SMEs are generally terrible at planning. I use an example with my students. Would you leave work, go home, pack whatever clothes are in the cupboard, take whatever cash is in your pocket, get in your car, drive until you run out of petrol, and then have a holiday wherever you run out of petrol. The answer is always no. And yet most SME owners run their businesses in this way.
They simply arrive each day in the hope of sales arriving. There is no plan. No strategy. No direction. There is simply ever-fading hope.
You need to read as widely as possible in order to ensure your strategy is informed by your environment. A PESTEL analysis is not a once-off annual event, but rather a way of life. It is about knowing and understanding what is happening at all times. How often do you hear businesses who are in trouble state "I just did not see it coming. Suddenly ....". Remember nothing is "suddenly". It is always announced in advance. Even the current global financial crisis was being talked about in advance.
So read a book or two on strategy. Gary Hamel is a strategy author who can give you some good tips and insights.
Read, read, read!
Showing posts with label PESTEL. Show all posts
Showing posts with label PESTEL. Show all posts
Sunday, June 7, 2009
Sunday, May 17, 2009
SMEs - Step 6 in the business planning process
The sixth step is the SWOT analysis. Essentially this is an analysis of the firms strengths and weaknesses in the context of the PESTEL analysis.
Remember that not everything in the environmental analysis is relevant to your business.
PESTEL + Weaknesses = Threat
and
PESTEL + Strengths = Opportunity
The secret to the SWOT analysis is to be realistic and objective in your analysis.
Remember that not everything in the environmental analysis is relevant to your business.
PESTEL + Weaknesses = Threat
and
PESTEL + Strengths = Opportunity
The secret to the SWOT analysis is to be realistic and objective in your analysis.
SMEs - Step 5 in the business planning process
The last step in the corporate strategy is the environmental analysis, more commonly known as the PESTEL analysis.
This could arguably be done earlier in the corporate strategy process, and in fact should best be done as part of each and every step of the corporate strategy process. This environmental analysis is crucial to success, as these external factors are outside the control of management and consequently it is imperative that management are aware of their possibly impact on the corporate strategy.
Too often businesses become introspective and consequently fail to take cognisance of the external factors that surround their businesses, and then they later wonder what caused their businesses to fail.
For the uninitiated it is Political, Economic, Social/Cultural, Technological, Environmental and Legal environments which are to be monitored.
This could arguably be done earlier in the corporate strategy process, and in fact should best be done as part of each and every step of the corporate strategy process. This environmental analysis is crucial to success, as these external factors are outside the control of management and consequently it is imperative that management are aware of their possibly impact on the corporate strategy.
Too often businesses become introspective and consequently fail to take cognisance of the external factors that surround their businesses, and then they later wonder what caused their businesses to fail.
For the uninitiated it is Political, Economic, Social/Cultural, Technological, Environmental and Legal environments which are to be monitored.
Saturday, June 28, 2008
SMEs - becoming opprotunity aware
SMEs generally survive big business, simply because they find niche markets, or because they are innnovative. Research shows that innovation is generally driven by SMEs. So how do you become innovative? Is innovation about coming up with creative ideas? Not really!
First off you have to know what is going on in the market place. So to do that you need to read, and obviously if you already trade within the industry, it is a lot easier to know what is going on in the industry. Often reading customer complaints in trade journals and other magzines, as well as internet websites that are specific to the industry, often provide an insight into customer needs. Never lose sight of the fact that innovation is generally driven by customer dissatisfaction.You need to read very widely. not only to find problems, but also to find solutions.
Remember that much innovation comes from other industries. A good example is Dell and Amazon. Dell sarted selling stuff locally in the USA using telesales and then moved to selling internationally on the internet. Amazon thought, if they can sell computers, why can we not sell books? Two very different markets - one solution! So get reading and find your next big opportunity!
First off you have to know what is going on in the market place. So to do that you need to read, and obviously if you already trade within the industry, it is a lot easier to know what is going on in the industry. Often reading customer complaints in trade journals and other magzines, as well as internet websites that are specific to the industry, often provide an insight into customer needs. Never lose sight of the fact that innovation is generally driven by customer dissatisfaction.You need to read very widely. not only to find problems, but also to find solutions.
Remember that much innovation comes from other industries. A good example is Dell and Amazon. Dell sarted selling stuff locally in the USA using telesales and then moved to selling internationally on the internet. Amazon thought, if they can sell computers, why can we not sell books? Two very different markets - one solution! So get reading and find your next big opportunity!
Wednesday, June 4, 2008
SMEs - business planning and the format (2/2007)
There has been some discussion on the topic of whether a business plan is necessary. but the real issue in mond mind is only one of whether to document the business plan or not. However, whether you believe a business plan should be in writing or not, you still need a format to work to.
A wide variety of formats exists but the one I have found covers all the critical success factors in business is as follows. This is the one I use and teach my clients and students when lecturing.
* Business model
* PESTEL analysis
* SWOT analysis
* Marketing plan
* Human resources plan
* Financial plan
* Harvest plan
Business model - How will this business make it's core profit. It helps to keep the business focused on the key areas and not get distracted.
PESTEL analysis is the external environments which we need to understand, in order to know what their impact on our business might be. They must be considered in the local, regional, continental and global context. The acronym applies to the Political, Economic, Social and cultural, Technological, Environmental and Legislative environments.
SWOT analysis is the internal analysis of the entrepreneur's and the businesses Strengths and Weaknesses, and then using them to consider how the environmental issues will impact negatively as a Threat or positively as an Opportunity for the business.
Marketing plan is the plan on how to grow your business. Read Philip Kotler for more assistance on this subject.
Human resources plan looks at what people and skills you will need to achieve your growth, and allows you to plan for how you will get the skills/people.
Financial plan looks at the financial implications of the marketing and human resources plans.
Harvest plan looks at who will want to buy the business in the future, what the buying triggers will be and what you are likely to want to sell for. This then allows you to decide at what point you will sell the business and harvest the wealth you have created.
Rob Smorfitt
A wide variety of formats exists but the one I have found covers all the critical success factors in business is as follows. This is the one I use and teach my clients and students when lecturing.
* Business model
* PESTEL analysis
* SWOT analysis
* Marketing plan
* Human resources plan
* Financial plan
* Harvest plan
Business model - How will this business make it's core profit. It helps to keep the business focused on the key areas and not get distracted.
PESTEL analysis is the external environments which we need to understand, in order to know what their impact on our business might be. They must be considered in the local, regional, continental and global context. The acronym applies to the Political, Economic, Social and cultural, Technological, Environmental and Legislative environments.
SWOT analysis is the internal analysis of the entrepreneur's and the businesses Strengths and Weaknesses, and then using them to consider how the environmental issues will impact negatively as a Threat or positively as an Opportunity for the business.
Marketing plan is the plan on how to grow your business. Read Philip Kotler for more assistance on this subject.
Human resources plan looks at what people and skills you will need to achieve your growth, and allows you to plan for how you will get the skills/people.
Financial plan looks at the financial implications of the marketing and human resources plans.
Harvest plan looks at who will want to buy the business in the future, what the buying triggers will be and what you are likely to want to sell for. This then allows you to decide at what point you will sell the business and harvest the wealth you have created.
Rob Smorfitt
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