It does not result in “pure blue sky”. Instead, it spans a journey of inquiry and activity – from creative inspiration at the ambiguous “fuzzy front end” through the detailed requirements of successful execution that lead to business impact.]
Strategic Innovation calls for a holistic approach that operates on multiple levels. First, it blends non-traditional and traditional approaches to business strategy, deploying the practices of “Industry Foresight”, “Consumer/Customer Insight” and “Strategic Alignment” as a foundation, and supplementing them with conventional
Consulting models.
Second, it combines two seemingly paradoxical mindsets: expansive, visionary thinking that imaginatively explores long-term possibilities; and pragmatic, down-to-earth implementation activities that lead to short-term, measurable business impact.
How to Improve Cash Flow
Cash flow is the life blood of every business and lack of cash is a much more significant cause of business failure than trading losses. The management and preservation of cash is a priority task which must be performed day in and day out in every business. This task is so routine that its importance is often overlooked. Here are some ways to improve cash flow:
Sales - Become more selective when granting credit.
Costs & Systems - Improve systems for billing and collection.
Credit Management - Generate regular reports on receivable ratios and aging.
Purchasing - Make prompt payments only when worthwhile discounts apply.
Inventory - Sell off or return obsolete/excess inventory.
Investment - Use leasing etc. to gain access to the use of productive assets.
Financing - Use factoring or discounting to accelerate receipts from sales.
For a list of over 30 ways of improving cash flow, visit the Checklist for Improving Cash Flow. Central to any program to improve cash flow is an accounting system to handle inventory, invoicing, receivables and payables. Allied to this is the need for frequently-updated cash flow projections to provide early warnings of possible liquidity problems and a foundation for improvement plans. For more on this, see the paper on Making Cash Flow Forecasts and download and try the Cashflow Plan software tools for making rolling 12-month forecasts and creating cash flow improvement plans
How to Wrap Up your Business Plan
Once you have completed the main parts of your business plan, insert a section entitled "Conclusion" and use it to wrap up your plan and to leave the reader with a warm and positive view of your business and its plans. Briefly, review what the business does and expects to achieve. Indicate why it will succeed and why it should be supported by investors etc. Be very positive and confident to encourage favorable reactions and draw on some of the strengths and opportunities identified in earlier parts of the plan dealing dealing with Mission, SWOTs, Strategies etc.
Confine your Conclusion to a few carefully-drafted paragraphs and write it once the plan is almost complete. At this stage, get someone to read a near-final draft plan to check that it makes good business sense reads well and is clearly presented. Ideally, that "someone" should be a detached, independent person involved in business with experience of your industry and/or business planning. Hopefully, they will be able to see "the wood from the trees" better than you can. Don't be resentful of any criticism - use it to improve the next draft. If your plan is lengthy or important, anticipate several drafts.
Key questions you should be asking yourself at this wrap up stage include:
Is the plan nicely presented - bound, page numbered etc.?
Has the plan been spell checked in its final form?
Is the plan's length appropriate to its purpose?
Have the business's (funding) needs been clearly stated?
Does the plan's summary stimulate interest?
Have all key questions been anticipated?
What likely objections remain unresolved?
Will the plan provoke the desired responses?
When Planning a Business make Explicit Strategic Statements
When planning a business, be clear and assertive about the strategies to be followed. Don't fudge or say "On the one hand ...... and on the other hand .....". If sound groundwork has been done on the background issues relating to the business, market and SWOTS etc., many key strategies will suggest themselves. You can weave these together into explicit strategic statement(s) of intent. For example:
Any Inn’s central objective is to become a full-line supplier. It will reduce its cost base through introducing new processes as result of licensing-in technology in parallel with broadening its distribution activities financed by retained profits and external debt.
Our aim is not to encourage planning by words but to illustrate the types of issues that might be considered when formulating explicit strategies. These can be applied equally to start-ups and established businesses. Of course, the big distinction is that the start-up is building strategies from scratch without the benefits of any market position, momentum or pre-existing strategies.
Any selected suite of strategies must be integrated and internally consistent, and in-line with the business's broader vision, mission and objectives (see Developing a Strategic Business Plan). There is little point in a business claiming to be technologically advanced if its R&D spend is sub-critical, or aspiring to become a leading brand if it has neither products, nor funds nor distribution to ensure this could happen.
Strategic statements can be defined as broad indicators of the direction(s) in which a business should be driven in order to fulfill its vision/mission while taking realistic account of its resources, constraints and opportunities. They also serve as the link between the business's objective and actions plans and should result in a series of integrated sub-strategies and action programs with goals, budgets, and timetables.
The latter can be most effective when linked to specific functional areas within the business e.g. sales, marketing, operations and so on. Limit the number of sub-strategic (tactical) programs to what can be realistically achieved within a realistic time frame and, if necessary, prioritize them. It is possible that just one strategy is needed for each of the business's main main functional areas.
Stating Your Funding Requirements & Proposals
Having made great progress with writing your business plan and crunching the financials, you may identify a significant funding need that cannot be bridged from your own resources (and those of your relatives, friends, colleagues, credit cards, local bank manager and so on) or from the business's cash flow. Consequently, you will need to raise external finance in the form of equity or loans or an equity/loan combination. When writing your plan, devote a short main section (immediately after the financial section) to present your needs and proposals. Here are some suggestions:
To assess funding requirements, compile your projections without any external funding and take note of the peak cash deficit and its timing. Your total funding requirement is likely to correspond to this deficit. It should be injected (in one or more trenches) ahead of being required so as to eliminate (or minimize) deficits and perhaps create cash cushions. Analysis of projected financial ratios (debt/equity, interest cover and current asset) will help determine the optimal mix of debt and equity.
When assessing funding needs in #1 above, you should plan to finance the "most likely" case, or even "worst" case, rather than for the "best" case as revealed by sensitivity analysis. Whilst the "best" case may show the smallest funding need, it may be unattainable due to the inevitability of some aspect of the double (costs), double (time) or half (revenues) rule.
Summarize and tabulate your funding requirements. Indicate planned uses, possible sources and forms (equity, loans, grants, credit etc.), likely timing, security offered and desired terms. Mention any conditional or firm funding commitments already secured. For the benefit of prospective investors, indicate the likely equity funding required; range of the equity stakes on offer; exit routes (IPO, trade sale, buy-back etc.); board representation; and make a stab at the projected returns on their investment.
If presenting funding proposals, bear in mind the golden rule - he who has the gold makes all the rules. If valuing your business, be realistic and base it on more than one method of valuation e.g. net asset value, price/earnings ratio, capitalization/revenue ratio, industry yardsticks and so on. Take account of market sentiment/conditions, "going rates", maturity of the business and degree of risk associated with its plans.
Restrict this section of your business plan to less than one page. Keep it factual and avoid any "over-the-top" hyping of your business as the greatest investment ever!
If planning to raise equity from venture capital or "angel" sources, allow adequate time to raise it. Depending on the amount needed and track record of the promoters/business, this may take several months and tie up significant management resources throughout - brace you for several re-drafts of the business plan and financials.
Of course, you may wish to withhold specific funding terms until you have met possible investors or lenders face-to-face and heard their initial reactions. In this case, this section would be confined to a description of funding needs and possible uses, sources and forms.
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