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Whether to maintain financing agreements, to look at growth opportunities, or more generally as a good housekeeping exercise, during the course of the year most business will undertake some form of business planning.

Stuart Lynn

They may use business planning software or business forecasting software to do this, or they may do it in a more manual way. Either way they’d probably look at things like assets, liabilities, opportunities, cash flow, revenue, costs and possibly carry out a “what are our Strengths, Weaknesses, Opportunities and Threats (SWOT) exercise.”

Why carry out business planning?

Business planning is very good practice and it’s essential for business continuity and growth. I’m always surprised how many businesses I come across that only do very basic planning or don’t do any planning at all.  However, for those who do, it’s very easy for a business to become too inward looking and I often wonder how many businesses are oblivious to external factors that could have a positive or negative impact on their business.

What to consider when business planning.

To produce a thorough plan, businesses need to consider Political, Economic, Social, Technological, Environmental and Legal (PESTEL) factors as well as their internal drivers.

Now, I know what you’re thinking… this all sounds a bit complicated and I don’t have time to do it. Well rest assured, it’s not complicated at all, and there are some very good resources to get you started such as this CBI report “The shape of business, the next 10 years”.

Let me give you an example of how you might look at a PESTEL for UK businesses today:

• You might look at the political landscape, how successful will the Conservative – Liberal Democrat coalition be and what policies might they put in place to help or hinder your business? What’s happening in Europe and how the stability, or not, of the Euro might affect your business and you might look forward to the June budget, one to watch very carefully, and hopefully some good news for businesses and consumers.
• You might look at the banking system and the continued difficulty that businesses have getting finance. Also if you run an export business you might be benefitting from the weakness of the pound against other currencies. Alternatively, if you run international subsidiaries you may be experiencing a negative impact of the weak pound.
• You might look at how the newer generation of business owners and consumers are more tech savvy, how they prefer to do business on the move and are looking for more collaborative tools and systems. You only have to look at the meteoric rise of social and business networking for evidence of this. I hasten to add that this isn’t really about the technology, which so many people get hung up on; it’s about solving real business problems and making life easier and more productive for UK businesses.
• You might look at how technology has developed over that last five years and think of where it might go in the next five years. Just look at the evolution of the mobile phone, an essential business tool today and you couldn’t imagine life without one, the emergence of small form devices such as the iPad and the general availability wireless networks and high speed internet bandwidth. [Don't forget that it's not too late to enter our competition to win an iPad - Cath]
• You might look from an environmental perspective at how energy costs are on the rise, significant for all businesses and those in logistics are always hit hard by the increasing cost of fuel. Will there be costs levied on UK business in relation to green policies, or will there be opportunities as the UK look at developing new types of energy? You might also look at topics such as Corporate and Social Responsibility, and Carbon Accounting. These have been normally associated with larger companies and are becoming more and more mainstream.
• You might also look at legislation as this is becoming increasingly complex and one of the biggest, if not the biggest, issue that businesses face today.

These are just a few examples and if you’re not doing so already, I would encourage you to consider these and many more like them that are specific to your own business. It’s not all doom and gloom as there are many opportunities if you can turn these factors into a positive advantage for your business. Give it a go; you never know what you might discover.

“Not just small business, all business”

Stuart Lynn, Head of R&D, Sage Mid Market Division www.twitter.com@_stuartlynn