The secrets of commercial success and the business plan

For new council commercial ventures to be a success, there is a significant need to develop and deliver against a different style of commercial business plan.

Business planning should focus on the objectives of the commercial venture, setting out clearly how and when these objectives will be achieved. Plans needs to be flexible enough to adapt to changing environments, ensuring financial sustainability is achieved.

The venture’s business plan should include sections more typically associated with commercial operations, like marketing and pricing. In a competitive environment, where the customer has a choice of provider, flexibility in planning for the venture’s business development may be required to create and take best advantage of opportunities for growth.

Business planning should be clear about resourcing, reflecting all the requirements of a standalone business. This will include resources for operational matters, support services, strategic guidance, and even for the venture’s overall governance. Depending on the venture, this can often include business development and marketing specialists to support competitive bids and tender opportunities. Not all activities outlined in the business plan will be successful, so the ability to evaluate, learn and develop are crucial. 
Funding sources may change throughout the life of the venture. It is therefore extremely important that business plans recognise the commercial principles of how and when funding will be drawn down and repaid. Sensitivity around income, pricing and levels of demand will determine the ability to grow, invest and achieve financial resilience, increasing the venture’s long term viability. 

Not all activities outlined in the business plan will be successful, so the ability to evaluate, learn and develop are crucial

Some commercial ventures are intended to generate dividend payments that flow to councils as shareholders. If distributions are intended to ease financial pressures on retained services then accurate and robust business planning is required to safeguard their delivery.

The practice of simply updating business plans on an annual basis should be avoided. We have worked with a number of local authorities that have created new ventures. Those that really flourish have recognised how business planning is a significant and detailed process which should be adapted with emerging priorities.