If you are starting a business or are already in business, your goal should be to "lead the pack", that is, to be the most successful company serving the particular market niche you are in. Being the best has all sorts of advantages, among them usually being that your net return on investment is higher than anyone else. But to get there means that you must not only work hard at your business but you must also have a clear, effective and well articulated business plan to follow. It not only provides the structure for all that you do as a business, but it also provides the basis on which you decide what you won’t do. Whether you are a business owner, a corporate executive or a member of the Board of Directors, your business plan should provide you the blueprint for moving the business from where it is today, to where it needs to be tomorrow.
An effective business plan should always include the following key elements:
A Vision of the Business. This is the starting point of the entire enterprise. It is generally driven by the owner or CEO and it conveys what the ultimate goal of the business is. This vision may never be completely achieved but should be the objective that management and the employees strive for. It includes both objective and emotional elements and attempts to describe characteristics such as the “feel” of the business, the "look" of the business, the way customers “perceive” the business. It is at this point too that core values that the organization will adhere to are determined as well. The corporate vision really becomes the measuring stick used whenever you ask yourself, "have we been successful at what we set out to do?" While the business’ vision may be easy for the owner (or CEO) to "see", it is often difficult to clearly articulate since it does deal with all those subjective issues. Nevertheless, clear articulation of that vision is critical to creating a shared vision and thus, a common sense of direction among employees and staff.
Competitive Differentiation. Many companies seem to have a creative and practical vision yet are unsuccessful because they have not set themselves apart from their competition. Some business "gurus" will include this element in the strategic planning process. I disagree with this approach. Competitive differentiation is too critical to the success of the business to receive secondary consideration as "part" of the strategic plan. Before you even go to the strategic planning phase, you should know whether (a) the vision you have for your business is unique and if not, (b) if the market niche you’re going to serve is large enough to support more than one competitor. There is only one way for your business to consistently attract new customers and retain the ones you have – and that is to be better than your competition. If you are indeed going to BE better, you need to understand HOW you will be better and then drive that difference in everything you do.
Strategic Plan. Once you have a well developed vision of your business and clearly understand in what ways it will differ from your competition, your next step is to create a Strategic Plan. The Strategic Plan describes how you will go about making your vision a reality and how you will drive the competitive differentiation. It addresses all of the key elements of not only creating your business but perpetuating it. As a result, it needs to include everything from how you will choose your business’ physical location to your marketing strategy to attract and retain customers; from how you find, hire and motivate employees to what your exit strategy is – that is, how you as the owner plan to eventually leave the business. Of critical importance in the strategic plan is to identify the key leverage points of the business that you MUST aggressively manage to ensure that the business is a success. Let’s face it, owners and CEO’s are rarely in the position to manage every detail of their business but they MUST manage those key issues that make the difference between success and failure. As you prepare your strategic plan, then, identify the indicators that absolutely must be going in the right direction and monitor them carefully.
Organizational Construct. This element focuses on how your organization is to be designed, or structured. The process can occur in conjunction with the strategic planning process or can take place after the majority of the strategic plan is complete. In either case, it attempts to conclude how best to organize your staff to accomplish the strategic and operational goals of the company. During the organizational design planning you will answer questions such as whether it is best to be a "flat" organization or multi-tiered? Whether the organization should be organized around specific products, around processes or around functions? How the organization might change as the business grows? Whether there is a need for strong cross-training disciplines to ensure continuity if someone leaves or is otherwise unavailable from a critical position? The fact is that your operating plan can only get implemented by people and people must be organized effectively. If you can get the organization designed appropriately, it will make the implementation of your Operating Plan much more likely to go smoothly.
Operating Plan. The Operating Plan is really the implementation plan of your strategy. Whereas the Strategic Plan describes how you will go about making your vision a reality, the Operating Plan lays out the key action steps necessary to implement the Strategy. In addition, each key action step will typically contain sub-steps, each of which is assigned to a specific individual or department to accomplish and each with specific time frames or "due by" dates. This is indeed where the "rubber meets the road" and as a result, there must be aggressive management of the Operating Plan to ensure that it is being accomplished as designed and being implemented on time. Consistent, timely, feedback on the plan’s progress, and early intervention to correct problems and/or revise the plan as appropriate, are critical to success in implementation.
Working Capital Plan. Overlaying the entire business planning process is your Working Capital Plan. In a nutshell, this is the plan you will use to finance your business. If your business is relatively small, the plan may be as simple as knowing you’ll need the $100,000 you’ve saved to cover all start-up costs and the operating costs of the first six months, after which you’ll either be profitable or you’ll “fold your tent”. More likely it will be a bit more complex covering not only startup capital needs but revenue and income projections, cash flow projections and the sources of working capital needed over time. Most businesses, particularly start-ups, fail for lack of adequate working capital. Your Working Capital Plan will help you avoid that result.
The business planning process is never really "done". Once you’ve completed the business planning process you should revisit it periodically. Whether your business is a "start-up" or has been in business for years, the Business Plan should be constantly evolving to meet the changing economic, competitive or technological environment you are doing business in. At a minimum, the Strategic Plan, Operating Plan and Capital Plan should be reviewed at least annually. Even the Corporate Vision should be re-visited occasionally to confirm its continued relevancy. Remember, your business plan means the difference between your being the "lead dog" or an "also ran". And the view at the front of the pack is ALWAYS better.
