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By
Mike Kelly, CFE
There is no exercise that makes my brain hurt
more than the development of the annual business plan. First of all, it
involves a lot of organising, sharing, writing and editing and editing and
editing. Our document ran to 114 pages in 2004-05. The development of the
plan requires a lot of open dialogue with staff and stakeholders, structure,
discipline and patience - not necessarily in that order. In most cases, it
would be easier just to go away and write the blasted thing but that doesn’t
encourage participation, shared understanding, comprehensiveness or buy in.
Buy in by staff and stakeholders can define the success or failure of the
plan.
Mind you, a business plan isn’t meant to be just a process and, certainly,
it isn’t meant to be a democratic process with the majority determining the
outcomes. Majorities don’t assume responsibilities for the outcome. Business
plans come with goals, objectives and responsibilities. They are meant to be
hard-headed reviews of the market environment, an assessment of product
qualities and competitive edges, a look at realistic opportunities and the
resources with which to achieve the goals arising from the exercise and, of
course, the strategies and actions required to achieve those goals. Business
plans aren’t all about selling but creating the environments, political and
commercial, that support the marketing activity.
Sometimes, marketing has to do with soft service delivery and not hard
product sell. More often than not the former is the focus in the public
sector, although even those dynamics are changing in some jurisdictions
where bottom line consciousness is expanding. Must be the drugs. Whether
soft or hard delivery, the business planning exercise should be hard headed
and precise, with measurable and achievable performance outcomes.
Politics and business plans aren’t always comfortable bedfellows. However,
that is the reality we must live with since the vast majority of public
assembly venues are created with public funds and operate in public
jurisdictions. We can all recount horror stories about managers who misread
their situation and went the extra mile to benefit their venue’s bottom line
and paid the ultimate price, their employment. The secret is to accommodate
the political realities without compromising too greatly the business
outcomes. Keep in mind too that political thoughts on issues aren’t
monolithic but contain their own share of divisive political considerations.
Sadly, in the public sectors - state, municipal and academic - the process
can be more important than the outcomes. Facilities are more often than not
political entities to an extent greater than their role as business
entities. The accomplished venue manager can differentiate between these
conflicting goals and deliver a business plan sensitive to the needs of the
stakeholders and the financial performance needs of the venue. Financial
performance is only one of the mix of objectives and then often of lesser
importance – despite noises being made to the contrary.
So why go through the agony of conferring and writing a business plan? Well,
there is the issue of contractual or legislative necessity. Secondly, the
exercise and process can provide the opportunity for stakeholder instruction
or staff professional development. Well considered business plans can place
stakeholders and staff at the decision making coal face, creating a better
understanding of the challenges and dynamics of the business. The exercise
can assist you to rationalise the venue management decision making process.
Venue management practices can be seen differently in a political context as
compared to a business context and there is some safety in flushing out all
the agendas through the process.
Maybe not surprisingly, non practitioners of venue management generally
don’t have a clue as to what we do or how we do it. The industry drivers
that are so evident to us aren’t apparent to the public or to many of the
stakeholders – although they may believe they understand the complexities of
the business. Even the shareholding jurisdictions, one of the many
stakeholder groups, don’t often recognise the existence of a facilities
industry outside their locally managed facilities. So the enlightenment of
their decision making, as it affects the business plan, is limited if not
skewed as they struggle to understand the need for industry based integrity
within an industry for which they have no context.
Facility based business planning has to be transparent and responsive to the
various needs of the stakeholders but the end document has to create a
platform for results. The wise manager is conscious of the need for an
inclusive process but ensures that expectations are managed and are
resourced and attainable with those resources. While it’s about the outcomes
– the reality is we live in a complex world where in some jurisdictions the
process counts as much as those performance outcomes.
Having said all of that, how about a sample of business plan format and
content? A good business plan provides a simple analysis of current
conditions, future aspirations and the resources and approaches needed to
get there. There are undoubtedly several good examples but here’s one.
Table of Contents
1. Executive Summary
The purpose of the business plan is to provide a framework for long-term
planning and to show how the budgets for the coming year will be achieved.
It is useful to explain some of the key difficulties, opportunities and
dependencies in the markets in which the venue(s) operates and to build
better partnerships between the various stakeholders.
2. Environmental Analysis
a. Co-operative Environment
This is a review of the businesses and stakeholders who have an interest in
the success of the business – e.g., suppliers, resellers – and with whom the
venue must work to achieve its goals – e.g., resident companies, convention
bureaus, etc.
b. Competitive Environment
There are some simple questions to be answered:
ii. What industry are we in?
iii. Which organisations are the major competitors and their market share?
iv. Competitor’s strategies and success?
v. Strengths and weaknesses of competitors?
vi. Threat of new competitors?
vii. Substitute products?
viii. Bargaining power of suppliers?
ix. Bargaining power of buyers?
c. Economic Environment
Review of the macro economic trends including interest and exchange rates,
changes to the planning cycle, taxation and business regulation legislation,
triple bottom line accounting, anticipated changes to seasonality of demand,
and supplier/buyer pressures.
d. Social Environment
Review of the cultural and social issues that may effect the operation of
the business – e.g., requirement to provide discounted access for local
users, changes to the structure of resident companies or franchise users,
opposition to current programs, etc.
e. Political Environment
A review of attitudes towards the venue by stakeholders and the public –
e.g., pending elections, resident surveys and relationships. The decision
making process is effected one way or another by political considerations,
even the private sector operations.
f. Legal Environment
Impacts from pending health and safety, ADA and taxation legislation and any
rulings that may favour or penalise your particular operation.
3. SWOT Analysis
This is simply a listing of the strengths, weaknesses, opportunities and
threats to your organisation or to the venue. It is adequate to point out
the SWOTs with the next step the strategic plan to accommodate and address
this mixed bag of circumstances.
4. Strategic Plan
a. Mission Statement – pretty standard stuff but it
should be concise and specific to your operation.
b. Business Objectives – These can be financial and non
financial but must be concise and measurable.
c. Business Strategies – This details the actions
required to achieve the business objectives.
d. Portfolio Plan – This is a scatter graph
identification of the venue by venue industry attractiveness from low to
high on the vertical plane and business strength from weak to strong on the
horizontal plane.
5. Relationship Between Strategic Plan and Functional Area Plans
The functional area plans are as follows: Marketing, Facilities, Human
Resources and Financial. This section allows you to outline the relationship
or impact of the strategic plan on the functional areas. An example could be
the impact of the Facilities Plan on the capital budget and the resultant
impact on the operating budget from a debt servicing or depreciation
perspective.
6. Marketing Plan
a. Situational Analysis – A simple statement of
circumstances such as competitive positioning, changing demographics, market
factors and market conditions.
b. Marketing Objectives – Above we outlined business
objectives and this is a market positioning statement.
c. Target Markets – These are the identifiable markets
into which the venue sells. An example might be the domestic association
conference market, the local wedding or sports dinner market or the family
show promoter market.
d. Marketing Mix – This details the approach to be
taken as affected by product (the venue or service), place (location –
taking advantage and overcoming disadvantages), price and promotion.
e. Implementation and Control – This details cash
control processes, signing authorities, integrated venue booking systems
and, generally, financial practices and safeguards.
f. Financial Budgets – This ties marketing initiatives
to financial requirements for staff, advertising and placement, promotional
activities such as trade show attendance and sponsorships.
7. Facilities Plan
For us, this would normally include five primary considerations:
• Environmental considerations - Green Globe 21 activities
• the asset management plan – equipment security, inventories and handling
practices
• the capital budget – provision for facility, equipment and systems repair
and replacement
• the maintenance and repair budget – contemplated operational, not capital,
maintenance and repair during the subject fiscal year or period
• utility consumption and conservation plans – double edged sword
8. Human Resources Plan
A narrative outline of approved and required staffing
resources needed to achieve the strategic and performance goals outlined
above. This might include collective agreement issues, staffing numbers or
additional staff requirements. It would normally include an approved
organisation chart inclusive of recommended additional positions with
appropriate justification.
9. Financial Plan
For us, this is a triple bottom line budget exercise. We are required to
provide summarised annual and three-year financial operating budgets
identifying revenues, expenditures and net financial expectations. Included
with the financial budgets are resulting social and environmental impacts,
considerations and outcomes.
10. Key Performance Indicators (KPI’s)
This will vary between jurisdictions. As a private venue management operator
we are required to provide KPI’s and measurements in several key performance
areas. These include:
• comparative financial performance
• venue occupancy and mixed event use
• community access and attendance
• qualitative service standards
• economic impact
The local Council, which owns the managed venues, conducts an annual
resident survey that asks specific venue management access and service
questions of the ratepayers. The results of that survey have a bearing on
performance measurement.
11. Risk Analysis
This section identifies a number of assessments of risk from loss of key
management personnel to show underwriting.
12. Appendices
This section allows for the provision of detailed financial plans including
current year-end forecast – as opposed to budget projections – and specific
articles on performance, comparison or general interest.
Mike Kelly, CFE, is Immediate Past President of IAAM and Executive Director
of NCC (New Zealand ) Ltd, in Christchurch, New Zealand. He may be contacted
at mike.kelly@nccnz.co.nz. |
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