Once your business is established and running well, you may be inclined to let things continue to run as they are. Show
However, it's actually time to plan again. After the crucial early stages, 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. This guide takes you through this essential process, detailing the stages you should go through to assess how well your business is performing, highlighting your strengths and areas that could be improved and suggesting the actions you need to take to implement the improvements that you've identified.
Why it's vital to review the progress of your businessIt'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:
It is also useful if you have decided that your company 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:
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. Assess your core activitiesA good starting point for your review is 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. Key questions about your products or services It's useful to address these questions:
Answering these questions will give you the basis on which to improve performance and profitability. Assess your business efficiencyMany 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
Facilities
Information technology
People and skills
Professional skills
Review your financial positionBusinesses 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:
Conduct a competitor analysisNow that 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. Questions to ask about your competitors include:
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 specifically your closest competitors. See the page in this guide on models for your strategic analysis. How to find out more There are three main ways to find out more about your competitors:
Conduct a customer and market analysisWhen 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. 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:
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. Use your review to redefine your business goalsTo remain successful it's vital that you regularly set time aside to ask the following key strategic questions:
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. 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. 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:
Models for your strategic analysisThere are a number of useful business-analysis models that may help you think more strategically about your business. The SWOT analysis (strengths, weaknesses, opportunities, threats) is one of the most popular. This involves looking at the strengths and weaknesses of your business' capabilities, and any opportunities and threats to your business. Once you've identified all of these, you can assess how to capitalise on your strengths, minimise the effects of your weaknesses, make the most of any opportunities and reduce the impact of any threats. Opportunities and threats in the external environment It's important to remember that opportunities can also be threats - for example, new markets could be dominated by competitors, undermining your position. Equally, threats can also be opportunities -for example, a competitor growing quickly and opening a new market for your product or service could mean that your market expands too. A SWOT analysis can provide a clear basis for examining your business performance and prospects. It can be used as part of a regular review process or in preparation for raising finance or bringing in consultants for a review. Once you have collected information on your organisation's internal strengths and weaknesses, and external opportunities and threats, enter this data into a simple table.
Other tools include: STEEPLE analysis - a technique for understanding the various external influences on a business – Social, Technological, Economic, Environmental, Political, Legal and Ethical. Scenario planning - a technique that builds various plausible views of possible futures for a business. Critical success factor analysis - a technique to identify the areas in which a business must succeed in order to achieve its objectives. The Five Forces - the theory that there are five defined factors that influence the development of markets and businesses - potential entrants, existing competitors, buyers, suppliers and alternative products/services. Using this model you build a strategy to keep ahead of these influences. Breaking down your strategic reviewAs owner-manager of your business or as a member of its management team, you should stand back once in a while and review your business' performance. The areas you need to look at are:
Next steps The five steps above will give you a clear indication of any issues that you need to address quickly in order to maintain your business in its early stages. If you feel all of the areas above are strong, you can start to plan for the next phase and build a cohesive strategy to develop your business. However, if there are areas that need attention, deal with them now so that you can move forward. There are a variety of growth options for every business - it's important that you settle on the right one for you. Also, once you've isolated your best route for developing your business, you can boost your chances of success by planning it carefully and monitoring your progress against an updated business plan. Original document, Review your business performance, © Crown copyright 2009 Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. As a
result:
What is the money needed to operate a business called?Startup capital is what entrepreneurs use to pay for any or all of the required expenses involved in creating a new business. This includes paying for the initial hires, obtaining office space, permits, licenses, inventory, research and market testing, product manufacturing, marketing, or any other operational expense.
What type of competition do you have when there are many consumers buying a standardized product from numerous small businesses?Perfect competition exists when there are many consumers buying a standardized product from numerous small businesses. Because no seller is big enough or influential enough to affect price, sellers and buyers accept the going price.
How many business types are there?There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.
Which of the following does an entrepreneur typically need to be willing to do to start a business?Which of the following does an entrepreneur typically need to be willing to do to start a business? Select a product or service that will be sustainable. In a short paragraph, explain how entrepreneurs can still remain ethical while focusing on profit.
|