When should I abandon my business plan?
My digital marketing agency has grown consistently for the last three years. I wrote an updated business plan, but the market has changed and my projections look unrealistic. With the outlook for this year increasingly grim, and our own growth slow as clients’ budgets are culled, I don’t know when the market will start to pick up. So should I tear up my business plan and start again?
A. Mike Harding writes:
Your business plan needs a complete refresh at least. Recession will make things harder for a while, but previous experience shows that those businesses that survive come out stronger. So it’s not all doom and gloom, and the current climate will bring opportunities as well as challenges. Here are some of the things you might want to concentrate on in your planning at the moment:
Existing customers: It’s tempting to rush out to find new business, but make sure you don’t neglect your most important existing clients. As your competitors become more desperate to find new clients, they will be courting your customers, so stay close to them and make sure you retain them long term.
New clients: This could actually be a good time to source some new clients. Many of those who use more traditional marketing methods might be looking at digital media at the moment as a way to reduce their costs of acquisition. Plan who you might target and make sure you are asking your existing satisfied customers for referrals.
Opportunities: Are there competitors struggling to survive this downturn? If so, can you poach their clients, or even look to acquire their business at a lower cost than you might otherwise.
Cashflow: Carry out a thorough review of all your debtor management practices. Make sure you have routines in place to carry out regular credit checks on larger clients. Invoice and chase money in quickly, and carry out a cashflow forecast, keeping it up to date, because if there are cash problems developing, it’s far better to approach the bank early for increased facilities rather than at the last minute.
Plan for different scenarios: It might be sensible to look at three versions of the financial part of your business plan, on an optimistic, realistic and pessimistic basis. This will mean you are well prepared no matter what happens, but will also help you to understand if you might need more funding or where you might be able to make more cost savings if necessary.