How the business planning process really works
The rudiments of planning are not complicated, which is the reason so many managers so often get it wrong! Each business plan is different, but all have a time frame and the same basic elements.
The Time Horizon: Today, Tomorrow and Exit
Today is what’s happening now and for the next 12 months and is mostly driven by previous rather than current decisions. In other words when it comes to “Today” the emphasis is on execution rather than planning.
To better understand this, think about identifying what appears to be a potentially valuable new market vertical or acquisition that you have not addressed before. Chances are you would need to have resources in place (financing, plant, equipment, and/or people) to take advantage of the opportunity, and unless you had planned for that in the past you would not be able to act until you did.
"Tomorrow" starts about a year from now and will last one to two years (the exact timing depends on your company's specifics). Of course once "Tomorrow" starts, it's "Today."
To take advantage of future opportunities you must make assumptions now about tomorrow. Although the "unknowns" often outnumber the "knowns," the process, more than the plan, is critical. Plans will change as assumptions are proved or disproved.
The "Exit" phase represents a major transition in products, management and even ownership. Consider what could happen and plan accordingly.
Elements of Your Plan
A business plan is the road map companies use to run their business and while there is much that goes into creating one, the primary elements of the plan are straightforward.
WHAT Describe what your company should accomplish, starting with the macro goals of revenue and profit as well as other goals critical to your corporate culture. For example, some companies specify philanthropic goals in addition to financial targets.
Each division or department operating entity should then identify their sub-goals to be achieved in support of the corporate goals.
HOW This too begins on a corporate level with a definition of corporate strategy. Each division or department then devises tactics to reflect the company-wide strategy. Once again, the planning trickles down to individual job descriptions and priorities.
HOW MUCH These “bottom up” budgets from the operating entities usually require negotiation and revision to create balance between what is needed versus available resources.
WHEN Every single tactic under “How” must include a deadline—or at the very least, a date when the date of completion will be known.
WHO Those responsible for managing each tactic within “How" are also responsible for insuring that changes to their areas of the plan are made and communicated to all others whose planning will be affected, well in advance of any deadlines.
Planning is top down/bottom up process that's necessary, challenging and worth the effort. It's the best investment your company can make in any economy.
To find out how I can help you and your team create a plan, call 714/726-2901 or email me.