There can be a lot of confusing advice surrounding the topic of Business Planning, with a number of generic templates available on the Internet. However, the net can be wide and daunting, and arguably designed to line the pockets of consultants!
So let’s cut to the chase with some pragmatic advice on what is really needed and why.
Okay, let’s be clear at the outset that a well put together and written Business Plan is an essential tool for growing your business.
A good Business Plan will provide:
- a structured path for company growth and development;
- focus on priority areas to address;
- a vehicle to rally and help align the team;
- a vehicle for ‘buy in’ between company owners and the senior management team that is charged to work with the wider team and deliver the plan;
- a point of reference to regularly measure company performance;
- visibility and confidence for potential investors, bankers, etc
So why do we often hear that Business Plans are either unnecessary, or are “collecting dust on the shelf”?
- The company owner is against the idea. He or she is at the centre of everything, with ideas ‘locked’ in the head.
- The company owner may be reluctant to share the ‘state of the nation’ and growth plans, and work through an open and frank planning process.
- There are not sufficient hours in the day or there may be other competing priorities which are considered to be more urgent. Sound familiar?!
- There may be a misplaced belief that Business Plans are for larger, perhaps corporate sized companies; and are “over the top” for smaller organisations.
- An external consultant has written the plan. While it is a good idea to use an experienced coach or mentor to provide advice and feedback, it is important that company personnel work through the process of developing, writing and “owning” the plan. After all, these are the very people that are required to execute the plan!.
- The Business Planning process has not been ‘sold’ to management and staff. The team needs to have a clear understanding as to why a Business Plan is required and the benefits for all.
- The Business Plan is too detailed, lengthy and boring. It is not a user-friendly and “working document”.
- Goals and targets are not realistic – for example, forecast sales are over optimistic, and the program for activity rollout is overly aggressive.
- The Business Plan is not a ‘living document’: regularly reviewed with the team, fine-tuned where necessary, and aligned with the company budgeting process.
Okay you and the wider team are now sold on the need for a Business Plan. Now let’s turn to the content.
By all means work through a template, but ensure that you consider with your team
- Nature of the Business: summarise what your business does, the industry that it works in, ownership structure, history; key financial results for previous 3 years ($ sales & $ EBIT).
- Vision – consider a simple, concise and aspirational statement for how you would wish your business to be recognised say in 20 to 30 years’ time. Google some vision statement examples like Walt Disney, Disneyland, and Bill Gates.
- Values: consider and work with your team to identify a list of core values for your business (suggest maximum of 3-4). Recognise that “core” values are those that will not change over the years; regardless of changes to your products or services, operational or market environment.
- Goals: consider short and longer term e.g. 1 and 5 year goals. Break these into “financial” (e.g. $ sales levels and $ EBIT profitability), and “other” (e.g. new markets, possibly export; 1 or 2 new products or services added for diversification/risk minimization; less “key man” dependency; shorter working days)
- Products & Services: provide a more detailed description of the current portfolio, including any R&D in process. Consider including in an appendix.
- The Team: document the current structure, roles and responsibilities.
- Operational: Summarize the current infrastructure – premises, plant, and equipment.
- The Market: summarize your current target market; the estimated potential total $ market size; your estimated market share; your sales, marketing and distribution strategies; your pricing policy; and your competitive analysis with your key competitors to identify your points of difference/advantage. Include market research references.
- Systems, Processes, Procedures: Summarize what is currently in place across the business.
- Critical Success Factors: list the fundamentals that you must get right in order to succeed. For example – having the ‘right’ product / service; at the ‘right’ time; with the ‘right’ distribution strategy; with the ‘right’ pricing and marketing; with the ‘right’ team and operational infrastructure to deliver; with the ‘right’ supportive systems and processes.
- Key Issues: for each Critical Success Factor, identify the current key issues which need to be addressed. To help identify these, consider working through a SWOT exercise with your team on the Strengths, Weaknesses, Opportunities and Threats as they apply to each Critical Success Factor.
- Strategies: now consider and capture the respective strategies that you need to introduce or build upon to tackle these key issues. Look for consistency with your stated core values.
- Action Plans: similarly, document associated Action Plans for these strategies, with clear timeframes, milestones and personnel responsibilities – who is to be involved, lead, etc. Consider using a simple Gantt chart which can be extracted and used separately for regular review and update with the team.
- KPI’s: identify clear and easily measurable performance indicators against the Action Plans, including timeframes for review.
- Financial: prepare and document realistic budgets as required to rollout the proposed activity. Consider summarising and including the detail of budgets in appendices.
A Business Plan is really useful, but it needs to be a team effort, concise, and provide for a logical flow that identifies the critical success factors for growth – the associated key issues to be addressed – suitable and realistic strategies and actions – sensible performance indicators to check that you are all on course – and all underpinned with the necessary budget.