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You don't have the time or inclination to sit down and nut out a business plan. What for? Business has been brilliant, setting a brisk pace for the financial year; your team is a thriving, oiled machine. Any business planning would be a waste of time, right?

Goldcross Consulting recently worked with an extremely profitable company, operating in a niche market. The wheels were turning until 2007, an unexpected job boom hit the books and forced the business to expand quickly, exacerbating growing pains and jumbling existing workflow. Unfortunately, the team struggled to handle the increase, encouraged to jump from job to job before the completion of any one project –they were to get the job done without delay, often sacrificing quality and control for tight timelines.

Though a bill to repair past mistakes is relatively simple to pay, damage to a standing reputation takes time to recover; our client is struggling to establish trust with new and existing clients in a post-GFC climate. Transparency and procedure is the currency of good business; if a company cannot function in a period of growth, any investment may be perceived as unstable for future clients.

What happened to the company? They are currently being shunned by their limited niche market. They did not plan for future growth, turning a profitable venture into a basket case within six months.

So, what went wrong?

The key directive encouraged staff to prioritise deadlines without qualifying quality or workmanship; get it done and move on – no matter what. Poor production created delays and costly re-workings of already completed projects, though the latter was often ignored. There was no time to rectify any errors, so customers were left with a problem product.

Consequences

Reputation dwindled and struggled to regain a lasting foot-hold, damaging partnerships with existing customers and scaring away prospective clients. When the GFC landed, the business was not in a prime position to reap the benefit of an expanded and diverse customer base – the niche continued to grow without them.

Could it have been avoided?

With a business plan in place, the owners would have known the capacity they had available, and the turnover associated with that capacity. Growth procedures and systems would ensure increased resources matched a swelling turnover. Accountability measures would be implemented; regulating monitoring of critical activities and subsequent actions, in the best interests of the business and the client.

The dangers and risks of rapid growth would have been managed, identifying the problematic nature of operating outside of their niche market. Instead of developing a long term strategy, hasty division flooded human resources and mitigated any chance of capturing post-GFC opportunities.

Hindsight
Hindsight is a dangerous principle to govern business procedures and growth strategies. Create a plan early - educate, implement and monitor to make sure your business stays up-to-date, relevant and fresh. Critical reflection can be a powerful tool, but too often an owner waits for the damage to present itself before making any meaningful changes. Don't fall into a trap, stay proactive and plan for every stage.

A business plan would have equipped our client with the following directives to take the sting out of a sudden up-turn. Not every boom is positive, especially if your current business structure is unprepared to support expansion.

  • Strategy for growing the business
  • Contingency plans for a possible downturn in their market
  • Systems & procedures to ensure that all employees were working to a pre-defined set of standards
  • Monitoring system to ensure that the tactics designed to implement the strategies were effective 

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Did you know?

Before Goldcross Consulting, Alan was a nationally recognised caterer, winning numerous industry awards, after building his hospitality legacy from the ground up. He stresses the importance of a detailed business infrastructure, covering every aspect, from customer relations, stock dispatch and cancellation policies.

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