REVEALED: THE BLUEPRINT FOR BUSINESS SUCCESS Find out if you are achieving your full growth potential

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1 REVEALED: THE BLUEPRINT FOR BUSINESS SUCCESS Find out if you are achieving your full growth potential Overview Running your own business can be tough. There s a huge amount of advice out there but you ll probably find that some of it is either too specific or too generic to be relevant to your personal set of circumstances. What small business owners really want to know is what makes a successful business successful? It s an age old question, and whilst there s no magic formula, recent research has uncovered a Blueprint for Success a number of crucial steps which every business owner should consider. Importantly, most of these can be implemented by the majority of businesses to ensure they are maximising their potential for growth and profitability. Research A six month study by Warwick Business School and Royal Mail has compared growth rates amongst 500 small and medium sized businesses and their competitors. The study identified six key factors that set the most successful firms apart. The six key factors vary in the probability that they will support above average performance (indicated in brackets): Flexibility (45%) Business process efficiency (41%) Marketing (38%) Human resources planning (35%) Growth ambition (34%) Research & development (32%) Whilst the blueprint highlights these six areas of success, not all will apply to each and every enterprise some will be more relevant than others. However, the good news is that implementing any three out of these six should materially enhance the performance of your business. Royal Mail Group Ltd 2010 Page 1 of 5

2 Encouragingly, the study revealed that 43 per cent of small and medium sized businesses already meet this Blueprint, while an additional 44 per cent need to implement just one more of the six steps to be on course to increase their turnover by up to a third over three years. The research suggests that if businesses that are just one step away were to meet the blueprint, this could be worth an extra 15 billion to the UK economy. So how do I implement the Blueprint for Success? Royal Mail has developed a simple checklist to help guide small and medium sized businesses toward their goals. The selection of which of the six elements of the blueprint to focus on depends on factors including market sector, age, size and current circumstances. If for example, you run a small estate agent, research & development may be of less relevance, but marketing will prove critical to success. Likewise, sole traders have little need for human resources planning. To find out which factors are most relevant to your business, and how close you are to fulfilling each and therefore to meeting the blueprint consider the following: 1) Flexibility Firms need to adopt internal structures which are flexible and ally this with strong and committed relationships on the sales side of the business. Having flexible structures and a can do attitude will enable firms to meet or surpass customer expectations leading to follow-on sales and positive word of mouth recommendations. Effective delegation of decisions is an example of an important element of flexibility for many small firms led by an entrepreneur or owner-manager. For example, who makes the urgent decisions when the MD or owner-manager is uncontactable and an important customer is waiting? a) What is your management style? Do you operate an open door policy, manage by consensus with your team, or do you favour a more hierarchical approach? b) Do you have a structured organisation in which individuals are assigned clear roles and responsibilities? 2) Business process efficiency All firms have internal processes for order management and delivery, logistics, quality checking, for example. The experience of respondents to the Blueprint survey suggests that making active attempts to evaluate and optimise these processes is a significant factor in delivering above average growth and profitability performance. Royal Mail Group Ltd 2010 Page 2 of 5

3 In some cases this may mean simplifying and taking cost out of these processes. In others, process development may be needed to better meet quality standards or improve delivery times. In either case, as the other elements of the Blueprint suggest, there is also a need to retain flexibility and responsiveness within the process. a) Do you always look for competitive quotes for goods & services to ensure you re getting the best value? Are you prepared to take the time to shop around? b) Do you set clear process targets such as cost reduction or delivery times? Do you benchmark these against best practice or competitors? c) Do you regularly review and improve process efficiency and implement changes where necessary? 3) Marketing Marketing to target specific audiences to make them aware of a firm's products or services is essential. The study suggests that using a variety of techniques for marketing reaps its rewards as those businesses that achieved the Blueprint adopted more channels than those that did not and 67 per cent used posted communications. a) Does your business successfully use marketing methods and approaches? b) Do you fully understand the potential of marketing how it can dramatically affect your bottom line? c) Have you considered to what extent the marketing methods you use could complement one another and how you might extend the reach and impact of them in this way? For example, have you ever considered supplementing a mailshot with s and vice versa? 4) Human resources planning Firms human resources are both their greatest asset and often their most significant cost. It is perhaps not surprising therefore that careful planning in this area emerges as one of the six key components of the Blueprint. It is suggested that any business which employs people should have a HR plan. First, the plan should be oriented towards supporting a growth aspiration. Second, it should be geared to increasing the flexibility and responsiveness of the firm. And, where it is relevant, it should help the firm develop its research and process change capabilities. a) Is there a structured plan for HR needs? b) Do you train your staff? How do you ensure they are challenged and motivated? How do you plan to develop them? c) Do you measure and track staff satisfaction? Royal Mail Group Ltd 2010 Page 3 of 5

4 d) Do you know what level of staffing with be required as you grow, and in what capacity? 5) Growth ambition Having a growth objective or ambition will shape the type of strategy firms adopt, their willingness to invest in the business and their willingness to put effort into the firm. Previous research has shown that ambitious entrepreneurs put more effort into running their firm, use a wider variety of finance sources and tend to adopt a more team-based approach to managing their businesses. Maintaining this type of growth orientation in the tough market conditions which firms face at the moment is difficult, but the Blueprint results suggest that this is a key factor in achieving above average growth and profit performance. a) Is there an explicit strategy to grow sales and profitability? Have you identified market opportunities that you re keen to exploit? b) Have you identified what your funding needs are in order to fulfill your growth potential? c) Do you have a clear idea of what success looks like? Will you know when you ve reached that point? 6) Research & development In broad terms this may involve exploring new technologies or new equipment but may also relate to market research or research about new potential partners or competitors. In either case the importance of research and development within the Blueprint emphasises the importance of firms having a thorough understanding of their markets and the best ways of delivering their services and products. Undertaking research and development can have another advantage, however, in helping firms to identify new external ideas which can improve their internal processes or extend their range of products or services. This intelligence role of research and development is seen by many as increasingly important as markets become ever more competitive. a) How do you compare against competitors when it comes to the development of new products and services? Are you ahead or behind the curve? b) How do you follow emerging research and development trends & opportunities? c) Are you planning any new product or service development in the near future? What would it take to do so? Are you looking to expand beyond the territory or market in which you re presently trading? Royal Mail Group Ltd 2010 Page 4 of 5

5 Now what? How can I make the Blueprint work for my Business? To give your business the best chance of achieving the blueprint, consider incorporating these simple next steps into your planning: Identify the blueprint areas relevant to your business. For example, you may own a small fashion boutique which is booming. As such, you might look at the growth ambition section to effectively plan for your second and third stores List your business strengths, weaknesses, opportunities and threats be as pragmatic as you can. You might find a friend or relative has a useful outsiders perspective and will give you honest feedback or valuable insight Starting with your threats and weaknesses, identify which of the blueprint success factors (and there may be more than one) would best resolve or help improve your current situation. For example, you may identify staff retention as a weakness. In which case, think about how you might develop a robust human resources plan that maps talent and skills rather than simply hire available people and hope they fit in Move onto your strengths and opportunities. How might the blueprint help you build the successful elements of your business? Do not rest on your laurels find ways to build and innovate or your competitors will. Think about ways you might be able to raise the profile of your business through different and varied approaches Finally, develop a six, nine and 12 month action plan to implement the areas you have identified your own Blueprint for Success. Include key dates and deadlines to keep things on track. Regularly review progress against this plan and address barriers to progress Royal Mail Group Ltd 2010 Page 5 of 5

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