SIMPLIFIED BUSINESS PLANNING FOR ESTABLISHED SMES

A SIX STEP APPROACH

JOE CARR & LORCAN COLCLOUGH

10th June 2015

SIX PARTS TO TODAY’S PRESENTATION

2

1. Understand the mission

2. Determine your current position

3. Set your goals

4. Prioritise the challenge

5. Prepare the Game Plan

6. Mobilise, Act and Report

Understand The Mission

3

01

STEP 1 UNDERSTAND THE MISSION: MIND OF MANAGEMENT

Describe what the Next Step looks and feels like Not More or Less

-5 -4 -3 -2 -1 0 1 2 3 4 5

1 The Management ChallengeMaintain Status Quo in a Stable

Market C

New Focus, New Direction, Multiple Adaptations in a Volatile

Market

2 Market Ambition Existing FootprintC

Significant Extension to Current Boundaries

3 Risk Appetite Extremely ConservativeC

Very Brave

4 Openness to Change Stick to Tried & TestedC

Open to Opportunity & New Ideas

5 Investment Horizon & Ethos Maximise return in short term C

Long Term Sustainability

6 Performance Hold Our OwnC

Radical Improvement

7 Command & Control System Laissez FaireC

Prescriptive & Detailed Action Plan

8 Working StyleMainly Individual - Personal Management Responsibility C

Mainly Team Focused

Values, Ambition, Culture & Style of Management

Min

d O

f M

anag

emen

t

Determine Your Current Position

5

02

STEP 2 DETERMINE YOUR CURRENT POSITION: MARKET MAP AND BUSINESS MODEL

6

WHERE DO WE GET OUR GOODS

CHINA 30

DIRECT FROM SUPPLIER 10

BRAND AGENT 10

WHOLESALE 40

PHYSICAL STORE

MERCHANDISING

DIY

GARDEN

BUILDING SUPPLIES

CUSTOMER SERVICE AND ADVICE

HOUSEWARESPROCUREMENT AND STOCK MANAGEMENT

20

5

-

10

20%

10%

40%

10%

WHO ARE OUR CUSTOMERS

GENERAL CONSUMERS 20%

NEWLY FORMED HOUSEHOLDS 10%

MATURE HOUSEHOLDS 30%

BUSINESS MODEL

REVENUE 100%

COST OF GOODS SOLD 55%

DIRECT STAFF COSTS 12%

RENT AND FACILITIES 15%

OVERHEADS 20%

PROFIT/LOSS -2%

HOW DO WE ADD VALUE FOR OUR CUSTOMERS WHAT DO WE OFFER

QUALITY CONTROL AND WARRANTIES

RESEARCH NEW TRENDS

3

-

PAINT

LIGHTING

10%

10%

CONTRACT MANUFACTURING 10

20

15

30

20

15

IND AVGE

10%

15%

55%

5%

5%

10%

BENCHMARKACTUAL

BUSINESS 10%

BUILDERS 30%

ACTUAL COST

ONLINE OFFERING -

10%

20%

20%

10%

40%

BENCHMARKACTUAL

BENCHMARKACTUAL

100%

50%

10%

20%

15%

5%

PLAN PLANPLAN

PLAN PLAN

Set Your Goals – 4 Key Themes

7

03

STEP 3 SET YOUR GOALS – 4 KEY THEMES

Market, Products & Customers Business Operations

Management & Organisation Finance & Risk

1 2

3 4

Prioritise The Challenge

9

04

STEP 4 PRIORITISE THE CHALLENGE

MARKET POSITION

10

Market Position 0 1 2 3 4 5 G A R

Marketplace Demand Significant decline C F Growing demand

Product / Service Offering Slow followersC F

Innovative leaders

Position in the Marketplace Little / No market recognitionC F

Well recognised market player

Customer Base No relationship, no loyalty C F Deep relationship, loyal

STEP 4 PRIORITISE THE CHALLENGE

11

OPERATIONAL EXCELLENCE

Operational Excellence 0 1 2 3 4 5 G A R

Product / Service Delivery Model Very inefficient C F Very efficient, best in class

Costbase & Infrastructure Uncompetitive, unsustainableC F

Very competitive, sustainable

Customer Service Very poorC F

Excellent

ICT & Processes Poor systems, processes & information C F Robust systems, processes & information

Quality & Compliance High error rateC F

Best in class

STEP 4 PRIORITISE THE CHALLENGE

MANAGEMENT, TALENT & TEAM

12

Management Talent & Team 0 1 2 3 4 5 G A R

Vision & Strategic Direction Very unclear & no defined actions C F Clear & actionable

Management Focus Unstructured, reactive C F Structured, proactive

Culture Unfit, dysfunctional C F Fit, functional

STEP 4 PRIORITISE THE CHALLENGE

FINANCE & RISK

13

Finance & Risk 0 1 2 3 4 5 G A R

Current Profit Levels Very poor, non existent C F Excellent

Cashflow Poor cash generation & no headroom C FExcellent cash generation & plenty of

headroom

Shareholder Return Inappropriate, unsustainable C F Appropriate, sustainable

Risk Management Risk profile too high relative to reward C F Risk profile appropriate relative to reward

Develop The Game Plan

14

05

STEP 5 – DEVELOP THE GAME PLAN

15

Theme Task Time Result

A Market Product & Customers

1 Segment customer base & provide focused offering Sep 15 5% sales increase

2 Volume discount for business projects Jan 16 10% business

3 Expand Garden Centre Mar 16 €150k additional sales

B

Business Operations (Ops)

4 Source more suppliers from Eurozone Sep 15 25% reduction in stock holding

5 Relocate 2 staff for Garden Centre Mar 16 Increase turnover with additional costs

C People & Teams (MID)

6 Implement a simplified business planning system Today “on the business focus”

7 Strengthen our Customer ICT Information System Jan 16 Loyalty & new business

D Finance & Risk (FD)

8 Reduce Working Capital tied up in stocks Dec 15 €200k

9 Margin mix analysis to drive higher average margin Dec 15 +4% margin increase

10 Restructure property loan to reduce repayments & top with €100k for Garden Centre

Dec 15 €100k headroom

11 Profit Increase from new activity Dec 15, 16 3% yr 1, 5% after

Mobilise And Act

16

06

STEP 6 – MOBILISE, ACT, MEASURE & REPORTTitle Theme Tasks Responsible

1 Allocate

Responsibility

1 Market, Product, Customers Tasks MD

2 Operational Tasks Store Manager

3 Financial Tasks FD

2

Measure Performance, KPIs

1 Overall Sales +9%Growth in Garden Sales Growth in B2B Sales

Store Manager

2 Gross Margin +4%New investment expenditure budget €100kWorking capital reduction €200KProfit +4% year 1 & 6% year 2

FD

3Report on Progress

1 6 step plan management meeting agenda

MD

Q&A

18

mazars.ie

Mazars is present in 5 continents.

CONTACT

Mazars

Joe Carr

Tel : +353 1 449 4477

Lorcan Colclough

Tel : +353 1 449 4420

Harcourt Centre Block 3, Harcourt Road

Dublin 2, IrelandTel: +353 (01) 4494400Email: mazars@mazars.ie