SME CLINIC With Kola Owolabi
We have been discussing, in the previous posts, the need to come up with brilliant promotional strategies to enable your business attract buyers in a big way to capitalize on the huge surge in demand that accompanies the end of the year season which we are now in.
At the same time, it will be a wise move for every business person to put together a new business plan that will guide the conduct of your business in the approaching year/years. The reason is very simple. If you have been working with an existing business plan for your business, I believe that the things that happened in Nigeria’s economy since this year started will have made nonsense of even the best prepared plan. Inflation has been officially put as close to 40%. Prices have doubled in virtually all product categories since the year started. This has affected everything about business particularly demand for product and services. The profile of demand in every sector of the economy is no longer what it used to be. It is similar to what happens in computer technology. There is a concept called “Moore’s law” which says that the processing ability of the computer chip, the device that is used for storage and processing of information in computers, doubles every eighteen months. It means that within that period the computer world has chips that can process information at half the time of what chips of the previous period. So, with the new chips, faster and more powerful computers can be produced. So within every eighteen months, you will have in the market, new set of computers and other accessories using the now faster and more powerful chips. This will also affect the software that will be needed to drive the greatly enhanced computers. Within eighteen months, new models of both computer hardware and software usually flood the market. At this period, a lot of users, particularly fairly big organizations phase out old computers and buy new ones that have superior capabilities.
The state of the economy of Nigeria has thrown up a scenario similar to what is happening in the computer world. Galloping inflation, with prices of products and services doubling within the space of months, leaves the entire system totally changed. If one had a business plan that was prepared premised on a particular price regimen, and prices have doubled, then that business plan requires review.
Just like what happens in the computer world where you may have to jettison your old computer hardware and software for new ones, you may have to jettison your old business plan and prepare a new one that will reflect the realities of the latest price regimen. Prices affect the behavior of buyers a great deal. You may have some buyers abandoning a product because of the high price tag it carries now. Those who may be able to afford it may be people within a different economic class. You may have to adjust the quantity of production because of demand that is coming down. You may need to adjust content of the product or service so that your business can still be viable. All these call for brand new projections which will affect the way you conduct your business if you still want to remain in business.
This means that it will be risky for you to continue with the guidance provided by the business plan you currently have. It is either that you initiate extensive adjustments to the existing plan or you prepare an entirely new one to guide you in the New Year.
For those who don’t have any business plan that you have been using, this is the time to quickly commission a business plan. No serious entrepreneur can do without a business plan. No business man no matter how big or small can exist without the benefit of planning. Having a business plan for your business and continuing to prepare a new one for each subsequent phase of growth cannot be overemphasized. Actually, the bigger a business grows, the more intricate the business plan that must be put together to guide the growth process. The business plan is also compulsory if the business is diversifying into something else.
If you see a business that has stood the test of time and is still growing, they have not been joking with habitual preparation and use of business plans.
Kola Owolabi (FIMC) Fellow of the Institute of Management Consultants, 08023203198, is the Executive Director of Centre of Entrepreneurial Research and Development based in Igbesa, a surburb of greater Lagos, in the vicinity of Crawford University. The organization has had the opportunity to execute landmark business development (business plan preparation and conduct of feasibility studies) and rmarket research briefs for organizations both within and outside Nigeria. You can send reactions to the contents of this post or any question you may have to the his telephone/WhatsApp line stated above.