The Australian Small Business Blog

Tuesday, February 09, 2016

Small Business Best Practice Benchmarks

by Dr. Greg Chapman

There have been many studies on what great businesses do differently. Each have identified a number of common benchmarks. Over the next 12 months I will review key Small Business Best Practice Benchmarks for Australian businesses. These will include Business, Financial, Marketing and Operational best practices.

The first practice in common with all great businesses is Strategic Planning. They all have a five year plan.

As the Cheshire Cat said to Alice “If you don’t know where you are going, any road will take you there”

Great businesses all produce a five year strategic plan. This is a fully integrated plan that connects financial forecasts with business, marketing and operating strategy, It presents the opportunities for the business and lays out step-by-step the actions that will be taken, the cost of those actions and their expected returns.

The plan also identifies risks since all strategies have them. The market may not respond as expected. The economy may sour. Operational difficulties may be greater than anticipated. The plan should quantify each risk and look for mitigation strategies to manage them.

The first step is to picture where the business will be in 5 years. Where it will be operating, what its products and services will be and how they will be delivered, to whom they will be delivered, the turnover and profitability.

Having established the business goals, the strategy becomes the “How”. What will be the marketing plan? What innovation, business development and skills will be necessary? How will all this be financed?

When businesses have such a plan, it makes decision making much simpler, as it‘s easy to be distracted by ‘opportunities’ which superficially look attractive but divert the business from the long term objectives. Five years is a long time, and a good plan like a map will show you your progress to your ultimate destination. Without a plan or map it is easy to get lost.

While the plan should be reviewed each year, if it is truly strategic, it changes only marginally unless some major shift has occurred. Frequent changes means that the business is shooting at a moving target.

Great businesses incorporate within their Five Year Plans all the other benchmarks of best practice as their targets.

May You Business Be - As You Plan It!

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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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