — particularly the ability to capture value and achieve greater differentiation and can increase customer engagement, broaden the scope for customisation, signal an organisation’s values or the quality of its product and relax competition. Nevertheless, customer participation is not a case where ‘more is better.’ It requires managers to read their environment, carefully consider all the additional costs and then evaluate the options. Many managers complain that once-healthy markets have grown stale, that too many products are being copied and that there are fewer opportunities for meaningful innovation than there used to be. Working with customers to develop new pricing strategies offers one way for organisations to create a new sense of excitement. Selecting the right pricing model is conditioned by two important considerations. First, every situation is different: each market has its unique challenges, and what’s suited to one environment may not work elsewhere. Therefore, it’s useful to have a sense for which models are best suited to a particular environment. Second, any decision to move away from a single fixed price is likely to entail several costs. In addition to expenses directly associated with implementing and managing a new pricing process, there are risks that a more complex process may trigger errors. Develop Performance Objectives and Measures through Consultation with Key Stakeholders Performance objectives are specific goals that: Are in addition to day-to-day accountabilities Align with the organisational competencies/core values Will be accomplished within the evaluation period Will contribute to the employee’s success, as well as the overall success of team, unit and organisation. 27BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Performance objectives and measures may relate to: Efficiency measures Input measures such as staff time or dollars allocated Outcome measures Qualitative indicators such as feedback from customers, effect on the wider market or competitors, staff reports Quantitative indicators, such as numbers produced and sold, turnover, customer satisfaction ranking, lower staff turnover. Performance objectives are designed to guide employees to ‘stretch’ and further their development while enhancing the organisational performance. Performance objectives should include specific targets that are: Dictated by the current strategy of team or unit Measurable and expressed in quantities, percentages, or dollars Weighted according to their relative importance to the job. Being able to measure performance objectives is a critical piece in the successful completion of any performance development plan and accountability review. Therefore, a key element to writing a successful performance objective is to identify the means of measurement. Identify the right measurement for assessing performance and determining progress towards performance objective(s). Components for creating effective measurements: Measurements should be focused on results, not effort. Effort is very hard to objectively quantify Don’t measure everything! Focus measurement on what is critical to achieving the desired results Measurements should be quantitative (numbers, dollars, percentages, etc.) Define a clear, solid definition of what the measurement is, how it will be executed, and when it will be tracked. The SMART Model The SMART Model is a tool used to ensure that agreed-upon objective(s) will lead to the desired result and can be measured and/or evaluated. Writing clear, specific objectives is a critical step in maximising the performance development process. Answering the questions in the following chart will help you write an objective that meets the SMART Model criteria. BSBMGT617  Develop and Implement a Business Plan28 Element 1: Develop Business Plan If any of your objectives do not conform to these criteria, rewrite the objective to make sure it does. Identify Financial, Human and Physical Resource Requirements for the Business A resource is any physical or virtual entity of limited availability; a stock or supply of money, materials, staff and other assets that can be drawn on by a person or organisation in order to function effectively. There are six broad types of resources: 1. 2. Financial: this includes money, shares and other assets Physical: refers to tangible property such as equipment and office space 3. Human resources: includes the knowledge, training, experience, as well as the time of the business owner and employees 29BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan 4. Technological: are embodied in a process, system or physical transformation, e.g. unique software products and tailored information system architecture 5. Reputation: encompasses the perceptions that people in the business’ environment have of the business 6. Organisational: includes the business’ structure, routines and systems. Taking time to review business requirements before launching into a new project is a critical component of good planning and protecting organisational assets. This also applies to conducting an annual review ensure of the security of the organisation and to enable you to capitalise on any unexpected opportunities. Clearly defining the current process, the problems that need to be focused on, and working with the people in the organisation before beginning your project will allow for a much more streamlined process once you start, with better odds for success. There are many excellent reasons to determine accurate and comprehensive organisational requirements. Knowing how to go about collecting critical information and where to find it can present many problems. Luckily, there are ways that critical business requirements can be determined and focused to help keep your project on track and on budget. Here are several options to think about: Interview Key Stakeholders In The Organisation Key stakeholders in your organisation comprise a group of people who will be affected by any changes that you make. These stakeholders may not only be upper management, but may encompass customer service departments, supply chain personnel and laterally placed teams. Take time to identify everyone who will need to be informed of your changes. Once you have identified key stakeholders, it is time to interview them. Take the time to prepare for the meeting by thinking through their possible concerns and the goals for the organisation as a whole. Prepare yourself and give stakeholders clear information as to what the goal of the meeting is so they have time to think through their responses. Carefully crafting an agenda and sticking to it will help to prevent the meeting from diverging into other organisational issues and provide the best information to assist you or your business analyst in evaluating what requirements are ultimately recommended by the group. Conduct Focus Groups within the Business Focus groups can be powerful in determining organisational requirements. When building your group, not only can you select people who are current stakeholders, but you can choose those who can help the process move forward or who will be directly affected by changes that the organisation is considering. Again, a key to making sure that the focus group works effectively is to ensure that members stay on topic and answer the questions that have been prepared so that you end up with the precise data you need. This is also a prime opportunity to discuss how hand-overs can be managed and what challenges the focus group can envision during that process. BSBMGT617  Develop and Implement a Business Plan30 Element 1: Develop Business Plan Schedule a Brainstorming Meeting Brainstorming is an effective tool when looking for a broad range of ideas regarding the specific circumstances that your organisation is facing. Brainstorming typically generates many quick ideas that may or may not be part of the organisational requirements. Ask people with knowledge of the problem to attend the brainstorming session and then develop a method to evaluate the ideas that are gathered. Remember that brainstorming is focused on generating ideas; encourage the group to evaluate these later. Also called a ‘use’ case; you can work through the problem or process in a very hypothetical way to not only gather functional requirements, but see how the current system as a whole operates. Complete a Survey Cycle Surveys are tremendously helpful if there are scheduling conflicts between team members that prevent them from meeting face-to-face. Prior to sending out surveys, make sure you take time to decide who should receive them and what format will work best for your team. Most importantly, running a small test survey will give you a chance to see if the survey truly gives you the information you are looking for. It gives you time to make any adjustments that may be deemed necessary. Once all of the data about the problem has been received, it is time to determine the final organisational requirements before starting the project. This can be the most critical step of the process. Requirements must be precise and firm. Vague, unmeasurable goals can lead to unknowns, which leads to cost and time overruns. Though it does take effort, using as much detail as possible will increase the odds that the project as a whole will succeed. Once a general list has been compiled, take time to prioritise those requirements. Which aspects of the project are critical? Which are unnecessary options? At this point, you may need to meet with stakeholders in order to determine if there are any conflicts and resolve them as quickly as possible. If you are concerned about correctly evaluating your organisational requirements, using the skills of an in-house or independent business analyst can be extremely helpful and can provide insight into things that you or your team may have missed. Business analysts can add value to an organisation in that they are trained to evaluate and plan organisational requirements, making the implementation of a new project a streamlined process through their unique perspective. Business analysts are trained to look carefully at return on investment (ROI). ROI can be quantified as either a reduction in cost or an increase in profitability to your organisation. With the assistance of a business analyst, every obvious and not-so-obvious cost will be counted to make sure that the plan that is created makes sense for the business as a whole in the short and long term. These costs include more than just technology and staffing costs. They include the costs of stakeholder investment and negative influences on other working teams and processes. 31BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan While a business analyst’s goal is to reduce overall project costs, doing so can be a challenge in itself. To limit costs, a business analyst may consider not only which changes are necessary, but those that aren’t needed and simply waste money or cause confusion. Business analysts also work with stakeholders to make sure that they stay focused on the most important requirements, keeping them on task and on track. Examining organisational requirements can now make any organisation run more smoothly with better outcomes. Though determining organisational requirements can sometimes be a lengthy process, it can make all the difference in today’s challenging organisational environment. With proper planning, the assistance of a business analyst and a sharp eye for details, determining organisational requirements can be a creative, fulfilling process that sets the groundwork for a successful technology upgrade or project start that guarantees positive momentum for your organisation’s future. Consider Any Permits or Licences That May Be Required For New Activity If you are changing or adding new business activities, consider whether any existing licensing that you may hold is current. New activities may require new licensing. The Australian Business Licence and Information Service (ABLIS) is the place to start. ABLIS will help you find the government licences, permits, approvals, registrations, codes of practice, standards and guidelines you need to know about to meet your compliance responsibilities. If you are starting, operating, growing, or closing a business, ABLIS will reduce the run-around and give you more time to get on with running your business. On their website you can find out about which government licences and registrations apply to your business, and create and download a personalised report containing: A summary of state or territory, local and Australian government requirements relevant to your business Information about licence fees, how to apply, periods of cover and renewals How to access application and renewal forms Where to go for more help and information. You should discuss any changes or additions with your lawyer and your accountant. They will be in the best position to provide reliable advice on what you need to know about ABLIS. BSBMGT617  Develop and Implement a Business Plan32 Element 1: Develop Business Plan Write Business Plan You are finally ready to write your new business plan. The business plan should include: A description of the business Business products and services Marketing activity Financial indicators Productivity and performance targets for key result areas such as: ○○ Profit And Loss (P&L) As the name suggests, this is an account compiled at the end of a period, usually the financial year, showing revenue and expense items and indicating gross and net profit or loss. Your investors in particular will want this. It is delivered in a standard format and usually completed by your accountant or accounting unit. ○○ Community Awareness Or Branding This is the extent to which a brand is recognised by potential customers, and is correctly associated with a particular product. It is expressed usually as a percentage of the target market. Brand awareness is the primary goal of advertising in the early months or years of a product’s introduction so should be measured if possible for benchmarking purposes. ○○ Environmental Impact This is the impact on the environment created by your business plan activities. Environmental impact is a ‘hot’ topic in the minds of the public and should be addressed in your plan. ○○ Governance Business plan governance is the management framework within which business plan decisions are made. Plan governance is a critical element of any business plan. While the accountabilities and responsibilities associated with an organisation’s business as usual activities are laid down in their organisational governance arrangements, seldom does an equivalent framework exist to govern the development of its business plan. For instance, the organisational chart provides a good indication of who in the organisation is responsible for any particular operational activity the organisation conducts. But unless an organisation has specifically developed a business plan governance policy, no such chart is likely to exist for business plan development activity. Therefore, the role of business plan governance is to provide a decision-making framework that is logical, robust and repeatable to govern an organisation’s business planning. In this way, an organisation will have a structured approach to conducting both its ‘business as usual’ activities and its business changes, plans and activities. 33BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan ○○ Quality Quality is related to an organisation’s mission to ensure that it delivers quality products and services that will keep customers satisfied. Developing and implementing such a plan is good for business, because only customers who are satisfied with what you offer will be happy to do business with you, and will therefore, keep coming back. Assuring both your old and prospective customers of your commitment to delivering top quality products and services is a very important concept. This will allow you to build a good brand name that will help ensure that your organisation or venture will remain in business for years to come. Satisfied customers will easily become brand loyalists who will always keep returning to do business with you when you offer them great products or services at a good price. In order to ensure that you continue to produce and release fantastic products at a great value, you need to have an organised and thorough quality management plan. The first thing to do to create an efficient system is to identify your objectives. These objectives should properly reflect the needs of your customers. You can use client feedback as your source for identifying these needs. After knowing what your customers need, it is easy to identify what your quality system should accomplish. Next, you need to define the various employee roles and responsibilities. This simply involves deciding who takes charge of what. Team members should be encouraged to ask questions to ensure good communication and thus, a proper understanding of what needs to be done and what is expected of each of them. When an employee knows what tasks to do, and how to do them without question, employee morale will increase, which will also increase customer satisfaction by default. Customers want to deal with happy and competent employees; this will only help the bottom line. After defining roles and responsibilities, it is important to design an organisational structure. Most organisations set up several teams to take charge of various standards and responsibilities. Each team is in charge of making sure a product value standard is met. This team must also work in harmony with all other teams. If this is not done well, team efforts may conflict and contradict each other, which will make the attainment of set objectives difficult. The final step is setting up the schedule definition and plan task. This step involves defining specific tasks that must be accomplished and deciding the specific time frame in which they must be completed. With this final step done, you would have defined the quality management objectives that need to be meet, decided who takes charge of what, defined the structure and set up specific goals and timeframes for this to take place. ○○ Sales How the organisation makes money is a large area of importance in the business plan. Obviously this will need to be measured and reported on as part of the evaluation of the plan. It may take more time to realise profits and this must be addressed and explained with the relevant figures. BSBMGT617  Develop and Implement a Business Plan34 Element 1: Develop Business Plan ○○ Triple Bottom Line (TBL) The TBL is an accounting framework that incorporates three dimensions of performance: social, environmental and financial. This differs from traditional reporting frameworks as it includes ecological (or environmental) and social measures that can be difficult to assign appropriate means of measurement. The TBL dimensions are also commonly called the 3Ps: people, planet and profits. The 3Ps do not have a common unit of measure. Profits are measured in dollars. What is social capital measured in? What about environmental or ecological health? Finding a common unit of measurement is one challenge. Economic Measures Economic variables ought to be variables that deal with the bottom line and the flow of money. It could look at income or expenditures, taxes, business climate factors, employment, and business diversity factors. Specific examples include: Personal income Cost of underemployment Establishment churn Establishment sizes Job growth Employment distribution by sector Percentage of firms in each sector Revenue by sector contributing to gross state product Environmental Measures Environmental variables should represent measurements of natural resources and reflect potential influences to its viability. It could incorporate air and water quality, energy consumption, natural resources, solid and toxic waste, and land use/land cover. Ideally, having long-range trends available for each of the environmental variables would help organisations identify the impacts a project or policy would have on the area. Specific examples include: Sulphur dioxide concentration Concentration of nitrogen oxides Selected priority pollutants Excessive nutrients Electricity consumption Fossil fuel consumption Solid waste management Hazardous waste management Change­ in land use/land cover 35BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Social Measures Social variables refer to social dimensions of a community or region and could include measurements of education, equity and access to social resources, health and well-being, quality of life, and social capital. The examples listed below are a small snippet of potential variables: Unemployment rate Female labour force participation rate Median household income Relative poverty Percentage of population with a post-secondary degree or certificate Average commute time Violent crimes per capita Health-adjusted life expectancy ○○ Workforce Workforce planning is a set of procedures that an organisation can implement to maintain the most efficient employee/management team possible, maximising profits and ensuring long-term success. If you already have a good plan, you may choose to merely update it. Ensure that you cover all areas and check every word for accuracy. Credibility is lost quickly when unintended errors are spotted. If you are planning to create a new business plan, we will run through the steps here to get you started. On the simulated business website, Bounce Fitness in the Documents folder under the Small Business tab, you will find the detailed instructions for writing a business planand a fillable template. If you print a copy and plan how you will complete each area, you will find that the task is not as onerous as trying to create one without a model. Types of Plans Business plans can be divided roughly into four separate types. There are very short plans, or mini plans. There are working plans, presentation plans and even electronic plans. They require very different amounts of labour and not always with proportionately different results. That is to say, a more elaborate plan is not guaranteed to be superior to an abbreviated one; it will depend on what you want to use it for. The Mini Plan A mini-plan may consist of 1 to 10 pages and should include at least cursory attention to such key matters as business concept, financing needs, marketing plan and financial statements, especially cash flow, income projection and BSBMGT617  Develop and Implement a Business Plan36 Element 1: Develop Business Plan balance sheet. It’s a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It can also serve as a valuable prelude to a full-length plan later on. Be careful about misusing a mini plan. It’s not intended to substitute for a full-length plan. If you send a mini plan to an investor who’s looking for a comprehensive one, you’re only going to look foolish. The Working Plan A working plan is a tool to be used to operate your business. It has to be long on detail but may be short on presentation. As with a mini plan, you can probably have a somewhat higher degree of candour and informality when preparing a working plan. A plan intended strictly for internal use may also omit some elements that would be important in one aimed at someone outside the firm. You probably don’t need to include an appendix with résumés of key executives, for example. Nor would a working plan especially benefit from, say, product photos. Fit and finish are liable to be quite different in a working plan. It’s not essential that a working plan be printed on high-quality paper and enclosed in a fancy binder. An old three-ring binder with ‘Plan’ scrawled across it with a felt-tip marker will serve quite well. Internal consistency of facts and figures is just as crucial with a working plan as with one aimed at outsiders. You don’t have to be as careful, however, about such things as typos in the text, perfectly conforming to business style, being consistent with date formats and so on. This document is like an old pair of khakis you wear into the office on Saturdays or that one ancient delivery truck that never seems to break down. It’s there to be used, not admired. The Presentation Plan If you take a working plan, with its low stress on cosmetics and impression, and twist the knob to boost the amount of attention paid to its looks, you’ll wind up with a presentation plan. This plan is suitable for showing to bankers, investors and others outside the company. Almost all the information in a presentation plan is going to be the same as your working plan, although it may be styled somewhat differently. For instance, you should use standard business vocabulary, omitting the informal jargon, slang and shorthand that’s so useful in the workplace and is appropriate in a working plan. Remember, these readers won’t be familiar with your operation. Unlike the working plan, this plan isn’t being used as a reminder but as an introduction. You’ll also have to include some added elements. Among investors’ requirements for due diligence is information on all competitive threats and risks. Even if you consider some to be of only peripheral significance, you still need to address these concerns by providing the information. The big difference between the presentation and working plans is in the details of appearance and polish. A working plan may be run off on the office printer and stapled together at one corner. A presentation plan should be printed by a high- 37BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan quality printer, probably using colour. It must be bound expertly into a booklet that is durable and easy to read. It should include graphics such as charts, graphs, tables and illustrations. It’s essential that a presentation plan be accurate and internally consistent. A mistake here could be construed as a misrepresentation by an unsympathetic outsider. At best, it will make you look less than careful. If the plan’s summary describes a need for $40,000 in financing, but the cash flow projection shows $50,000 in financing coming in during the first year, you might think, “Oops! Forgot to update that summary to show the new numbers.” The investor you’re asking to lend the cash, however, is unlikely to be so charitable. The Electronic Plan The majority of business plans are composed on a computer of some kind, then printed out and presented in hard copy. But more and more business information that once was transferred between parties only on paper is now sent electronically. So you may find it appropriate to have an electronic version of your plan available. An electronic plan can be handy for presentations to a group using a data projector, for example, or for satisfying the demands of a discriminating investor who wants to be able to delve deeply into the underpinnings of complex spreadsheets. BSBMGT617  Develop and Implement a Business Plan38 Element 1: Develop Business Plan Activity One Using the business plan on the simulated business website, Bounce Fitness in the Documents folder under the Small Business tab, break into groups and brainstormwhat should be included. Provide feedback to each other to ensure that the best ideas are incorporated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BSBMGT617  Develop and Implement a Business Plan39 Element 1: Develop Business Plan Key Points Element 1 If available always review and evaluate pre-existing strategic, business and operational plans. The business vision, mission, values and objectives must be analysed and interpreted. Key stakeholders must be consulted. Market requirements for the product or service, profile customer needs and research pricing options must be reviewed. Develop performance objectives and measures in consultation with key stakeholders. Identify financial, human and physical resource requirements for the business. Consider if any permits or licences may be required for new activity. Write the business plan. 40BSBMGT617  Develop and Implement a Business Plan Element 1: Develop Business Plan Element 1 – ‘True’ or ‘False’ Quiz TrueFalseCritical Success Factors (CSF), also known as Key Result Areas (KRA), are the areas of your business that are absolutely essential to its successYou 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 nextA good starting point for your review is to evaluate what you actually intended to do – your strategic plan.Strategic planning is internal planning to decide how plans will be implemented, the deadlines for the coming year and what responsibilities employees will be assigned.Often the business plan that was used to help raise finance is put on a shelf to gather dust.When it comes to your business’ success, developing and implementing sound financial and management systems (or paying someone to do it for you) is vital. Updating your original business plan is a good place to start.The SWOT Analysis is one of the best tools you can use to help sales managers develop a true understanding of where you are and where you need to be, before you try to take things to the next level.Michael Porter has identified seven forces that determine the intrinsic long-run attractiveness of a market or market segment.You need to revisit and update your business plan when introducing a new strategy.By identifying and communicating CSFs, you can help ensure your Q business is well-focused and avoids wasting effort and resources on less important areas. BSBMGT617  Develop and Implement a Business Plan41 LEMENT 2: Monitor Performance Performance Criteria Element 2 2.1 Communicate business plan to all relevant parties and ensure understanding of performance requirements and timeframes 2.2 Ensure skilled labour is available to implement plan 2.3 Test performance measurement systems and refine, if necessary 2.4 Ensure timely reports on all key aspects of the business are available, user-friendly and balanced in terms of financial and non-financial performance 2.5 Report system failures, product failures and variances to the business plan as they occur BSBMGT617  Develop and Implement a Business Plan42 Element 2: Monitor Performance Monitor Performance Communicate Business Plan to All Relevant Parties and Ensure Understanding of Performance Requirements and Timeframes For many organisations a key factor for success is the ability of the managers within the business to communicate both the strategic and practical intent of the business plan. It requires managers to not only have the ability to communicate the strategic intent, or vision of the business, but also to breakdown complex business concepts and jargon into practical initiatives. To do this effectively managers need to be able to conduct quality conversations based on the business situations that they are confronting. These conversations broadly fit into the following types: The ability to provide clear direction to staff on the required activities within their responsibility and how they relate to the overall business strategy The ability to provide succinct, timely and effective feedback to employees on both performance and behaviour to keep plans on track and ensure goals are achieved The ability to manage conflict conversations, required when plans go off course with peers, direct reports, next level managers, customers and other stakeholders, where there may be significant differences of opinion or high emotions present The ability to engage and align staff with a strategic vision and direction. Like all business competencies, communication is a learnt skill rather than an inherent ability. The key differentiator between managers who clearly communicate plans versus those who do not is their ability to understand when and how to undertake each type of conversation. Leadership development and communication skills training is an essential step in any business plan execution to equip mangers with the right skills to drive performance and outcomes. Many managers experience challenges trying to breakdown silo-based behaviours and thinking; this can slow down productivity and block the lines of communication. These silos often run along business units, geographic or functional lines. e.g. sales, operations, finance, production, etc. As a way of breaking down these silos organisations have invested significant resources in interdependent business planning processes where the inputs and outputs required from different areas of the organisation are clearly identified and detailed in the respective business plans. The effectiveness of these initiatives has not been as significant as hoped by organisations, and root cause analysis has identified that this may be due to an inability or unwillingness of managers from different functional areas within organisations to effectively communicate the needs and expectations required to meet the initiatives in their business plans. 43BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance In some cases this is a legacy of historical command and control management structures. Or it may be the result of cultural issues such as an unwillingness to convey what might be considered as negative feedback or through a fear of offending the other party. Communicating change is required when executing a new business plan, so understanding and knowing how to communicate the changes and drive performance during the change period is integral to successfully delivering on the business plan. A structured behavioural change program is also often required for the wider business in order to manage performance and instil resilience in employees. Addressing the change requires both a framework to manage the conversation and also a process to drive behavioural change. While the first is straightforward, the second is considerably more challenging. Behavioural change requires managers to confront many ingrained beliefs about themselves and how business is done. Many managers are highly uncomfortable confronting these issues and beliefs and consequently leadership training and development plays an important role in being able to effectively communicate change processes. A change program needs to provide both a framework within which to conduct conversations and also a safe environment in which to practise the new skills that have been developed. The payoff for an investment in leadership development is significant. The ability to manage robust conversations that involve differences of opinion to a point where a decision is made and action taken is a crucial skill for any effective manager. Of equal importance is the ability to do this in such a way as to maintain strong and productive professional relationships with key stakeholders, many over which the manager will not have formal authority. Getting the numbers and initiatives into the business plan is only the beginning of the process. The ability to have the conversations required to get things done is the critical aspect of executing any business plan. How skilled are the managers of your organisation in communicating the strategic initiatives and change processes? Developing a communication plan can help with the process. Communication Plan What is a communication plan? When should it be developed? Where does the information in the plan come from? How do you write one, and why should you bother? Overworked and underfunded communicators have a right to ask whether the work involved in developing a plan is worth it. The answer is yes because a written communication plan will: Give your day-to-day work a focus Help you set priorities Provide you with a sense of order and control BSBMGT617  Develop and Implement a Business Plan44 Element 2: Monitor Performance Help get the executive and staff to support your program Protect you against last-minute, seat-of-the-pants demands from staff Prevent you from feeling overwhelmed, offering instead peace of mind. What Is a Communication Plan? A communication plan is a written document that describes What you want to accomplish with your organisational communication (your objectives) Ways in which those objectives can be accomplished (your goals or program of work) Who the target audience for your communication is How you will accomplish your objectives (the tools and timetable) How you will measure the results of your communication strategy (evaluation). Communications include all written, spoken, and electronic interaction with the stakeholder audiences. A communication plan encompasses objectives, goals, and tools for communicating, including but not limited to: Periodic print publications Online communications Meeting and conference materials Media relations and public relations materials Marketing and sales tools Legal and legislative documents Incoming communications, including reception procedures and voice mail content Committee and board communiques Corporate identity materials, including letterhead, logo, and envelopes Surveys Certificates and awards Annual reports Signage Speeches Invoices. When to Develop the Plan The best time to develop your plan is in conjunction with your business planning process. 45BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Where to Get Information Information for the plan generally comes from five sources: 1. Your organisation’s mission statement 2. A communication audit 3. Membership surveys and focus groups 4. Committee and leadership input 5. Discussions with other staff, teams and units. How to Develop the Plan Take the following steps to develop an effective communication plan: 1. Conduct A Research-Communication Audit Evaluate your current communications. Some organisations hire firms to do this, but the price for the objectivity of an outside auditor can be high. To conduct your own audit, find out: What every staff person is doing in the way of communication What each communication activity is designed to achieve How effective each activity is. To get the answers you need: Brainstorm with communication staff Talk to other units Interview the chief executive Interview the board Talk to communication committee members Survey the stakeholders Conduct focus groups Obtain feedback from others such as suppliers or consumers. Define Objectives Armed with information from your audit, define your overall communication objectives – the results you want to achieve. These might include: Excellent service to stakeholders Stakeholder loyalty Centralisation of the communication effort Increased employee teamwork Improved product delivery BSBMGT617  Develop and Implement a Business Plan46 Element 2: Monitor Performance Visibility for the organisation and the industry or profession it represents 3. 4. Influence on government, media, consumers, and other audiences. Define Audiences List all the audiences that your organisation might contact, attempt to influence, or serve. Included on your list may be Staff Investors Financiers Banks B2B Customers Related organisations Adversarial organisations Educators Federal, regional, and local governments Related industries The media. Define Goals With stated objectives, and considering available human and financial resources, define goals; in other words, a program of work for each objective. Goals include general programs, products, or services that you will use to achieve stated objectives. For example, if the objective is to improve customer service, goals might include improved training for the customer-service function, and a reference manual for handling complaints. 5. Identify Tools Decide what tools will be used to accomplish stated goals. These tools can be anything from a simple flyer to a glossy magazine. Don’t overlook less obvious tools such as posters, report covers, Rolodex cards, and websites. Brainstorm ideas with your staff. 6. Establish A Timetable Once objectives, goals, audiences, and tools have been identified, quantify the results in a calendar grid that outlines roughly what projects will be accomplished and when. Remember to separate objectives into logical time periods (monthly, weekly, etc). 7. Evaluate The Result Build into your plan a method for measuring results. Your evaluation might take the form of • A monthly report on work in progress 47BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Formalised department reports for presentation at staff meetings Periodic briefings of the chief staff executive and the department heads A year-end summary for the annual report. A plan is always best shared. Make sure you share it with your team. You will only have a positive, active, participative culture if you share your plans with your team so they can share your vision for the business’s direction. By enlisting their input your plan will also be tested. A plan that’s kept in your head is just a good idea. A plan that is communicated, questioned and tested is a true business plan. Sharing A Plan Brings It To Life Developing a written communication plan will take effort. Plan on three or four days the first time you do it. Once in place, the written plan will smooth your job, earn you respect from the CEO and other staff, help set work priorities, protect you from last-minute demands, and bring a semblance of order to your chaotic job. If you now go to the website of the simulated business, Bounce Fitness / Documents folder, open the Administrative tab. You will see the Communication Plan Template and the Communication Plan Fillable Template. The Communication Plan Template contains advice and guidance about creating your plan. The Communication Plan Fillable Template allows you to enter your information and print a copy. Have a lookat them now so you will know what they contain as we continue. Ensure Skilled Labour Is Available To Implement Plan Next you need to detail your staffing requirements. This section generally includes the following items: Number of employees needed over a three year period The titles of each staff member The skills required for each position When each staff member is needed (hiring date) Duties and responsibilities of each employee Forecasted salaries for each position Whether casual staff will be needed from time to time. BSBMGT617  Develop and Implement a Business Plan48 Element 2: Monitor Performance If your business requires the hiring of highly specialised individuals, you may decide to add a brief statement about how you plan to recruit, select and hire employees. If training of employees is of prime importance to your business, be sure to discuss who and how they will need to be trained. Also, many business plan writers provide a brief statement outlining corporate policies regarding employee motivation, incentives and benefits. You may also decide to discuss your organisation’s planned managerial style, its corporate culture, and organisational structure. With new developments in technology and access to global markets, organisations must be willing to adapt in order to remain competitive and capitalise on new opportunities. Many organisations are being restructured, often eliminating middle-management to increase efficiency. Organisations are also modifying their attitudes and approach to business. Some are experimenting with new styles of management and the use of teams to increase productivity. No matter what changes are occurring in business, one thing remains constant: the need for human resources. Employees are the foundation of your organisation. They have the potential to make it a prosperous success, or miserable failure. Regardless of whether you own a small business employing two people, or manage a large organisation employing two hundred people, it is essential to hire the best person for the job. This is especially important in service industries and small enterprises, where your only link to customers is your staff. The manner in which you treat customers will determine the reputation of your business. At one time or another, you have probably vowed never to shop at a particular business ever again, due to the poor service you received. Friendly, helpful employees lead to customer satisfaction, which means returning customers. The ability of employees to reach their full potential relies on your ability to lead and manage them properly. The accomplishments of a good staff are limited, without a good leader. The management and staffing section of a business plan usually consists of three parts. These include: Part 1 Details of your management team Part 2 Information about outside supporters and/or strategic alliances Part 3 Details of your staffing requirements. The individuals who read business plans are certainly aware of the failure rate of many business ventures. Specifically, they are conscious that one of the main reasons for business success or demise lies in the abilities of the management team, outside supporters, and staff members. Therefore, when writing this section of the business plan be sure to keep the following items in minds: Convince the reader that the owners are credit worthy and trust worthy Demonstrate that the management team has the aptitude, attitude and ability to operate the business successfully Show that the management team, all outside supporters and each staff member provide a solid balance to the business venture. 49BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Calculate the Numbers Once you’ve structured your business you need to consider your overall goals and the number of personnel required to reach those goals. In order to determine the number of employees you’ll need to meet the goals you’ve set for your business, you’ll need to apply the following equation to each unit listed in your organisational structure: C / S = P In this equation, C represents the total number of customers, S represents the total number of customers that can be served by each employee, and P represents the personnel requirements. For instance, if the number of customers for first year sales is projected at 10,110 and one marketing employee is required for every 200 customers, you would need 51 employees within the marketing department: 10,110 / 200 = 51 Once you calculate the number of employees that you’ll need for your organisation, you’ll need to determine the labour expense. The factors that need to be considered when calculating labour expense (LE) are the personnel requirements (P) for each department multiplied by the employee salary level (SL). Therefore, the equation would be: P * SL = LE BSBMGT617  Develop and Implement a Business Plan50 Element 2: Monitor Performance Using the marketing example from above, the labour expense for that department would be: 51 * $40,000 = $2,040,000 One final note to remember: It is imperative to establish credibility and position yourself as a low risk. Test Performance Measurement Systems and Refine, If Necessary Once you have decided the goals, testing whether they are appropriate and achievable is a challenge. A good place to start is by seeking feedback. Developing your business plan can be lonely, and have you deeply involved in such a way that you may miss the obvious. You may be so deep into your subject that you don’t see the plan the way an investor or other partner might. Getting an experienced outside business plan review can give you useful feedback, save time and money. Your accountant would be a good person to consider first up. If you have a marketing consultant, they also may be able to ensure that you are getting value for money! Do not let anyone else write your business plan for you and always get a business plan review. Get it critiqued by someone whose opinion you value. You want to know if the document is going to work. A detached but interested outsider’s perspective can be very helpful. But that outsider needs to have business plan experience. A business plan review should cover: Purpose of the plan – what and who it is for Structure – what is vital to include and how should it be ordered Contents – what should it cover Value proposition – convincing or not Business model – will it work How long should the document be – what to leave out or put in the appendices What financials are essential – how they should be presented and do they add up What part needs tackling first – and last What do different readers look for – investors, bankers, grant-givers, partners. 51BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Calculate Overhead Expenses Once the organisation’s operations have been planned, the expenses associated with the operation of the business can be developed and used as another test for the objectives of the business plan. These are usually referred to as overhead expenses. Overhead expenses refer to all non-labour expenses required to operate the business. Expenses can be divided into fixed (those that must be paid, usually at the same rate, regardless of the volume of business) and variable or semi-variable (those which change according to the amount of business). Overhead expenses usually include the following: Travel Maintenance and repair Equipment leases Rent Advertising and promotion Supplies Utilities Packaging and shipping Payroll taxes and benefits Uncollectible receivables Professional services Insurance Loan payments Depreciation. In order to develop the overhead expenses for the expense table used in this portion of the business plan, you need to multiply the number of employees by the expenses associated with each employee. Therefore, if NE represents the number of employees and EE is the expense per employee, the following equation can be used to calculate the sum of each overhead (OH) expense: OH = NE * EE Develop a Capital Requirements Table In addition to the expense table, you’ll also need to develop a capital requirements table that depicts the amount of money necessary to purchase the equipment you’ll use to establish and continue operations. It also illustrates the amount of depreciation your company will incur based on all equipment elements purchased with a lifetime of more than one year. BSBMGT617  Develop and Implement a Business Plan52 Element 2: Monitor Performance In order to generate the capital requirements table, you first have to establish the various elements within the business that will require capital investment. For service businesses, capital is usually tied to the various pieces of equipment used to service customers. Capital for manufacturing companies, on the other hand, is based on the equipment required in order to produce the product. Manufacturing equipment usually falls into three categories: testing equipment, assembly equipment and packaging equipment. With these capital elements in mind, you need to determine the number of units or customers, in terms of sales, that each equipment item can adequately handle. This is important because capital requirements are a product of income, which is produced through unit sales. In order to meet sales projections, a business usually has to invest money to increase production or supply better service. In the business plan, capital requirements are tied to projected sales. For instance, if the capital equipment required is capable of handling the needs of 10,000 customers at an average sale of $10 each, that would be $100,000 in sales, at which point additional capital will be required in order to purchase more equipment should the company grow beyond this point. This leads us to another factor within the capital requirements equation, and that is equipment cost. If you multiply the cost of equipment by the number of customers it can support in terms of sales, it would result in the capital requirements for that particular equipment element. Therefore, you can use an equation in which capital requirements (CR) equals sales (S) divided by number of customers (NC) supported by each equipment element, multiplied by the average sale (AS), which is then multiplied by the capital cost (CC) of the equipment element. Given these parameters, your equation would look like the following: CR = [(S / NC) * AS] * CC The capital requirements table is formed by adding all your equipment elements to generate the total new capital for that year. During the first year, total new capital is also the total capital required. For each successive year thereafter, total capital (TC) required is the sum of total new capital (NC) plus total capital (PC) from the previous year, less depreciation (D), once again, from the previous year. Therefore, your equation to arrive at total capital for each year portrayed in the capital requirements model would be: TC = NC + PC – D Keep in mind that depreciation is an expense that shows the decrease in value of the equipment throughout its effective lifetime. For many businesses, depreciation is based upon schedules that are tied to the lifetime of the equipment. Be careful when choosing the schedule that best fits your business. Depreciation is also the basis for a tax deduction as well as the flow of money for new capital. You may need to seek consultation from an expert in this area. 53BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Create a Cost of Goods Table The last table that needs to be generated in the operations and management section of your business plan is the cost of goods table. This table is used only for businesses where the product is placed into inventory. For a retail or wholesale business, cost of goods sold – or cost of sales – refers to the purchase of products for resale, i.e. the inventory. The products that are sold are logged into cost of goods as an expense of the sale, while those that aren’t sold remain in inventory. For a manufacturing firm, cost of goods is the cost incurred by the company to manufacture its product. This usually consists of three elements: 1. 2. 3. Material Labour Overheads. As in retail, the merchandise that is sold is expensed as a cost of goods, while merchandise that isn’t sold is placed in inventory. Cost of goods has to be accounted for in the operations of a business. It is an important yardstick for measuring the firm’s profitability for the cash-flow statement and income statement. In the income statement, the last stage of the manufacturing process is the item expensed as cost of goods, but it is important to document the inventory still in various stages of the manufacturing process because it represents assets to the company. This is important to determining cash flow and to generating the balance sheet. That is what the cost of goods table does. It’s one of the most complicated tables you’ll have to develop for your business plan, but it’s an integral part of portraying the flow of inventory through your operations, the placement of assets within the company, and the rate at which your inventory turns. In order to generate the cost of goods table, you need a little more information in addition to what your labour and material cost is per unit. You also need to know the total number of units sold for the year, the percentage of units which will be fully assembled, the percentage which will be partially assembled, and the percentage which will be in unassembled inventory. Much of these figures will depend on the capacity of your equipment as well as on the inventory control system you develop. Along with these factors, you also need to know at what stage the majority of the labour is performed. BSBMGT617  Develop and Implement a Business Plan54 Element 2: Monitor Performance Ensure Timely Reports on All Key Aspects of the Business Are Available, User- Friendly and Balanced in Terms of Financial and Non Financial Performance Performance Measurement Timetable The different targets and things you measure will need to be considered at different times. For example, the issues relating to business value may only be looked at once a year. However, other measures, such as risk and business development, customer service, quality, financial measures, and people capability, would normally be looked at either monthly or quarterly. Some businesses will look at them in real time, either daily or weekly. Ensure Your Measurements are Timely When looking at plan performance versus actuals, you need a reporting system that delivers the actuals in a timely manner. So if you’re looking at monthly profit as a plan measure versus a target you’ve set in the business plan, it’s no good looking at August’s profit on the 25th of September. It’s too late then, because you’re not able to do anything about it. If you’re going to look at that measure you need the figures within seven days of end of month, or sooner, because then you can make management decisions based on how you’re performing versus the plan. So, again, the planning process allows you to drive focus on your reporting and management systems and the way your staff are assisting you with those. Who needs to be involved in the measurement process? There are a number of stakeholders, including your banker and staff, who will be interested to know how you’re tracking relative to your plan. Monitoring your progress will allow you to give them certainty and confidence, or transparency, on where things are going and why they’re going the way they are. Don’t be too worried if you find the business is not sticking exactly to the plan. It’s often said that a good budget, or a good plan, is wrong the day it’s written. That is correct to a degree, because you operate in a dynamic environment. A plan is only an estimate of where you think you’ll be based on the things you can influence, but also taking account as best you can of the things you can’t influence. The beauty of the tracking process is that it forces you as a business owner to ask the important questions of yourself and your team: Why are we here versus where we expected to be in the plan? What’s changed that we didn’t expect? What’s better, what’s worse, what does that mean for the business and what we’re doing? 55BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance It institutionalises that questioning process that goes so deeply to enhance business performance, because it’s a dynamic, active process. Questioning gives life to your plan on a regular basis. When you are evaluating performance against key results indicators remember to include evaluations of: Profit and Loss (P&L) Community Awareness or Branding Environmental Impact Governance Quality Sales Triple Bottom Line (TBL) Workforce. Report System Failures, Product Failures and Variances to the Business Plan as They Occur Failure is not always bad. In organisational life it is sometimes bad, sometimes inevitable, and sometimes even good. Learning from organisational failures is anything but straightforward. The attitudes and activities required to effectively detect and analyse failures are in short supply in most organisations, and the need for context-specific learning strategies is underappreciated. Organisations need new and better ways to go beyond lessons that are superficial (Procedures weren’t followed) or self-serving (The market just wasn’t ready for our great new product). That means jettisoning old cultural beliefs and stereotypical notions of success and embracing failure’s lessons. Leaders can begin by understanding how the blame game gets in the way. Failure and fault are virtually inseparable in most organisations, and cultures. That is why so few organisations have shifted to a culture of psychological safety in which the rewards of learning from failure can be fully realised. A sophisticated understanding of failure’s causes and contexts will help to avoid the blame game and institute an effective strategy for learning from failure. Although an infinite number of things can go wrong in organisations, mistakes fall into three broad categories: preventable, complexity-related, and intelligent. 1. Preventable Failures in Predictable Operations Most failures in this category can indeed be considered ‘bad.’ They usually involve deviations from spec in the closely defined processes of high-volume or routine operations in manufacturing and services. With proper training and support, employees can follow those processes consistently. When they don’t, BSBMGT617  Develop and Implement a Business Plan56 Element 2: Monitor Performance deviance, inattention, or lack of ability is usually the reason. But in such cases, the causes can be readily identified and solutions developed. Checklists are one solution. Another solution is to build continual learning from tiny failures (small process deviations) into an approach to improvement. This is done at the Toyota factory. A team member on their assembly line who spots a problem or even a potential problem is encouraged to pull a rope, which immediately initiates a diagnostic and problem-solving process. Production continues unimpeded if the problem can be remedied in less than a minute. Otherwise, production is halted — despite the loss of revenue entailed — until the failure is understood and resolved. 2. Unavoidable Failures in Complex Systems A large number of organisational failures are due to the inherent uncertainty of work: A particular combination of needs, people, and problems may have never occurred before. Triaging patients in a hospital emergency room, responding to enemy actions on the battlefield, and running a fast-growing start-up all occur in unpredictable situations. And in complex organisations like aircraft carriers and nuclear power plants, system failure is a perpetual risk. Although serious failures can be averted by following best practices for safety and risk management, including a thorough analysis of any such events that do occur, small process failures are inevitable. To consider them bad is not just a misunderstanding of how complex systems work; it is counterproductive. Avoiding consequential failures means rapidly identifying and correcting small failures. Most accidents in hospitals result from a series of small failures that went unnoticed and unfortunately lined up in just the wrong way. 3. Intelligent Failures at the Frontier Failures in this category can rightly be considered ‘good,’ because they provide valuable new knowledge that can help an organisation leap ahead of the competition and ensure its future growth — which is why the Duke University Professor of Management Sim Sitkin calls them intelligent failures. They occur when experimentation is necessary: when answers are not knowable in advance because this exact situation hasn’t been encountered before and perhaps never will be again. Discovering new drugs, creating a radically new business, designing an innovative product, and testing customer reactions in a brand-new market are tasks that require intelligent failures. ‘Trial and error’ is a common term for the kind of experimentation needed in these settings, but it is a misnomer, because ‘error’ implies that there was a ‘right’ outcome in the first place. At the frontier, the right kind of experimentation produces good failures quickly. Managers who practise it can avoid the unintelligent failure of conducting experiments at a larger scale than necessary. The business plan will state contingencies and how these will be dealt with. However, including the organisational expectations for reporting and timeframes in the plan, policies and procedures will ensure a better response and give comfort to investors that you have considered what is in all likelihood, inevitable on varying scales of magnitude. 57BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Activity Two Using the business plan that you used in Activity One, break into groups again and brainstorm what should be included now that you had not considered before. Provide feedback to each other to ensure that the best ideas are incorporated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BSBMGT617  Develop and Implement a Business Plan58 Element 2: Monitor Performance Key Points Element 2 Communicate business plan to all of the relevant parties to ensure understanding of performance requirements and timeframes. Ensure that skilled labour is available to implement the plan. Test performance measurement systems and refine, if necessary. Ensure you produce timely reports on all key aspects of the business that are user-friendly and balanced in terms of financial and non-financial performance. Report system failures, product failures and variances to the business plan as they occur. 59BSBMGT617  Develop and Implement a Business Plan Element 2: Monitor Performance Element 2 – ‘True’ or ‘False’ Quiz TrueFalseFor many organisations a key factor for success is the ability of the managers within the business to communicate both the strategic and practical intent of the business planCommunicating change is required when executing a new business plan, so understanding and knowing how to communicate the changes and drive performance during the change period is integral to successfully delivering on the business plan.A plan is always best kept confidential and to yourself, because when you share it with your team they will want to change it.Once you have decided the goals, testing whether they are appropriate and achievable is a challenge.For a retail or wholesale business, cost of goods sold – or cost of sales – refers to the purchase of products for resale, i.e. the inventory.The products that are sold are logged into cost of goods as an expense of the sale, while those that aren’t sold remain in inventory.The expense table illustrates the amount of depreciation your company will incur based on all equipment elements purchased with a lifetime of more than one year.The different targets and things you measure will need to be considered at different times.Failure within an organisation is always bad.Employees are in an eager state of transition. BSBMGT617  Develop and Implement a Business Plan60 Element 1: TITLE ELEMENT 3: Respond to Performance Data Performance Criteria Element 3 3.1 Analyse performance reports against planned objectives 3.2 Review performance indicators and refine if necessary 3.3 Ensure groups and individuals contributing to under performance are coached, and provide training where appropriate 3.4 Review system processes and work methods regularly as part of continuous improvement BSBMGT617  Develop and Implement a Business Plan61 Element 3: Respond to Performance Data Respond to Performance Data Analyse Performance Reports against Planned Objectives Businesses large and small analyse reports to better understand trends, review past performance and predict future performance. Reports may be analysed by management team members or specialised analysts who are highly skilled in business intelligence interpretation. Performance reports may include quantitative data such as sales results, marketing campaign outcomes, or qualitative data such as customer survey comments. Effective performance analysis requires a step-by-step process that starts with goal setting and ends with a summary of findings and an action plan. Performance data is usually analysed in these steps: 1. Determine the Purpose or Goals of Your Analysis If you recently hired a new reporting analyst and have been asked to check their work, the purpose of your analysis may be to uncover errors or problems. If company sales are trending downward, the purpose of your analysis may be to find the root causes of the poor performance. Or you may just be checking your performance against the objectives of your business plan. 2. Determine the Timeframe for Your Analysis You may want to compare performance this year to performance last year or from a specific date to the current date. Ensure that your performance timeframe is long enough to identify trends and meet your analysis goals. 3. Gather Data and Reports that Align with Your Goals and Timeframe If you are using Microsoft Excel, consider hiding or excluding data elements that do not apply. The sorting, filtering and pivot table functions may also be very helpful. 4. Review the Data and Reports, and Look for Information Related to Your Analysis Goals Attempt to find patterns, elements that stand out, significant changes, and numbers that appear to be too high or too low. It may be helpful to use a manual or online highlighter, and/or note taking, so you can remember and refer back to anything that catches your eye. 5. Interpret the Information Identify and document the trends you uncovered when you reviewed the data and reports. Draw out the findings that are most important and directly align with your analysis goals. 6. Summarise Your Findings in a Memo, Report or Email Start with an executive summary that describes your analysis and highlights the key findings. Include the appropriate level of detail and your recommendations for next steps. 6262BSBMGT617  Develop and Implement a Business Plan Element 3: Respond to Performance Data Review Performance Indicators and Refine If Necessary Once the performance reports have been analysed, it is necessary to understand variances. There are many, many reasons why the performance indicators established in the business plan may not have been met or even been exceeded. But the reason in both cases must be found. It may be that the performance indicator needs to be refined. If the goals were too high, they may need to be scaled back a little and lifted incrementally. If there appears to be a need to change a performance indicator, it should be discussed with those involved in that particular area and an agreed change made. All changes must then be updated as soon as possible on an existing business plan and key stakeholders (banks, accountants and investors for example) informed. Ensure Groups and Individuals Contributing to Under Performance Are Coached, and Provide Training Where Appropriate What is Performance Coaching? Coaching refers to informal on-the-job and off-the-job advice and training to improve performance. Performance coaching is: A series of conversations that are designed and conducted to enhance someone’s wellbeing or performance A process that both parties enter into willingly with clear expectations and agreements on how the process will work A relationship, or partnership, that allows anything to be asked, said or considered Based on the premise that performance in any field can be enhanced by creating a partnership and setting aside time to explore in conversation how performance might be taken to a new level. Performance coaching can be described as a series of guided conversations that enable the individual being coached to discover and implement personal solutions to challenging issues or areas of performance. These solutions, because they are intrinsic to the one being coached are more likely to succeed and endure than solutions imposed externally. BSBMGT617  Develop and Implement a Business Plan63 Element 3: Respond to Performance Data Coaching is… Listening actively Asking questions that cause new thinking and possible actions Hearing limitations in the other person’s speaking A place where people can think out loud Getting the most value and learning from an experience Acknowledging people for who they are and what they produce Generating possibility and keeping it alive A way of allowing people to change how they are relating to something A place to vent, experiment and play with ideas Confidential A supportive relationship A structure for making things happen. “High achievement always takes place in the framework of high expectation.” Jack Kinder 64BSBMGT617  Develop and Implement a Business Plan Element 3: Respond to Performance Data Coaching is not… Giving advice, being the expert or having the answers Counselling Fixing people Doing it for them Policing or getting people to work harder A close, personal relationship A replacement for supervision or management. Employee Training Employee training is essential for an organisation’s success. Despite the importance of training, a trainer can encounter resistance from both employees and managers. Both groups may claim that training is taking them away from their work. However, a trainer can combat this by demonstrating that training is actually a crucial part of employees’ and managers’ work. Training is crucial because it: Educates workers about the effective use of technology Ensures competitive edge in the market place Promotes safety and health among employees Creates opportunities for career development and personal growth, an important factor in retaining workers Helps employers comply with laws and regulations Improves productivity and profitability. Training presents a prime opportunity to expand the knowledge base of all employees, but many employers find the development opportunities expensive. Most employees have some weaknesses in their workplace skills. A training program allows you to strengthen those skills that each employee needs to improve. A development program brings all employees to a higher level so they all have similar skills and knowledge. This helps reduce any weak links within the organisation where staff rely heavily on others to complete basic work tasks. Providing the necessary training creates an overall knowledgeable staff with employees who can take over for one another as needed, work on teams or work independently without constant help and supervision from others. BSBMGT617  Develop and Implement a Business Plan65 Element 3: Respond to Performance Data An employee who receives the necessary training is better able to perform their job. They become more aware of safety practices and proper procedures for basic tasks. The training may also build the employee’s confidence because they have a stronger understanding of the industry and the responsibilities of their job. This confidence may push them to perform even better and think of new ideas that help them excel. Continuous training also keeps your employees on the cutting edge of industry developments. Employees who are competent and on top of changing industry standards help your organisation hold a position as a leader and strong competitor within the industry. A structured training and development program ensures that employees have a consistent experience and background knowledge. The consistency is particularly relevant for the company’s basic policies and procedures. All employees need to be aware of the expectations and procedures within the company. This includes safety, discrimination and administrative tasks. Putting all employees through regular training in these areas ensures that all staff members at least have exposure to the information. Employees with access to training and development programs have the advantage over employees in other organisations that are left to seek out training opportunities on their own. The investment in training that an organisation makes shows the employees they are valued. The training creates a supportive workplace. Employees may gain access to training they wouldn’t have otherwise known about or sought out themselves. Employees who feel appreciated and challenged through training opportunities may feel more satisfaction toward their jobs, building loyalty to the organisation. Review System Processes and Work Methods Regularly as Part of Continuous Improvement When presented with an overburdened or inefficient process it’s tempting to throw more resources at the problem; be that staff time or investment in new systems. Carrying out a system process review enables a review of processes and then makes improvements to make them more efficient and effective with less wasted effort and more time spent on valuable work. A system process review should deliver an understanding of how a process is currently performed, the technology/systems that support the process and the people involved. A review should also help to highlight problem areas and opportunities for change. Put simply, what are you trying to do? How are you doing it? What does and doesn’t work? How might it be done better? Every system process should consider at the start whether it would be helpful to review the processes involved in the area. Effective system process review and improvement can make or break an objective, and often some of the biggest benefits come from the process changes. 66BSBMGT617  Develop and Implement a Business Plan Element 3: Respond to Performance Data There are many reasons why you might want to do this but you need to be sure how the review fits in with your organisational strategy. It is also particularly important to understand how a business change project fits in with your organisational culture and values. Methods such as a SWOT analyses are very useful in considering the context in which you are operating and the arising strengths, weaknesses, opportunities and threats. With most process reviews, a certain amount of anxiety and fear is unavoidably introduced for the staff involved in the process under review. If it is suggested a process should be reviewed then by inference there is a suggestion that it may not be as efficient or effective as it might be. Just mentioning the possibility that a process might be reviewed will imply criticism to some. One way to avoid this is to foster a culture of continuous or regular reviews of organisational process. Once reviews are accepted as a routine process in their own right, reaction to an imminent review becomes “Ah, it’s time to review this one again” rather than “Do they think I’m not pulling my weight?” We have already discussed above how processes can change incrementally over time. In the majority of cases the focus of the process shifts incrementally from clients to staff as process workers introduce small changes to make their tasks easier. Undertaking periodic reviews helps to keep the focus firmly on the needs and requirements of the client or learner. BSBMGT617  Develop and Implement a Business Plan67 Element 3: Respond to Performance Data Activity Three Using the business plan that you used in Activity One and Two, break into groups again and brainstorm what should be included now that you had not considered before. Provide feedback to each other to ensure that the best ideas are incorporated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BSBMGT617  Develop and Implement a Business Plan68 Element 3: Respond to Performance Data Key Points Element 3 Always analyse performance reports against planned objectives. Always review performance indicators and refine if necessary. Ensure groups and individuals contributing to under performance are coached, and provide training where appropriate. Review the system processes and work methods regularly as part of the continuous improvement program. 69BSBMGT617  Develop and Implement a Business Plan Element 3: Respond to Performance Data Element 3 – ‘True’ or ‘False’ Quiz TrueFalseBusinesses large and small analyse reports to better understand trends, review past performance and predict future performance.Reports may be analysed by management team members or specialised analysts who are highly skilled in business intelligence interpretation.Performance reports may include quantitative data such as sales results Q or marketing campaign outcomes, or qualitative data such as customer survey comments.Effective performance analysis requires taking a broad overview and not letting detail impede the goal setting.Once the performance reports have been analysed, it is necessary to understand variances.There are only a few reasons why the performance indicators established in the business plan may not have been met or even been exceeded.If there appears to be a need to change a performance indicator, it should be discussed with those involved in that particular area and an agreed change made.All changes must be tested before updating an existing business plan Q and key stakeholders (banks, accountants and investors, for example) informed.Training presents a prime opportunity to expand the knowledge base of all employees, but many employers find the development opportunitiesAn employee who receives the necessary training is better able to perform their job.A structured training and development program ensures that employees have a consistent experience and background knowledge.Carrying out a system process review enables a review of processes and Q then makes improvements to make them more efficient and effective with less wasted effort and more time spent on valuable work. BSBMGT617  Develop and Implement a Business Plan70 Summary “Though no one“Thecanworldgo back and makerewardsanewthose start, anyone canwhostarttake from now andresponsibilitymakea new ending.”forCarltheirBardown success.” Curt Gerrish Planning is one of the most important parts of running a business, no matter whether it is a large multinational corporation trying to plan an expansion or a small business launching an exciting new product. It is easy to start a project, but without careful planning it is like setting off on a journey to an unknown destination without a roadmap. You might manage to make it to your destination eventually, but don’t be surprised if you get really lost on the way! As a small business owner it is very tempting to neglect planning altogether, especially if you are the only person in the company. After all, planning can be a time-consuming process and for small business owners time spent planning is likely to be time when they are not earning any money. But the benefits of good planning will far outweigh any temporary loss of earnings. The great thing about a business plan is that it can provide a reference point for you to return to at any point during the project. Just looking at a plan and seeing how far you have come is a great motivational tool. It can help you determine whether you have drifted too far away from your original vision and allow you to get back on track once again. Writing a business plan will also help you to think more analytically than ever before about your industry and the role of your business within it. It will help you to see correlations between the different parts of your business e.g. how decreasing the cost of a particular process will affect your overall profit margin. The value of a business plan simply cannot be overstated. Putting ideas and concepts down on paper is invaluable and the act of researching and compiling data about your competitors and the market will prove to be very useful in the years to come. 71BSBMGT617  Develop and Implement a Business Plan Bibliography These are some books that we feel may be of assistance to you in completing the Assessment for this unit of competency. Your local library may hold these publications. Blackwell, E 2011, How to prepare a business plan, 5th edn, Kogan Page, London, UK. Grant, RM 2007, Contemporary strategic analysis: concepts, techniques, applications, 6th edn, Wiley-Blackwell, Malden, MA, USA. Dunham, R 2003, Manager’s workshop v3.0, CD-ROM, 3rd edn, Prentice Hall. Robbins, SP & Barnwell, N 2006, Organisational theory: concepts and cases, 5th edn, Pearson Education, Frenchs Forest. Robbins, SP, & De Cenzo, DA & Wolter, RM 2013, Supervision today! 7th edn, Prentice Hall. Williams, C 2013, Management, 7th edn, South-Western, Cengage Learning, Mason, OH, USA. SBMGT617  Develop and Implement a Business Plan72


Leave a Reply

Your email address will not be published. Required fields are marked *