Small business accounts for 97 per cent of all businesses in Western Australia, but an estimated 40 per cent do not have a strategic business plan.
Small business accounts for 97 per cent of all businesses in Western Australia, but an estimated 40 per cent do not have a strategic business plan.
And that lack of strategic planning is often the cause of small business failure, Small Business Development Corp (SBDC) managing director George Etrelezis told WA Business News.
“Scratch the surface and you’ll find that many small business operators are so busy running their businesses on a day-to-day basis, they find it difficult to take time out to consider strategic, long term planning,” Mr Etrelezis said.
“In addition to providing direction for the running of the business, a strategic plan also makes it clear to employees and customers just what the business is about.
“Creating a plan for a small business forces the owner to take an objective look at the business, its purpose and ultimately the goals the owner wants to achieve.”
But no plan should be set in stone; as things change, so too should the strategic plan.
Any plan should cover the full spectrum of business operation, from opening the door on the first day to the exit strategy when the owner decides it is time to move on.
Mr Etrelezis said that, during the life of the business, outside forces such as changes in the economy, consumer buying trends or increased competition would require a review of the plan, as would changes in personal circumstances.
The final stage of any strategic plan was the succession plan, when it was time to decide what would happen to the business when the owner or operator moved on, or in the unexpected event of death or disability.
A recent survey by accountants KPMG and Deakin University showed 57 per cent of family business owners in Australia indicated they would retire within the next 10 years, but 68 per cent had not chosen a successor.
“Succession, or exit planning, should start very early by taking a long-term approach to exiting the business,” Mr Etrelezis said.
“Whether it involves selling, closing down or handing on to other family members, the business should be developed with this in mind.”
If the plan was to sell the business, potential buyers, such as colleagues, staff, family, competitors, suppliers or customers could be identified during the life of the business.
Alternatively, if it is intended to pass the business on to children or other family members, relationship issues needed to be carefully considered.
“A hand-over should be undertaken with sufficient time to provide full training, including the opportunity to work alongside the outgoing manager,” Mr Etrelezis said.
