Strategic thinking and planning must be the first step to running an effective business, says accountant and business advisor Michael Ogilvie.
Michael, a director with OBC The Accountants, is currently working with a fast-growing Bulgarian company to help them prioritise their plans with the aim of finding the way of generating the most profit consistently for the future.
Michael said: “It is not only lonely being an owner and a leader but it can be very, very frustrating and in my experience unless you do the right strategic thinking and planning first, you will generally ask yourself the wrong questions which will only give you the wrong answers causing you to make the wrong decisions for your ultimate success.”
When Michael advises a business, his first request is that all key team members go away and reflect about what they really want in the future from their business and how they feel their lives ideally fit into the company and, ideally, how they would like their business to fit into their lives.
He also urges them to think about a possible future exit, either partial or total, so effectively owners are starting with the end in mind.
He explained: “So in simplistic terms, before everyone involved allows themselves to get diverted into the nitty gritty of “how” (this is always tempting to do, and does happen most times), I strongly emphasise the need to do our best initially to think and plan carefully and to be clearer about their “what” or “whats”.
“I would then ask them and test them carefully about analysing their “reasons why” to check for transparency, congruence and consistency between all the main parties involved, which can also include spouses, who are sometimes mistakenly forgotten in this process.”
Other key steps to planning a more effective business include:
Understanding how the business and operations work as well as how they do not work
Understanding who and what generates profit in the business
Ensuring the business management team makes the right decisions at the right time to generate sufficient profits not only to reward, but also reinvest in future growth
Once there is a clearer picture and understanding from strategic thinking and planning, then priorities and focus can be established for everyone so they are clear in their roles and where they are heading.
Michael concluded: “Of course, once you start working on the “How” you will never stop as it is a never-ending process especially if your “how” is actively looking to find the “wow” in your processes, your team and in your customer interaction.”