Having SMART objectives is very important when starting an endeavor. For example, to raise capital and shares you will need a business plan to present to lenders and banks.
In addition, a business plan will help you to generate a road map for your business in terms of what it will achieve and how you will achieve it.
It is important that you set out clear objectives so you know what you are aiming for. These objectives will need to go into your business plan.
You’ve likely heard the phrase “When you don’t know where you’re going, any road will do.” Setting the correct objectives will help you reach your ultimate goals.
The most effective way to use objectives is to set SMART ones. SMART is an acronym for Specific, Measurable, Achievable, Realistic and Time-Sensitive.
Your objectives should be specific and not ambiguous. If you are forecasting that your business will increase sales compared to last year then you need to be specific about what that increase will look like. For example, sales will increase by 12% by the end of the next financial year.
Objectives have to be measurable in order to identify if progress is being made or not. Avoid using vague terminology such as; the best, the largest, the fastest etc. Measurable targets should include sales results, net profit and capital expenditure.
Your objectives must be achievable. This means your business needs the capacity and resources available to achieve what you set out to do.
It is easy to be carried away by setting objectives based on enthusiasm. However, you need to be realistic when setting your objectives.
For example, if your business has on average increased sales by 10% each year, then stating that your sales number for next year will double is setting up the company for disappointment.
Targeted numbers should be backed up by supporting evidence to prove that they are possible.
Setting a date and a deadline is very important when creating objectives and goals. Not setting a deadline for when the objective will be achieved will likely cause delays and in many cases the objectives will not be achieved.
Avoid vague terms such as short or long-term. You need to have a clear and specific timeline for the accomplishment of each objective.
What’s so smart about SMART objectives?
Why has this acronym become part and parcel of project planning and performance management?
When objectives go through the SMART process, they become targets that bring focus, action, feedback and learning.
These targets help in the development of individual work plans, and also provide a road map for performance review discussions.
How Do You Write a SMART Objective Statement?
First or all, you must decide what exactly you expect to create, and how you will recognize the result when it comes to pass.
For example, “Our insurance premiums should make a minimum of $60,000 per month in sales by June 30, 2020, with a quarterly increase of at least 5% thereafter.”
A conversion objective could be “to increase the average value of all subscriptions processed in the firm to $100 per client in the next twelve months”.
The above SMART objectives are attainable because they are very specific regarding what needs to be done, they are measurable, and the time-bound aspect is also included in one short declaration.
Without the time factor the team responsible wouldn’t know when it has to achieve the target.
Reviewing the smart objectives can be done quarterly, semi-annually or annually. It all depends on the timeline that has been set on the targets.
In a nutshell, SMART objectives have the potential to focus attention, work plans, and commitment to performance targets.
If you would like to learn more about creating and using SMART objectives, contact us for a free consultation. Don’t forget to sign up for our newsletter for more interesting insights on business planning.
No matter the size, age, or purpose of a commercial entity – it needs a business model canvas. Even if you started your business years ago with the intention of just running it out of your garage, you still need a plan.
What is a Business Plan?
When most people think of writing a business plan, they envision a long, extensively detailed document with masses of data and financial forecasts. While that may be the requirement for people seeking outside funding, a business plan doesn’t have to be complicated to be effective.
A business plan provides the blueprint for how you intend to build your business, so the plan only has to be as long as you need, depending on the size of your business. Use your own business plan to map out your goals, action plans, and financials while significantly increasing your chances for success.
In other words, your business plan is vital to establish the structure of your business. The goals, objectives, strategies, and services to be offered are components used to plan and manage your business, apply for funding, or show to potential investors.
Some advantages of having a business plan
Objectivity – while preparing the plan, it forces the person preparing it to look at the business in an objective and critical manner.
The big picture – It helps the entrepreneur starting the business to consider all options.
Strategic focus – It helps to focus ideas and serves as a feasibility study of the business’s chances for success and growth.
Feasibility – It may show the business is not viable and help realize the idea is flawed.
Strategic planning tool – it can be shared with potential investors, partners, and business development professionals.
It is a strong communication tool for your business defining your purpose, your competition, your management, and personnel.
The process of creating a business plan can be cumbersome and a serious reality check for anyone attempting to set up a B2B firm.
On the other hand, using a Business Model Canvas could prove to be a valuable tool in helping you to develop your business’ model and achieve success, regardless of what type of business it is.
What is a Business Model Canvas?
The Business Model Canvas is a tool that is used to visualize all the building blocks required for beginning a business, including customers, market route, value proposition, and finance.
It enables you to visualize and map your model onto one page and allows you to quickly make changes as and when required. Put simply it’s a short and precise version of a
This canvas (made up of 9 building blocks) provides you with a clearer understanding of the relationship between, services, channels of distribution and costs, etc.
These blocks consist of:
- Key Partners – For example, partners, suppliers
- Key Activities – For example, distribution channels, customer relationships, revenue streams
- Key Resources – What unique strategic assets must the business have to compete? For example, human, financial
- Value Propositions – What’s compelling about the proposition? For example, brand, price, design
- Customer Relationships – How do you interact with your clients? For example, personal assistance, self-service
- Client Segments – Who are the customers? e.g. mass market, niche market
- Channels – How will your services be promoted, sold, and delivered?
- Cost Structure – What are the business’ major cost drivers? For example, fixed costs, variable costs
- Revenue Streams – How does the business earn revenue from the value propositions? For example, commodity sale, a subscription fee
Although the canvas is pre-structured, each component will be unique to your model. Visualizing the relationship between components allows both the business owner and stakeholders, to experiment with various strategic possibilities, thereby maximizing the potential for growth, profitability, and success.
Advantages of Using a Business Model Canvas
The business model canvas is not static. Instead, it regularly evolves, allowing you to make quick changes to your business model and help secure your competitive strategy.
It’s perfect for startups or small professional service firms with limited capital.
There are plenty of templates out there. You might begin with a predefined template and see where it takes you. For more advanced planning, seek the help of expert consultants who will offer a variety of tools and resources to ensure the plan will be successful in achieving its goal.
So, which is better? A business plan, or a business model canvas?
A business plan works for every type of business but is not as flexible as a business model canvas. Business model canvas allows small, medium, and large professional service firms to quickly make changes to their strategies or any other mechanism in their plan that doesn’t seem to work.
It’s a good alternative that best suits small and medium-sized professional service or B2B firms.
For more information about this topic, contact us for a free consultation. Don’t forget to sign up for our newsletter for more interesting insights on other B2B planning topics.
Planning is one of the key factors for any successful business venture. Whether you are looking for banks or investors to fund your business idea or project or you just want to give a more concrete approach to your small business ideas, a well-written comprehensive business plan is what you need to meet these goals.
Based on your plan, you can outline your business strategy, both short-term and long-term. Without a plan… well, there’s an old adage “failing to plan is planning to fail”.
Why Create a Business Plan?
The most common use for a business plan is for new and existing businesses to get funding from a bank or loan organization. This is where you’ll end up needing that detailed document that supports all aspects of your plans and explains why you believe they’ll succeed.
Writing a business plan of this nature can be an ordeal and can slow down the start of your business, but it’s a necessity if you need someone else to loan you money.
Both online and offline business owners often create business plans on a yearly basis to get themselves organized for the next year. It’s a way of taking stock of progress, examining what’s working, and laying out goals and plans for the year to come.
Almost all successful business owners will tell you that they create business goals and action plans on a regular basis, sometimes as often as once a month since markets can change quickly.
In addition, if you have been struggling in your business or are considering something new, the entire process of creating a business plan will help you see where you can be most profitable.
It will also tell you where you are going wrong and need to change.
What are the Key Components of a Business Plan?
Most business plans consist of the following parts. If you are creating a proposal for a business loan, you’ll be given more precise requirements. But for small business planning purposes, these components should be sufficient:
- Description of your business model and target market.What kind of business are you implementing and who are your target clients?
- Unique Value Proposition. What do you have to offer that makes you different from everyone else? Why should people buy from you or work with you.
- Business goals. What are your specific, measurable goals that you want to achieve, and when?
You must write down what you want to achieve in the short term and long term. The short term goals may include what you want to achieve within the next few months or up to one year.
For example, acquiring the right business licenses, or getting office space. Your long term goals are likely to include where you see yourself in the next three to five years
- Marketing Plan. What marketing strategies will you put in place and what is their timeline?
Market strategies are the result of a thorough market analysis carried out after market research has been done. After determining who and what your prospects are, you can begin crafting strategies to establish and solidify your position in that market.
A market analysis will also help you establish pricing, distribution, and promotional strategies that will allow your company to be successful.
- Action Plan. What are the tasks you need to complete and when?
- Financial forecast and budget. How much is all of this going to cost on a monthly basis, and what kind of revenue do you expect? How long will it take to break even and make a profit?
This gives you a realistic picture of your financial situation; you must look at all your anticipated expenses for every single month in comparison to what you really think you are going to earn.
This will enable you to decide whether you have sufficient cash to cover all your costs or if you will need to acquire a loan to cover some of these expenses.
So, did you start your business without a plan? How did a business plan help your long-term goals? Give us your feedback in the comments section below or join our newsletter by signing up here. Also, feel free to share this blog!