Man doesn't plan to fail but often fails to plan - it has never been more important to have a business plan
Those of you that know me and follow my posts and articles on LinkedIn, Twitter and in the trade press will know the importance I place on having a written business plan. Setting objectives and having clear actions to deliver. This involves knowing all of the numbers relating to your business and an understanding of the market/competition etc. so that points of differentiation can be found.
Many of my clients have worked with me to produce plans and they will, naturally, be better placed to review and adjust those plans in the light of the current covid-19 pandemic.
Quite simply, if your business is going to survive this crisis you will effectively need two business plans: one setting out how you will survive the few months and one setting out how you will survive the upturn.
It is a fact that more businesses go bust on an upturn than a downturn as by then, they are tired, may lack resources and haven’t planned the actions they need to implement in order to “hit the ground running” and take advantage of new opportunities and improving conditions. The future will not look exactly the same as the past and there may need to be fundamental changes to business operations, structures, positioning etc. involving people, technology, physical aspects such as premises, marketing to be successful.
My article here on moving from comfort zone to growth zone is probably worth a read.
Your first plan is about mitigation and survival and should be fairly straightforward to write, as it will largely involve cutting expenditure and preserving cash.
It will probably include:
- Postponing your next VAT payment
- Postponing the second payment of income tax on account
- Asking to postpone your corporation tax
- Asking to postpone your payroll tax
- Furloughing some of your staff
- Cutting expenditure to the bone
- Renegotiating the rent on your premises
- Renegotiating payments with your suppliers - gross costs but also number of individual licences needed
- Chasing and hopefully collecting all overdue debts
- Completing on as many transactions in progress as is currently possible and retaining as much of ongoing stc pipeline
- Ensuring rent collection and management is first class to maintain income streams
- Where you position your business now – community, communication, CSR etc.
- A detailed cashflow forecast and budget
Your business plan for recovery will be more difficult to produce as views will need to be taken on several key issues. One of the hardest aspects will be judging when the right time has arrived to put your foot back on the gas. The plan will include:
- How to retain your existing instructions
- How to “farm” your database to line up future business
- How to retain your existing sales and lettings pipelines and get them ready to exchange and complete even if that is not currently possible
- When and how to start proactively marketing for valuations again
- How to improve your conversion ratio of valuations to instructions in a market where fewer properties are likely to be coming to the market
- How to increase the instructions to sales ratio in a market where buyers confidence may have been reduced
- How to minimise abort rates at a time when buyers are nervous
- How to increase your fee level to compensate for a reduced number of sales
- How to maximise your income from selling conveyancing, mortgage services and other ancillary products and services
- How to upsell and convert more of your lettings business to a fully managed format in order to maximise control and income
- How to ensure that any backlog created in aspects such as gas and electric safety certificates, EPCs etc. is both managed compliantly but also commercially
- How to ensure that your staff are ready, motivated and trained to “hit the ground running”
- What aspects of your business have changed or need to change? Premises, people, the use of portals, introducing improved technology and systems
- Drawing up a detailed cashflow and budget
As always a plan should follow the SMART principle:
- Achievable or Agreed
Plans should always be regularly monitored with, what I call, the Sat Nav approach.
If you were heading to another town, you’d put the postcode into your Sat-Nav and off you go. If you take a wrong turning, the Sat-Nav immediately notifies you and makes an adjustment to bring you back to the best route. It doesn’t wait for you to be 100 miles off course before letting you know!
The same applies to your business plans – keep them monitored and be prepared to make changes if needed.
We cannot change the wind but we can adjust our sails.
As always, I am here to help – please contact me to discuss.