BUSINESS PLANNING FAILURE THREATENS FUTURE OF UK SME’S

54% of businesses have no written business plan and are endangering their future prosperity and survival, according to research carried out by PKF Accountants.

While 45% of businesses claimed to be working to a plan, 46% said they had a strategy but no plan, and 9% described themselves as having no plan at all. The most common reason given for having no plan was that the ‘owner makes the decisions’ (25%), followed by ‘no time to formulate a plan’, ‘just moving the business forward’ and that ‘the company is reactive’ – each on 17%.

Encouragingly, 65% of the companies interviewed said they were projecting growth of up to 25% in 2007 while a further 23% anticipate even greater growth. Nearly a third of companies (31%) said they were planning to make one or more acquisition in the year ahead with the majority of these (66%) looking to acquire a competitor.

PKF Corporate Finance Partner, Mark Lister welcomed the level of confidence among SMEs but sounded a note of caution. “The research findings suggest that businesses are riding the wave of relative economic prosperity in the UK but many appear to be forgetting some business basics“, he said.

“Businesses need to balance their drive for growth with ensuring that strategies for tackling tougher times are in place. Recent interest rate rises should sound a warning that favourable economic conditions should not be taken for granted; Managing Directors need to plan for the future so that their businesses are capable of surviving and thriving during leaner periods too.”

“Effective planning is critical when building a successful business and, while companies can succeed without proper planning, the most effective are generally those that are aware of the opportunities and threats in the marketplace so that they can plan how to achieve targets and monitor their progress. Growth is generally good for business but companies need to understand the implications so that they don’t create ‘boom and bust’ situations.”

Online tools to help firms meet maternity requirements

An interactive online tool has been launched to help businesses meet the requirements of the Work and Families Act 2006 when dealing with members of staff who are pregnant. The legislation, which gives mothers extended leave and additional maternity pay, affects women whose babies are born or due after 6 April. The online tool has been designed to help businesses stay within the law while dealing with new parents they employ.

Who is your most influential direct competitor?
What are their current marketing techniques?
Are their staff happy and motivated?
Why do customers choose them and not you?

This article aims to encourage you to ask and answer these questions, gain an advantage on your competitors and thereby increase your own business potential.

Understanding the market place can help you to target your own products and services and respond in all areas of your business including pricing, marketing, recruitment and overall strategy.

Your business is likely to have two groups of competitors; indirect competitors will offer a product or service which can substitute the benefits your products and services provide. For instance, a slimming club may be an indirect competitor of a health club. The consumer may choose to join a slimming club to maintain a healthier lifestyle as apposed to joining a health club. It is important to review your indirect competitors to asses diversification opportunities. The health club could launch a slimming group or provide slimming drinks in order to take advantage of diversification opportunities and appeal on a wider level to the consumer.

A direct competitor will offer the same or similar products or services and will therefore pose a larger threat to your business. Two hairdressers in the same locality may have separate customer groups, but will ultimately provide the same service. The customers’ loyalty depends upon their satisfaction with their favoured hairdresser. However, if one business develops a new hair cutting technique, receives positive PR or renovates the premises, that hairdresser may acquire customers from the other. It is important to be aware of what your competitors are doing – stay one step ahead of them and find innovative ways for your own business to flourish.

In order to monitor a competitor, analyse their performance in various areas:

Who are your competitors?

Firstly, search the internet for competitors through general search engines and directory listings. You can also look at the relevant trade association or industry body to ascertain competitors in your area. Look at market research reports, directories and survey reports available free in most business reference libraries. Once you have identified a general list, identify which are the major competitors based on location, reputation, customer base and so on.

What products and services do they provide?

Once you have identified your major competitors, view their own websites to gain an insight into the products and services they provide. Business websites often reveal much more information than they did in the past - from company history to staff biographies.

The most effective way to gain an insight into your competitors’ products and services is to experience them as a customer. Visit the place of business or call to ask for copies of their marketing literature. How were you treated and did you feel like you received an adequate level of service?

You could also consider undertaking a questionnaire on your current and potential customers. Ask if they have used competitor products and services and how ask for their feedback.

How do they market their business?

Search for information about competitors in local press, trade publications and journals. If they have a presence in these publications, it is likely they have a PR campaign as part of their strategy to raise their profile.

What other marketing methods do they use? Monitor where they advertise, their marketing literature and website.

At exhibitions and trade fairs check which of your competitors are also exhibiting. Look at their stands and promotional activities. Note how busy they are and who visits them.

What prices do they charge?

It can be difficult to gain information about a competitor’s pricing policy and if a price list is not publicly available, you may need to experience their service as a customer. If your pricing is higher, asses what additional value your customer’s are receiving from you. If you cannot justify your prices, you may need to lower them, however, keep in mind, your pricing may be set at the right level and competitors may be under-pricing.

How many staff do they employ and what are the calibre and motivational levels of staff?

You could ascertain the staffing levels from the company website or from visiting the premises. Try to gage how contented the staff seem to be in their role. Also, review recruitment websites and local press which may detail current roles in the business and may detail salary costs.

Competitor revenue and profit levels

If your competitor is a registered limited company, their financial information will be available through the WebCHeck service on the Companies House website.

Acting on the results

It is important to act on your findings and make changes to enhance your standing in the market place. Draw up a list of the findings, however small.

If you’re sure your competitors are doing something better than you, you need to make some changes. It could be anything from improving customer service, assessing your prices and updating your products to changing the way you market yourself, redesigning your literature and website and changing your suppliers.

Exploit the gaps you’ve identified. These may be in their product range or service, marketing or distribution, even the way they recruit and retain employees. Don’t be complacent about your current strengths. Your current offerings may still need improving and your competitors may also be assessing you. They may adopt and enhance your good ideas.

Finally, ensure that a competitive review is a regular task. You should analyse the market on a regular basis to monitor changes in customer views and identifying new market entrants.

How to get the best from a Public Relations Media Campaign

What do you think of when you hear the phrase Public Relations?

Press releases?
Product launches?
Sponsorship?
Hot air balloon trips around the World?

In fact, it is all the above and more. Public relations is about a business creating, maintaining and developing relationships with the public. Some use the more traditional techniques whilst Virgin and Richard Branson will use public relations stunts such as balloon trips around the world simply to generate public interest in the brand.

From the sole trader to the multinational company, sending the right message to the public is critical to how they view the business. Many people hear the words Public Relations (PR) and consider it to indicate the distribution of press releases to the media. In fact, PR is much more complex and can be a vital part of any business’s strategy, as well as its downfall if not handled correctly.

So exactly what is PR?

Public relations, according to the Institute of Public Relations (IPR) “is about reputation. The result of what you do; what you say and what others say about you.”

In short, it is the communication you have with your stakeholders. Stakeholders will include: customers, suppliers, employees, associates, the local community and the government - in other words, any entity that is directly affected by your business.

Part of a PR campaign can include amongst other things:

Ø Writing and distributing press releases to the media
Ø Organising a launch event to celebrate a new product or service
Ø Public speaking at industry related exhibitions or events
Ø Sponsorship
Ø Any activity which generates attention from the public and/or media

For the purposes of this article I will concentrate on the media relations side of PR as this is the most significant and widely used technique when communicating with stakeholders.

Set your PR objectives

When planning your public relations campaign, use your own business objectives to ascertain what you want to achieve. Are you looking for new customers, investors or to promote a new product?

Decide on a budget – you can set your budget at a cost of a few postage stamps or at thousands of pounds, depending upon the impact you are looking to achieve. If you are looking for local recognition for your business, it is possible to write the release yourself and simply send it to local press and a selection of relevant media.

If you want to carry out a full campaign, it is often cost effective to outsource to an agency or PR consultant who will subscribe to journalist databases and cuttings services so releases can be sent easily and coverage monitored. The release will also be professionally produced and the consultant will often have contacts in your target media to encourage the editorial.

The Rules!

The truth is, there are certain rules that you should abide by when writing a press release. This may sound rather arrogant on the part of the media, but with the concept of “free publicity” and the fact that the public relations industry is growing at over 20% per annum, it is easy to imagine the number of press releases that arrive on a journalist’s desk every day. A large majority of releases will be quickly directed towards the bin but if you follow some basic rules and capture the journalists’ attention, you’re half way there.

PR – THE RULES!

HEADING - Type the heading PRESS RELEASE in bold at the top of the release
DATE - Always quote the release date under the heading
TITLE - The headline should briefly encompass the release’s content – make it interesting and no more than 10 words
OPENING SENTENCE - The opening paragraph, in bold, should introduce the story. This is a crucial part of the release to ensure the reader is instantly engaged and will continue to the body of the story.
LANGUAGE - Always write in the third person and never try to sell a product/service like you would in an advertisement. Think of the release as a story you would like to read yourself.
CONTENT - Keep the main body of the release free from background information on the company – the release should focus upon a hook which is relevant to the publication and readership. As above, make sure the story is interesting, topical and relevant to the readership.
NOTES - Under the NOTES TO EDITOR section at the end of the release, details of the company, background and any other additional information should be included along with full contact details.

Editors also like to see the content follow a specific theme and these tips should help you ensure the content is of the right quality:

SIMPLICITY - Keep it simple. Don’t be too flamboyant – just state the facts.
EDITING - The key to a good press release is one that does not need editing by a journalist. Making their job easy by just copying and pasting the release into the publication will be a hit!
COPY DEADLINES - Remember time frames: some monthly magazines have a 3-month copy deadline so if you are looking to promote a new product for Christmas, you should send the release in October. For this reason, planning a sustained and ongoing PR campaign is crucial.
RELEVANCE - As well as topical issues look at conducting a survey or using statistics to generate press coverage. State this information as news, then mention how your company can help. Newsworthy stories, especially aimed at local press, can also be related to anything that brings attention to your business. For instance, you celebrate receiving your 100th unique customer by inviting all regular customers for a champagne reception. This is interesting to your local free weekly paper as it has a direct affiliation with the readership, but the story is far too localised for the Sunday Times so go with an entirely different angle to this type of media.
WRITING STYLE - Journalists write in a style called the ‘inverted pyramid’ which means that any paragraph can be taken and understood without the other text supporting it. If you can follow this system, the journalist will be more inclined to use the story as their editing work is limited.
REVELVANT CONTACT - Make sure the release is distributed to the relevant news or features editor as they are unlikely to pass it to a colleague.

Target Media List

It is very important to select your target media list carefully. Send the release to the media titles who have an interest in either your industry or the news item in the release.

There are two types of press release:

1. Consumer press releases
Aimed at the general public and will be distributed via local or national newspapers and consumer magazines. The release can be written in a less formal tone but should be newsworthy, topical or statistically led.
2. Trade press releases
Aimed at specialist trade journals, business press and trade news websites. You are likely to have more success with trade press, although the circulated readership will often be much less than consumer press. You can also add quotes from the management team.

The Value of PR

Adrian Wheeler, Chairman of the Public Relations Consultants Association (PRCA) in London states:

“The press like new things. They like innovation and entrepreneurship. The return on investment [from PR] is like 1,000% for start-ups.”

If you are looking to promote your business to your stakeholders but cannot afford advertising, PR is often the most cost effective place to start. Your PR campaign can then be backed up by an advertising campaign once your brand has received recognition from the public.

Ultimately, a prospective customer will have more time for your business after reading an article from an editorial viewpoint, than they would from an advertisement which is selling your business from a biased viewpoint. Customers will learn to recognise your brand from a trusted source.

Don’t be afraid to be creative – look at what people like Richard Branson have achieved through PR! Also, remember the phrase that all publicity is good publicity. Although Branson’s original balloon trip was a complete failure, Virgin received unprecedented press coverage which enforced their brand recognition with the public and ultimately aided the development of the business.

A new system may help small businesses escape red tape when new layers of bureaucracy are introduced by the Government. The Government is making an effort to ‘think small first’, so Impact Assessments (IAs) of new policy proposals will be used to consider what effects regulations would have on small enterprises. Under the IA process, Government departments must show they have considered alternatives before introducing new rules. The new IAs will replace the previous Regulatory Impact Assessments (RIAs). Find out more.

You are only as good as your people

A common phrase, used in organisations the World over, from Multinational companies to Sole traders but how much importance do businesses really put on their people?

Employing, training and retaining staff is a difficult, time consuming and costly exercise and recruiting the wrong people can by extremely expensive. Nearly two thirds of all SMEs say they have had a key appointment go wrong within the last two years.

The National labour turnover rate currently stands at 16%. The cost of recruitment and induction training can be minimised by adhering to a thorough recruitment strategy. This article aims to explain the key issues to consider to ensure you get it right from the outset.

Do you need to recruit?

Firstly, consider your recruitment needs. Is it essential to recruit externally or can someone within the organisation take on additional tasks? Although internal promotion can be a cost effective alternative to external recruitment, it is also important to ensure that existing staff remain content with their extra responsibilities. Look at reorganising the business structure and promoting from within.

Start by considering the skills required for the position. If you are replacing a team member, then think about what kind of experience you will be losing and what needs to be replaced. If recruiting for a new role, what skills will the position require, both personal and job specific.

Job Specification and Job Description

Once you have identified the type of individual required, you need to draft a concise and accurate person specification and job description allowing you to identify and attract the ideal candidate.

The person specification should accurately outline the skills, knowledge and experience the role requires. This will help you define the qualities you are looking for in a candidate. Think about how much responsibility the employee will have and to whom they will report to. What skills or experience are essential? What kind of personality are you looking for? Profile the person: describe the skills that are required for the role. If you are looking for a salesperson, then good communications skills will be crucial.

The job description should highlight the general nature and objectives of the job, along with the main duties and tasks it will involve. You should also include practical information, such as job title, the position and location. Also consider what the recruitee is looking for in a job: promotion opportunities, training, flexible working and a formal pay scale. Define the job, set out the scope, responsibilities and core competencies before you start recruiting.

Recruitment Methods

Using a recruitment agency is effectively outsourcing the majority of the recruitment process to save time. Another benefit is that in some instances, you can review temporary workers before employing them permanently. In most instances you will receive a refund of fees (within certain time periods) if the first candidate you take on is unsuitable.

Although recruitment agencies are expensive - you may have to pay an agency as much as 30 % of the employee’s annual salary (or equivalent for temporary staff) once the candidate has successfully completed their probationary period - the benefits of using an agency can outweigh the cost in time saved.

People are increasingly using the internet to find a job, so don’t overlook online job agencies. Online job agencies can be more cost effective to recruitment agencies, although you may receive more unsuitable candidates which can take time to review.

Consider advertising in the general recruitment section of local press or place an advert in a specialist journal for your industry which may prompt better-qualified responses. If you are posting a number of jobs, consider using a media planning agency who will place the ads on your behalf for no cost.

Also, don’t underestimate word of mouth when recruiting. Ask existing staff to recommend likely candidates. They may know of former colleagues who would be ideal. Also talk to suppliers, networking groups and business clubs that you are involved with.

Interviewing

Interviewing requires time and preparation and is not simply about assessing the abilities of potential employees.

Prepare in advance and reflect on the person specification and job description. Your aim is to get quality information from the candidate so you can assess them fairly and fully against your needs.

At the same time, think about your business and how you will sell the idea of why the candidate might want to work with you instead of a competitor. By selling your business as a good place to work with opportunities to progress, you are more likely to attract a better calibre of candidate who will accept your job offer and ultimately improve your business.

To ensure that your interviews have a clear and consistent structure, follow this outline:

Ø Welcome the candidate and put them at ease
Ø Introduce yourself and briefly explain the interview process
Ø Explain the business background and provide some information on the role and what it will involve
Ø Encourage the candidate to talk about their skills and experience and how they apply to the vacancy
Ø Ask open-ended questions so that the candidate has the opportunity to express themselves and expand on your questions
Ø Keep control of the interview. If you feel the candidate is going off-track, turn the focus back to the information you need
Ø At the end of the interview, ask the candidate if they have any questions
Ø Inform them of the next stage in the recruitment process, e.g. second interviews and estimated timescales
Ø Thank the candidate for their time

This structure can of course be adapted to suit your needs. For instance, you may want to include a role play or test that will help you assess the interviewee and their ability more accurately.

Ensure that you have a marking structure that assesses the key competencies for each question. For instance, if you are assessing communication skills, the response from the candidate should show the skills the candidate portrays in communicating the answer. This will allow you to easily compare competencies and overall scores for each interview.

Once the offer has been made and accepted verbally, ensure the same is done in writing. Make sure you think about how you will welcome, train and induct your new recruit to the business so that they are fully equipped to immediately add value.

Wider Strategy

Finding good staff and recruiting the right staff will add to business success. Recruitment should be planned and executed along with the overall business strategy and a budget should be allocated to it.

Review your business goals. For instance, if you plan to increase sales it will have implications on sales resources. The exact implications will depend on how those sales are to be achieved but the likelihood of requiring additional sales staff may be high.

Finally, once you have successfully recruited and trained new staff, ensure that motivation is kept to a maximum. Allow staff to work towards promotion, conduct regular appraisals, training plans and pay reviews.

Great news for social enterprise businesses - the government have recently allocated £1.4 million in grant finance to UK based social enterprises.

The grants will be used to help fund businesses involved in community health and social care. The full news report is available by accessing this charity funding link.

Any charity or not for profit organisation can also benefit from a reduced price grant funding report from Trade Solutions Business Consultancy.