A Personal Epiphany Regarding Planning for Small Business Operators
Anyone who has known me for longer than 5 minutes as a business leader knows I have a, we’ll call it a bit, of an issue with the freeness with which the term ‘strategic’ is used with respect to business planning. I shall hop onto my well-worn soap box briefly, for those readers unaware of how boring I can become in such conversations.
A strategy is something you have to give you direction, it is used to light the way, to ignite the fire and illustrate on a map your destination. Your business plan is simply the means by which you shall get there. A strategic plan will speak just as emphatically about what you’re not as it does what you are, that is; it should clarify your definition. The issue, to which I speak regularly, is that small business confuses these two things and believes “we shall increase revenue by 15% and reduce costs by 10%” are strategic statements.
Your strategic statement should indicate where you plan to sit within your marketplace, how you plan to finance this position (cash or credit) and WHY! OK, rant over; now let’s get into my latest epiphany regarding small business planning.
Last September, I became General Manager of MyCRA Lawyers and have been learning so much more about the dark side of credit reporting. As a business owner, or executive (I have been both) I have used Credit Reports as a means of deciding who may or may not have an account with my business/es, taking the credit report on face value as a true indication of that person/entity’s true risk. I have now learned that many of the issues illustrated in the reports received may not have been a true reflection of that risk.
A large number of our clients are people who have been defaulted because of very poor process and even apparent laziness on behalf of a creditor. Whilst the debts are sometimes true debts, our clients’ non-payment of these debts haven’t resulted from delinquency on their behalf, but more from simply just not knowing the debt existed.
I’ll give a very common example, you are moving premises, you arrange to have your utilities disconnected from the old premises and connected at the new premises. During this process the utility company (power/telecommunications) doesn’t add the new address into the system for the last invoice for the previous address. They only follow up and chase you with the old details and when they cannot contact you, they list a default on your credit file. We remove these every day, but that isn’t the current point to this story.
When you are planning how to grow your business, when you’re deciding who you want to have accounts with, you may not realise you are looking like a risk with a default (or two) next to your name; meaning you won’t get credit, or if you do get, say, a vehicle loan you may end up paying 3% or more in interest. Knowing in advance is the true basis of planning; you should be doing a complete SWOT (another soap box for another time; long story short – a strength can become a threat and a weakness an opportunity!) analysis and knowing your own creditworthiness is either going to illustrate a strength or weakness in your planning!
Obtaining your credit reports is easy enough, just head to www.freecreditrating.com.au and follow the links (up to 10 days), alternatively you could give us a call and have MyCRA Lawyers get them and assess them for you (same day).
Whether you’re looking to start or grow and business, or even if you’re just looking for personal planning such as a car or house; knowing your creditworthiness in advance gives you the knowledge required to ensure greater success.
Written by Erica Allgood, General Manager of MYCRA Lawyers.