Wednesday 1 April 2015

What! YOU a Leader!

What is Leadership to YOU?


Leaders matter because they drive organisations forward


Leadership is never just a title. Leaders are people who show the way, they challenge people and make decisions, they are the people others look to as role models and for authority. Everyone can identify a good leaders when they see them in action, but what makes a good leader is always open to question as to which attributes really matter. Situational leadership, picking the right attributes of leadership for the situation you face, for the list below, is the key to great leadership, the ability to understand the leadership needs of the people you lead at any time.



Leadership skills leaders need to be demonstrated by someone who wants to lead their business successfully skill developed by Richard Gourlay leadership consultant, busienss advisor and independent NED


I have met many leaders who try to do all these things, 'trying to be all things to all men', but in doing so fail to lead. Leading people must always start by leading yourself, that means by believing in yourself, in your abilities and that your belief motivates and empower your team to perform. GREAT LEADERSHIP IS NOT WHAT A LEADER DOES BUT WHAT THEY INSPIRE OTHERS TO ACHIEVE. This essential first element, a leader's core belief in themselves and what they stand for is the self-branding which other people buy into. 


Leadership starts with having a Clear Vision 

True leadership to me is always shown by how a leader develops and owns their vision for their organisation. Having a clear vision which reflects what they stand for, is the most demonstrable way a leader can communicate their core beliefs. Having a vision for the future pulls together a leaders core beliefs as a human person and as a leader.  What you stand for, reflected in how leader behaves to others, is the most important value a leader can portray. 

The vision a leader demonstrates not only reflects their core beliefs in themselves but more importantly in their team. That faith is reflected in the leader's intent, what they are setting out to do. How bold, how courageous their plan for the organisation is an important element in successful leadership. Many great teams fall apart as people leave, not because of poor leadership in leading people in their role, but due to a lack of inspiring aspiration from the leader. Where leader's change from being aggressive and assertive and play safe and show little aggressive intent, then aspirational teams often breakup as the aspiration breaks down.            

3 key Leadership Elements

The 3rd element of a leaders vision is in their actions. Does the leader lead form the front, or is all talk. Great leaders know that being seen to lead is easy when things are going well, but truly effective leadership is about being visible and determined during the difficult times. When nothing is going according to plan. Taking the first step into the unknown, is demonstrating our belief in your vision as is rallying the troops after a set-back is belief in your vision, these are the moments of truth for a leader, are they there at the front or hiding away leaving others to pick up the pieces.   

The 3 Elements In Effective Leadership: 


The three elements which determine a truly effective leader:

A leader’s core beliefs
A leader’s aspiration 
A leader’s actions

Each of these three elements can be defined with three simple questions:

  1. What you really believe is the essence of who you are? (core beliefs)
  2. What will you commit to do each and every day to ensure that those core beliefs are demonstrated to your team? (aspiration)
  3. How will others recognise what you believe in what you do?  (actions)

The challenging part for any leader is how do you know you as a leader are communicating that pure belief.  The rousing speech, the motivational run around the team and the congratulations as people achieve results are not where you will find the evidence of your leadership.  

Evidence of leadership comes from where you are taking your people. Not the destination, but the direction and pace of travel. A leader's beliefs, aspirations and actions are best demonstrated when needed most, when things aren't going well, when are where there is uncertainty and confusion. 

"True leadership skills, and the leaders' character come out when setbacks occur, that's when leaders need to stand up and stand out"


When things don't go according to plan that people look for leadership and look at leaders, not just as a role model but to look at who they really are. Inspiring someone who is succeeding is just management jumping on a bandwagon: leadership is when people are struggling, or failing, and the leader comes to them listens, refocuses them and inspires them to try again with new tools or in new ways and then supports them every step of the way to success.

Here's three useful ways for leaders to see how if and how you are delivering effective leadership:-

1. Strategic Leadership 

Are you leading from the front? Have you got plan which inspires and motivates people about the future. If not then spend time to develop your strategic plan for your organisation. If you are not working ON your business, they you are stuck working IN it. 

Do your people know what your plan for the organisation is and looks like? Do they know where they are going and do they understand where and more importantly why they are going that way? Ask your people what they know about the future direction of the organisation, start with the person who knows you least and work backwards. What do you learn about how your future plan is understood and valued across the company?

 If you don't have a plan which everyone understands and values then it is time to step out and work on your forward Strategic Plan.

2. Self-reflection: 

Think about the impact you have as a leader. Are you inspiring people or managing people? Leaders motivate others to act, managers conversely tell others what to do. Leadership is not about managing, but motivating through setting an example. 

Sit down and think about what you can do to deliver more effective leadership rather than being pulled into a glorified management role. Get yourself an experienced mentor to bounce ideas around with, from outside the organisation if possible to help you focus on your leadership skill development.   

3. Feedback: 

Look at both the verbal and nonverbal cues from people you work with. Do they readily engage with you? Do they give you honest feedback openly and frequently? Do people really want to work with you, or do they try to avoid you at almost any cost, or only come to see you when they have good news to share and look for praise from? 

This type of feedback is invaluable in monitoring how you as a leader are performing day-to-day in your role. If people are generating ideas and asking effective questions which test and validate your strategic plan then you are probably leading them well. If not, then the verbal and nonverbal clues of silence and evasion are probably an alarm bell sounding in your ear to change committing quickly. 

I hope that helps YOU become a better leader, if you need more support get in touch to see how I can support you lead your people better. 

Richard Gourlay leadership consultant, business leader mentor, strategic consultant, Independent NED, business advisor, Dumfries, UK

Richard Gourlay provides leaders with ideas and inspiration to lead their organisations. From strategy development to implementation, he works with leaders to work on their business rather than in their business. His online mentoring enables leaders to develop their forward strategic plan enabling them to lead their organisation forward with their plan to succeed.

Wednesday 28 January 2015

What Great Leaders DO Differently

What happens without leadership, article by Richard Gourlay on what Great leader's do differently to succeed as business leader by Richard Gourlay NED, business consultant, business advisor

Peter Drucker's iconic quote above defines the need for leadership, but what makes a great leader? Is the question which people placed in any position of authority, want to know. 


What great leaders do differently to succeed by Richard Gourlay
Leadership is often described in terms of being the figurehead, the ultimate power and the final authority.  

While there are many excellent qualities which people can identify in good leaders, these traits are the outcome of leaders being bale to work well with people inside their business. What makes the exceptional leaders is not people doing all of them better than average, but being able to do a few of these core skills to an outstanding standard, making them great leaders. Great leaders play to their strengths, not trying to do everything, just the things that matter, those which make a real bottomline difference in performance. 


Leadership Skills

Leadership skills, those personal attributes which people recognise as able to inspire others, are always built upon the ability to motivate other people. All leaders must be able to inspire, to keep people driven and focused on their goals. 

Quote by Richard Branson about leadership and how he does things differently quoted by Richard GourlayThere are a number of ways in motivating people, for some using their charisma and energy can be great motivators, their personality drives people to follow them. This type of charisma leadership is often focused around the culture of the personality, the successful sales person, the inspiring leader, using their relationships with staff and often key customers, they lead through the force of their personality.   

For others their technical knowledge and expertise within their field provides the inspiration for others to follow. Their ability to foresee and create products and services which meet target customers needs and exceed expectations open up markets and generates business through the leaders insight and forethought. This type of leadership, the technical leader, relies more upon their ability to achieve results rather than to personally motivate.   

No One Leadership Type

Being a leader, either by be placed in a position of leadership or by the accident of assuming the role, either as the inspirational or technical leader within an organisation, puts pressure on leaders to perform. Being the focus of attention, the decision maker, requires leaders to develop a range of skills to lead in a number of situations and to lead different types of people.  

There are no definite way of stating 'do this to be a great leader', everyone can be a leader, it all depends upon the circumstances, but what makes great leadership, is not just the ability to take decisions,  but a few specific factors often grouped into three areas which separate great leaders from the rest. So here's what I see great leaders do differently.  

Leadership skills what great leaders do differently by Richard Gourlay NED and business consultant.

Importance of Diverse Voices

The first thing great leaders do differently is create diverse and strong networks of contacts. If you always listen to the same people you will always be limited to their views. Most leaders listen and make decisions based on a small group of trusted advisors. 

The weakness for leaders of always listening to the same inner group is that as change happens to our business, as it grows, as change impacts on our markets this inner circle becomes outdated, not fit for purpose. Those people that leaders listen to when they are starting out, for example you first accountant, maybe a compliance account (keeps you legal) as your business grows you need new services and expertise (expansion funding, tax advice, etc) outside that persons skill set. Great leaders recognise they need to add to their advice panel, good leaders often don't.

Investing in your trust network is a core skill which great leads do, they sharpen the saw as Stephen Covey phrases it. Always be learning, sharpening your skills by working with the right mix of people who you trust to take advice from. This investment by great leaders is about having a diverse set of trusted advisors who provide the balance and foresight which great leaders need to think ahead with the right sources of information. The great leaders I have seen often introduce Non-Executive Directors, new experienced people from different industries and widening the trust network with greater diversity of views.

Leaders Stand Back

The second thing great leaders always do is the ability to stand back and see the big picture of your industry. The role of being the general commanding your resources. Great leaders not only command today's activities, as the ultimate controller, but are always looking at develop fresh understanding what is driving your industry, the change making factors. 

"Where you are is not as important as knowing where you are going and why." Great leadership is about creating the tomorrow you want to achieve.  It is looking for the drivers of change within your business.  It is one of the hardest skills which great leaders have to master. It takes time, effort and resources, often with blind alleys and a high degree of uncertainty. 

The struggle for busy leaders is to value doing enough of the right research to create clarity in an unclear future, which changes matter and what impact do they make on the future of your market, your customer and your future as a organisation? These are the most important and valuable questions any leader can and must answer. 

The importance of understanding the impact change and using it to create your forward strategy is one of the defining characteristics of great leaders. Great leadership is about focusing on what you can change the future, not fire-fighting todays problems. Not only is it more productive but it is also the only way to be effective as a great leader. 

Be Decisive

The third and vital attribute of great leaders is that they make change happen. Sometimes seen as being ruthless to make change happen, great leaders are proactive in making change happen. This pro-activeness in making change happen, can see to others as utter ruthlessness, because great leaders can see why the change is needed, while those elsewhere in the organisation see the change but not the drivers of why leaders are making that change happen then and there.

Great leaders are not frightened of change and when I say change, I do not mean evolutionary or organic changes, but revolutionary changes.  Great leaders make bold changes at the optimum point for sustainable success, when do we need to make the change to succeed in the long-term. 

Good leaders make changes, but often only when they have few other options, or are forced into making that change, they are often reactive change, Great leaders on the other hand make proactive revolutionary changes because they can see the long-term benefit.

Each of these three great leader attributes support and drive all those other skills which good leaders often portray, and this is what makes some leaders great at leading their people and their organisations. 

By creating diverse trust networks it enables leaders to find better information about the future and the changes they need to make. This virtuous cycle is what makes some leaders great and very different from those who rely upon gut feel and reactive enforced decision making.   

If you would like to know more about what makes a great leader, you can read more about my work in working with great leaders, then get in toch to learn how I can support you develop your leadership skills: Contact Richard 



Richard Gourlay supports leaders develop their leaderships skills, from strategic planning to mentoring, based in Dumfries and Galloway, Scotland he covers the UK, learn more at www.richardgourlay.com  or Contact Richard 




Sunday 12 October 2014

Leadership is about YOU

Leadership is about YOU


Change is the law of life and those who look only to the past or present are certain to miss the future.” John F. Kennedy

Your brand is what people say about you when you're not there, by Richard Gourlay leadership consultant, independent NED and business advisor.
Who you are as a leader

When ever I look at any organisation I am in effect seeing the style and type of leader who runs it, their character shows through.

From the first online impression the brand portrays, to the real impression I feel when I walk through is front door and meet the people, the impact of the leadership is everywhere. Good leadership makes a good impression throughout, it should be seen and felt at every level.

I recently arrived at a new client to see that their disabled parking was at the other end of the car park from the front door, while the executives had named parking bays right next to the front door.

My first question to the directors was why? Followed up with the obvious second question, what first impression do you want to make to people about your values as a business? After a pregnant pause (and implausible excuse that HSE said we needed to keep the front area easily clear so the fire brigade could quickly be deployed), the directors looked at me and said 'we do have a written equal opportunities policy in place' and 'no-one has ever complained'. I then asked what impression this first impression gave to their staff, customers and suppliers? They said 'no idea, but now you mention it there are always a few staff comments when it rains about them and us culture'.

I often see great leadership happen through the delivery of small details which great results can be achieved. For any leader making change happen successfully relies as much on the big picture plan as the implementation of the minute detail. That detail delivery can only be achieved through the character of the leaders themselves. Recognising and using that individual style to mould and shape how leaders decide to lead is fundamental to leadership success.

Leaders Make Change Happen

Great leadership is about making change by demonstrating character-based leadership skills, in other words, leading from “who you are” and not from power or position. Everyone is different and that makes every leader different. Who you are is something you cannot change, successful leadership is about developing your style, based around who you are not on trying to be something you aren't.  Trying to be someone else, from Richard Branson to Steve Jobs maybe fashionable, but its not who you are, so learn from them but don't try to be them.

The idea of character-based leadership resonates with leadership advisors today. Why? Well in my example earlier the leaders were impressed by vehicles, thats how they valued their status, hence their focus as leaders was on highlighting that attribute of who they were. When they thought about what was really important to them they immediately realised what impression they wanted to provide and the impact their current focus was making. Reflecting to my observation and then positively responding to it, told us more about who they are and what was really important to them.

By the time a visited my car obsessed customer the following week, the personalised director parking places at the front door had been replaced by disabled parking area, and the directors cars were parked alongside everyone else in the general parking. They recognised their characters as leaders were being reflected in their business, and not for the best. The result of that simple change was that staff started to engage with them more openly and the staff survey a few months later reported that people felt more valued, when questioned further staff reported that everyone was now seen to be treated equally. 
Great leadership is always about change, not just making it but really understanding it and how to pre-empt where possible and react where necessary to it. Forward planning is the most obvious way in which leaders pre-empt their market. Planning for tomorrow as an inherent culture is one key attribute which sustainable successful organisations possess, but it has to be matched by a culture of implementation. Planning is only a dream if nothing changes. The ability to see that and make that simple immediate change, reflects an openness to change and an approach to listening and implementing change, not just talking about it.

What changes?

In business, everything changes all the time, innovative new products and services become mainstream, then classics then legacy then discontinued. Change is the law of life as John F. Kennedy said, great leadership is about looking for change.

Some changes can be strategic, such as new markets or new products etc but play to who leaders are come from soft leadership skills by playing on who you are as a leader. Playing to you and your style is often as important in delivering effective leadership.

Like to know more about how to lead your business successfully? then see How to Take the Guess Work out of your Business Success
Richard Gourlay provides leadership development programmes, including mentoring support for leaders, connect to learn more.  

Wednesday 28 May 2014

Using Talent Management as a Competitive Strategy

Why a Talent Strategy

Finding, winning, retaining and developing talent is at the heart of what makes a world-class organisation. Those businesses who strategically focus on having outstanding people outcompete those who are merely recruiting above average, but too few organisations recognise that focusing on talent is a distinctive business strategy. 

"Ultimately, the businesses that are going to win in the war for talent, are those that accept the challenges and opportunities presented, and adapt to a new way of recruiting..." Real Business

Talent management is not about paying higher, it is about a complete company wide strategic approach to people, focusing on them as the key strategic asset of a company. Its a different way of thinking about the total value of human capital within an organisation.

Talent Management as a competitive advantage, win talent to outcompete them by Richard Gourlay, NED and busienss consultant.

Businesses have always recognised the importance of outstanding people, but only relatively recently have businesses focused on the strategic competitive advantage that can be leveraged through talent management strategies. The benefits not only include lower costs per employee, lower staff turnover, higher effectiveness but ultimately the ability to strategically outcompete your competition with dynamic, highly motivated people.     

World-Class companies spend 27% less on HR and operate with 24% fewer staff, while still achieving higher effectiveness. (The Hackett Group)

Battle for Talent


In advanced economies the battle for talent is what drives the exceptional from the simply outstanding. Using talent to drive your organisation is becoming an increasingly viable option for brand leaders across an ever wider range of industry sectors to create a sustainable competitive advantage within businesses. The strategy of targeting the best talent, acquiring it and then developing it to enable their organisation to effectively outcompete their competition on more than product and service. 


Defining your strategic advantage through quality people is about setting out a standard of excellence to find, win and retain the best people provides a competitive advantage for many businesses. Professional services, such as legal, financial and medical have always focused on creating a vertically aligned talent development market from specialist schools, dedicated well resourced universities and then into the ivy league businesses. These originally informal models have now become established global standards competing around the world, now competing against each other in a global intellectual super race. World-class competition exists in many such high worth sectors with national and international industries established by trading blocks.

This is also a strategic model which international businesses are frequently adopting to enable them to ensure they have the human capital resources they need to succeed across a wide-range of markets, particularly those competing on a global scale from heavy engineering through to customer service.      

Integrated Strategic Approach


It requires firstly operational excellence within the Human Resources department to be successful, ensuring they are aligned with the organisations strategic goals coupled with an integrated approach to talent management. This integrated approach requires Human Resources to proactively work across the organisation rather than respond to it. Developing talent at the top end drives up not only the top performers but also raises the bar for all employees. A talent management strategy is about raising standards of excellence throughout an organisation not just for the high flyers.   

That approach also requires organisations to ensure that their vision and values are central to their talent recruitment and development strategy. Anyone can buy talent, but that is not a sustainable guarantee of success, because if you just buy talent then so can anyone else buy them off you. Sustainable talent development strategy requires more than just buying talent, it requires nurturing and developing people who believe what you believe, or as Simon Sinek says:-  

"If you hire people just because they can do a job, they'll work for your money. But if you hire people who believe what you believe, they'll work for you with blood sweat and tears" Simon Sinek  


A talent strategy is not just about accelerating the high fliers, the tomorrows leaders, the most successful companies develop a complete systematic, integrated approach across 'all the talent' management throughout the whole organisation.  While talent programmes tend by their nature to focus on the top talent, actually rolling the strategy throughout all the talents within the organisation creates, realises and sustains the competitive advantage of a talent strategy.


Focusing on Talent Reduces Costs 

By developing a talent strategy organisations can effectively reduce costs inside their Human Resources departments through strategic alignment, and more significantly reduce often hidden  ancillary costs and in the use of outside agencies, as well as the huge benefits of lower staff churn and backfilling, but fundamentally through strategic alignment throughout the employee life cycle.     

Having a clear strategic vision for Human Resources is central to the success of talent strategies. Without the strategic alignment, Human resources are focused on reactive tactics rather than proactive ones.  The costs of being reactionary in human capital terms are firstly being non competitive, but also HR departments cost more to run. 


Talent is a Culture 

Organisations which are reactionary to recruitment are increasingly suffering from the inability to win the top talent as peer review and social media drive the agenda of knowledge way from the company to its employees and directly to core target employee groups. This social media shift results in the control moving from how organisations wish to been seen as, to how they are really perceived by potential talent. No matter how big your brand or your marketing budget your reputation is what matters to knowledge rich target audiences. 


Talent strategies focused around creating world-class performance require increased focus on the development and performance of employees. That dedicated investment in strategic workforce planning creates effective resource planning aligned to strategic goals, rather than tactical ones which often leads to significant savings in staff and skill investment. Investment in skills which directly contribute to tangible strategic goals rather than abstract ones. In highly competitive markets, your business culture is often the key factor in achieving talent acquisition.    


The organisations undertaking and winning talent strategies are most noticeably those playing in highly competitive, high value global markets rather than at national scale, where being world-class is not an aspiration but a reality. They are also quicker at identifying skills that are needed by their company today and in the future, and often take a multi-year perspective that enables them to develop needed skills internally. 


Strategic Talent is the Future

World-class HR organisations have nearly twice the number of internal placements that typical companies have, saving significantly on time and costs and are also able to recruit staff externally much more quickly when necessary. The final big advantage that talent strategy organisations have is the direct link between employee engagement and performance, they are far more rigorous in measuring it as well as providing people managers with the training and support they need to be effective.

Learn more by contact me here Richard Gourlay 

Wednesday 3 July 2013

The TOP TWELVE Business Planning Mistakes



Business planning is often talked about as a challenging process to go through either to start a new business or as the essential process of taking ownership of an existing business. Many business plans fail to achieve their objective, not because they represent a bad idea but because they fall into classic business planning pitfalls or fall over blinding obvious credibility cliffs.

The business-planning process is in itself a very worthwhile pursuit, while they take a lot of effort and resources they are an excellent way for business owners to undergo. A business plan's primary purpose is to convey an idea with a view to achieving a specific goal, most typically in securing funding. 

Business planning mistakes and how to avoid them, by Richard Gourlay independent NED, busienss consultant and business advisor.



Always remember that a business plan needs to be tailored to its target audience, if you have different audiences you will need to be able to flex your plan to that audiences specific needs. That means shaping it, edit it and amending it to achieve your objective. 

If you would like to know how to avoid these top ten pitfalls and credibility cliff edges then click on the subject titles which are links at any time to see my step-by-step videos on how to avoid these pitfalls and credibility cliff edges. I have over the last 30 years been involved with hundreds of business developing business strategy, reviewing business plans and advising clients on how to implement a business plan. Below are my top 12 business planning mistakes business owners most often make, along with my thoughts on how to avoid them happening. 

Here's the top twelve business planning mistakes I come across:- 

1. Lack of Viable Opportunity

Every business plan needs to describe the opportunity in detail. It must also detail how that opportunity can, and will by this plan, be exploited profitably, effectively and successfully.  A good business plan can visualise the opportunity and articulate the company’s ability to reach a viable opportunity, this is a credibility cliff.

Tomorrow is a difficult place to plan for, but being able to identify and make that opportunity viable is the most critical test any business plan has. It is also the most common reason they fail. Your executive summary and the wider plan describes the viability of the opportunity in terms such as:-

  1. What is the problem which people  will pay to have solved?
  2. Does your solution solve this issue for a specific target market?
  3. Why would someone buy your solution over someone else's?
  4. Why are the benefits of your offering so compelling?
  5. Can you reach that target market with a compelling message quickly and directly?

2. Unbelievable / Unsupported Financial Numbers

Where any assessment of a business starts and often finishes is at the numbers, specifically on the projected Income Statement or Profit & Loss. Projections are just that, but they are vital and must be based upon clearly stated assumptions. Many business plans are written with numbers which just do not stand up even to a first glance. 

Dream numbers: in overestimating income and understating costs. 

Your numbers have to make sense and be realistic, if you are a new start-up then they must grow rationally from nothing, but costs will be incurred before turnover is generated, these need to be realised and recognised in your financials.

The financials must also make sense and be presented in a format which presents a clear case for the investment and the return you will deliver. Ultimately, they need to be credible, defensible and consistent. 


3. No Accessible Route(s) to Market

All opportunities are only prospective ones without evidence that the target market can be accessed profitably, this is a big cliff to fall over.

Entrepreneurs are inherently product focused, concentrating their energies on ‘the winning idea’ to the exclusion of many other important elements such as how they intend to access their customer base, a classic cliff edge for any plan.

"Built and they will come" is a great dream but a poor plan. 

A business plan must include a comprehensive, credible and costed analysis of how the company is going to access their target market in a cost effective manner. 

For that to happen your plan needs to really understand the target customers, their needs, and purchasing priorities. Turning historical data into information and drawing knowledge from it ascertain insight into their future purchasing habits. Only then can you demonstrate cost effective routes to market within a business plan.

4. Executive Summaries Which Aren't

Somewhere between a pitfall and a cliff edge, is the failure of the Executive Summary, to be either a summary or aimed at executives. The only part of any plan that will certainly be read is the Executive Summary and yet they rarely provide an effective summary of the business plan. A good plan highlights the key proposition of the plan and sells the proposal. 

Too many Executive Summaries either throw everything down in a jumbled mess, making them pages long and randomly pulling facts together, or they are so bland they say nothing!  

What's a good Executive Summary, one that states the proposition clearly and succinctly, a page is sufficient for any plan. The Executive Summary should clearly explain the whole picture including what investment is required and what it will deliver. The point of an Executive Summary is to inform the executives, so many it punchy, outcome focused and only ever write it at the end.  
     

5. Over Estimating Turnover 

Another associated key element of the plan which relates to this element is the estimations of projected turnover. 

While every business plan talks in positive terms (hopefully), the obvious and persistent danger is that the innate optimism of all entrepreneurs and their tendency to exaggerate every business opportunity. 

This pitfall is most easily managed using a realistic method for estimating income is to calculate the number of customers the business intends to capture and the average revenues. These two averaged inputs are easier to calculate and also to justify within a business plan.

6. Absence of Clear Objectives 

I could have put this pitfall at number one very easily. What is the main purpose of the plan?

If the plan's objective is to seek funding then it is vitally important to clearly describe the investment opportunity. While the plan describes the concept in detail, it must also address the primary purpose of the plan. So many plans fail to make it explicitly clear what the company's needs to be successful or what the investment will mean to the company.

A good business plan answers:

  • Why investors should investing in this business rather than anywhere else?
  • When will they recoup their initial investment and how and when it can be realised?
  • What is their expected return on investment?
  • How the company has managed all aspects of risk? 
  • Is the investment merely cash or do they need to bring other assets such as expertise to the table?

If you can answer these key questions, the intended audience will feel comfortable and be able to recognise that they fit the brief.

7. Non-Existent Cashflow Management

Particularly relevant to a new business, this is often an invisible cliff edge which business plans fall over on, is the ability of the business to articulate the differences between cash and profit. Running out of cash is the highest risk any new business or re-engineered business faces.

Good, positive, and conservative cash flow management is vital when businesses pursue investment opportunities where there are significant cash flows out, in advance of the cash flows coming in. This is the classic business plan cliff, which sends potential investors running.

If a business plan’s financial model is based upon selling on credit, then they receive the cash in the future, but need cask to pay expenses before that income hits their account, then they have a cashflow risk. This outflow of cash is the single biggest reason companies fail, its not margin, its rarely the product, it is invariably that they run out of cash.     

8. Non existent Management Teams

Throwing a few CV's into a business plan does not create a delivery team. Likewise a generic organisational chart with missing pieces and TBC (To Be Confirmed) is not going to inspire confidence  with investors to part with their cash.

Entrepreneurs can often sell an idea but they do not always inspire they can select a balanced team of people with the right skill mix, from the financial management to key leadership roles and the right operational team to deliver your ambitious plan.

Having a structured management team with operational structures is essential for success. Track records matter, as much as having clear roles and responsibilities laid out in delivering the operational plan which underpins the business plan.  

9. Poor Evidence of Demand

A significant area of concern when planning is justifying the sales forecast or demand levels for a product or service. This breaks down into the two main elements used in forecasting: the use of historical facts and the dependency of subjective assessment.

Sales forecasting, is the vital tool to identify the basis of all projected revenue figures that can be considered credible in the wider context of the plan. Unless there is verifiable demand for the idea, the risks grow out of all proportion, particularly if the initial start-up or investment costs are high.

Minimising risk in a business plan is all about gaining an understanding the potential demand and how the company will with this plan create or drive that demand rather than concentrate on ‘the product or the idea’. This classic cliff edge is a silent killer for investors, they don't believe in it.


10. Gaping Inconsistencies

An effective business plan needs to be consistent throughout as all the various strands are brought together into one single entity, the plan. It is pitfall which entrepreneurs gloss over, but investors relentlessly prod before committing to any plan.

If there are multiple authors of the plan the risks of inconsistencies will exponentially increase. Extrapolating data can also cause problems, using research data and then jumping from possible market size to sales potential and then sales forecast are classic pitfalls which need to be thought through. 

Presenters of the plan must have a simple narrative that runs through their plan, using key facts and staying ‘on script’ so as to ensure that a cohesive story is communicated. The numbers must also be consistent with the broader content so that there are no contradictions between them.

11. Not Appreciating the Competition 

There is always competition. Yet the number of times the phrase “there are  no competitors” appears in plans is considerable.

It does not matter how unique the proposition is there will also be some other business competing for people’s money. While there may not be a direct competitor it will certainly be a transfer investment that customers will be making. The business plan must recognise where the customers invest is coming from. If competitors are not identified in a business plan then the only credible assessment is that the company has not been diligent enough in its research.

Also remember that no company lives in a vacuum, as soon as you launch (or before) the marketplace will change. What will the competitive landscape look like in a few days, weeks, months or years? Can you create or establish significant barriers to entry, or is it likely that a successful market entry will be followed by better-placed competitors with greater resources, etc


12. Throwing Your Plan Out Too Soon

You never get a second chance to make a great first impression. Your plan needs to be right the first time and the content needs to be accurate, clear, concise and correct.

More often than not business plans need to be completed by a certain date and hence the final stages can be rushed, a classic pitfall.

Consequently, in many instances the final output does not do justice to the plan. Attention to detail at the end is vital, so ensure you have a completed plan with references and formatted correctly. Also ensure the content of the plan has been edited down to a digestible size, use appendices for details.

Get someone removed from the process to proof the plan. If a presentation is part of the process, it should reflect the Executive Summary.


In Summary

Business plans by definition have a purpose of communicating a course of action so make sure they do that primary role. Support inevitably means resources with the primary aim of the plan often being to secure financial investment. Explain the invest what it will be used for and how it will be protected from these classic pitfalls and cliff edges.

Writing a successful business plan is all about preparation, about being as thorough in your research and planning as is possible. By avoiding the cliff edges and pitfalls above, the chances of the plan objectives being met increase substantially.

Read more or get in touch to learn how Richard Gourlay can support your business growth. Or read more about strategic planning and business planning in my blog.


Featured post

Working ON Your Business NOT IN Your Business

Working ON Your Business not IN Your Business The pressure on directors and leaders to be not only great role models but also to be invol...

Most popular posts by Richard Gourlay