By Adrian Misiano, Partner Business Advisory, Matthews Steer.
Planning can be exciting, engaging, and fun to do. Speak to anyone who’s set their sights on a house build or renovation, or a holiday, and they’ll wax lyrical describing every detail they’ve planned down to the second dishwasher in the butler’s pantry or the poolside cocktails they’re intending to consume.
No less than 38% of Australians made plans to renovate their homes in 2019 – Victorian local councils process more than 56,000 planning permits every year. Meanwhile 2.2-million Australians (10.5% of the adult population) were planning a post-pandemic overseas holiday as far back as June 2020, and back in 2017 nearly 10-million people travelled internationally which means passports, visas, flight and accommodation bookings and all manner of logistics.
Planning, it seems, can be highly enjoyable and, when we’re not wrestling with a global pandemic, a hugely fruitful occupation to devote some time to. So, why then do so many Australian business owners fail to write or refine a formal business plan? According to one study, 80% of Australian businesses don’t have a business plan, and of those who do have a plan, only one third update and refine it on a regular basis!
Winging it might seem like the natural course of action when you’re just starting out in business and you’re fired by ideas, enthusiasm, passion, innovation and unlimited energy to tackle the challenges that come your way, but the risks are real. According to the Australian Bureau of Statistics, 60% of Australian small businesses fail within three years, and 90% of Australian startups fail within the first year.
A 2018 Australian Centre for Business Growth study attributes Australian business failure to poor market research, bad financial management, lack of control over external factors and bad leadership skills, AKA poor business planning and execution. “Many CEOs didn’t understand that setting the company’s direction was their No.1 job… (few) took the time to develop written plans, to think ahead, prepare for growth opportunities or calculate the risks associated with business expansion,” the Australian Centre for Business Growth’s Dr Jana Matthews wrote in Entrepreneur.com. “And even if they managed to develop a plan, many times it was not followed or executed.”
Victorian businesses have enjoyed favourable economic conditions for almost as long as we can remember, but the pandemic has been a stark reminder that those good financial times can’t last forever. Insulating yourself against economic downturns and other challenges, and gaining a competitive advantage against others in your industry, are two of the chief reasons that mapping out a solid business plan is vital to the foundations of a successful business.
Strategic planning helps you set direction, define your objectives, and plot how you’ll achieve your goals.
Time waits for no one and, if the days and months tick by and you’ve devoted all your time and resources to working in your business rather than on your businesses, you could find yourself in trouble at retirement age. It’s often only when many business owners reach their late 50s and start sizing up their nest egg that they realise they don’t have enough personal investments to retire, and that they need to build the value of their business for sale, and they start trying to plan. The problem is that, at that stage of your business journey, your energy and interest levels are likely depleted, so building your business will feel like a battle, or you’ll adopt risky strategies in order to make quick gains – not something you should be entertaining at that stage of your business journey!
Having a strategic plan is all very well, but implementing that plan, and being accountable to it is a greater predictor of success. The Australian Centre for Business Growth’s Dr Matthews agrees: “Successful CEOs and their managers understand the need to identify goals in measurable terms, provide the resources needed, then delegate and hold individuals and divisions accountable for achieving those goals,” she says.
When business planning isn’t part of the fabric of your organisation it can be tough to know where to start, and not every business owner has the time or resources to build and maintain a functional strategic plan. That’s where business advisory comes in.
A business advisor straddles the intersect between maximising business growth and minimizing business risk, providing ideas and analysis, streamlining processes, identifying government funding opportunities, and assisting with goal setting, measurement and accountability across the breadth of your business; supporting effectiveness, efficiencies, and growth, and sale or succession strategies.
Going it alone vs engaging a business advisor or advisory firm is like the difference between taking out a gym membership, where the accountability for working out rests solely with you , or engaging a personal trainer who you report back to on a weekly basis. In general, the latter is going to be significantly more successful in helping you achieve your fitness goals, and the same can be said in the businesses space.
Effective strategic planning can provide clarity on next steps and the potential outcomes, help you understand the value of your business, navigate yourself into the best possible position for retirement providing peace of mind that you’ve done everything in your power to set yourself up for a secure and prosperous future. And, you may be eligible for government funding to help you support your strategic planning process.
You’d never build a house without plans, so why would you entertain starting – or continuing your business journey – without a strategic plan?
To learn if you are eligible for government funding to support your strategic planning, or if you’d like to discuss your current business needs, please contact Adrian Misiano on (03) 9325 6300 for a complimentary one-hour risk review of your business.