Many people see business plans as a tool used to obtain funding to get their business started. However, it is important to realise that a good plan can, in fact, help you assess the viability of your business, collate all your ideas, help set targets and even provide a structure for growing and developing the company. An effective business plan turns vision into clear and tangible actions, directing the organisation on the path towards its strategic goals.
The main thing to remember before preparing a business plan is that no business is the same, so each plan needs to be specifically tailored to meet the needs of the organisation and the industry in which it operates.
Plans should be a description of how your business will move from where it is now to where you want it to be. For specialist lenders, these plans could outline how the company can move from its existing sectors into new markets such as prime.
Understanding your market
In the initial stages of any business plan development, it is imperative to understand your market, identify potential services and products that could be provided, and look at how the plan can be implemented.
Good planning not only provides a model to work from, but it also provides direction for growth and development. Business plans are similar to a road map – they show you where you are, where you want to go and, more importantly, how to get there.
Business plans are, by definition, corporate strategies and most large corporations participate in multiple markets and businesses. Corporate level strategies address the business as a whole, but organisations that operate in a number of businesses and markets, organise their plans into single groupings of related businesses.
Within these businesses are operating units, together with corporate functions such as HR, finance, IT and research and development, all of which have their individual plans that feed into the overall corporate strategy. This ensures the individual business units are achieving the overall goal of the organisation, while keeping some specialist expertise.
The same organisation is mirrored within the operating units with tightly focused businesses organised by customer need, channel or product.
A complex world
Today, businesses have to operate in a complex world with fast changing technology and global competition. In the specialist market alone, we have seen numerous changes in recent months including new market entrants, the implementation of technologies and diversification into the prime market, all of which have impacted on business plans.
As a result, any business plan needs to be flexible enough to adapt to a changing market and allow regular recalibration to ensure resources are aligned in the most efficient way to grow the business.
Growth and development are obviously important, but so is the quality of the products and services on offer to brokers, packagers and customers. Ask anyone about GE and there is a fair chance that they will mention ‘Lean’ or ‘Six Sigma’.
Six Sigma is a process that helps users to focus on developing and delivering near-perfect products and services. It revolves around a few key concepts: being critical to quality; defect; process capability; variation; stable operations and design for Six Sigma. The idea is that if you can measure how many ‘defects’ you have in a process, you can systematically work out how to eliminate them and get as close to zero as possible. Lean focuses on using practical tools to simplify processes and is something that can have an immediate impact.
No room for error
Globalisation and instant access to information, products and services are continuing to change the way our customers conduct business and in an ever increasingly competitive market, there is no room for error. This is why Six Sigma quality has become such an integral part of our culture.
Lean is a simple, practical tool that has application to any financial business. Indeed, we have worked with close to a dozen of our brokers to use Lean to simplify their processes.
All GE employees are given access to the strategy, statistical tools and techniques of Six Sigma Quality. Training courses are also offered at various levels to ensure all our employees have access to this core planning tool.
In addition, it is important for businesses to follow the ‘ABC’ of standard business planning, including:
- The vision – where the business is and where it wants to go.
- Target market – what your current market is, who your customers are by segment and how this can be expanded.
- Product offering – details of the product and services being provided and plans for evolving your unique service points.
- Strategy and implementation – key deadlines, how your objectives will be achieved and budgets available.
- Resources – details of the core management team, their skills and their responsibilities and how resources are aligned to key initiatives throughout the business.
- Financial projections – the overall strategy, with a risk analysis.
The businessplan is just that; a plan. The proof of the pudding is in the execution.
Duncan Berry is director of sales, first mortgages at GE Money Home Lending
