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A business plan will include the integration of all of the business's knowledge, priorities, and activities and focus them into a concentrated strategy and implementation plan to meet the business's goals.
What it is: An operating business needs to constantly evolveto grow revenues and profits and adapt to changing industry trends, customer needs, and the competitive environment. A well-crafted business plan focuses on the resources and activities of a business and on using those to maximize revenues and profit. A business plan will include all of the business's knowledge, priorities, and activities and focus them into a concentrated strategy to meet the business' goals.
What it does: A well-crafted business plan highlights the external analysis (markets served and competitive environment), internal analysis (identifying sustainable competitive advantage) and chosen strategy (targeting the maximum beneficial metrics for the company) as well as summarizing the functional plans to implement the strategy. Having all functions and activities clearly tied to a focused strategy will eliminate low-value activities and counter-productive initiatives while driving progress towards the most valuable goals.
How it is used: A business plan can be used to give focus and direction to all units and functions of the business. Units and functions will not compete with each other or perform activities that will harm the initiatives of the other units and functions, because they have a common purpose and direction that has been vetted in the business development process. Units and functions will support and work with each other to synergistically grow the business and increase profits. Business plans can also be used to garner funding from corporate leaders, investors, or venture capitalists.
Where: Business plans can be used in many venues:
To operate an existing business and create transparency and clarity on the businesses plans and priorities for everyone in the business
To garner the support of corporate leaders for the business's goals and activities
To support requests for capital in the capital planning process
To support requests for resource allocations in the annual budgeting process
To gain the support of stakeholders for new and continuing initiatives
To share information and gain support from other business units in the corporation as well as suppliers, customers, and other alliance partners
To gain the support of financial partners and institutions from which you are trying to obtain financial funding
For a start-up business to attract investors
Why: Without an integrated business plan, the individual units and functions can work against each other and destroy value. To achieve the business unit goals, every unit and function must work together to achieve the desired ends. The business plan provides the strategy and plans that have taken into account the internal and external analyses as well as the capabilities and priorities of each business unit and function.
Where it shouldn't be used: While a business plan is not used in every business, there are no business situations where a business plan would fail to add value if implemented properly. But where there is no desire within the business to use the business plan, there will be no value in taking take the time and resources to create one. If a business plan is in place and nothing in the internal or external environments have changed, then there is no need to update the business plan.
Any restrictions: Business plans should be developed within an independent business unit. Business units that are subordinate to a larger business entity that controls most of the decision elements should be a part of the business plan of the larger unit. The smaller unit could then make more detailed plans within the framework of the business plan of the larger, independent business unit.
Warnings: Developing a business plan without the requisite understanding gained from a thorough internal and external analysis of the trends and issues will likely develop a suboptimal strategy and business plan. Business plans that are developed without the input and consensus of the integrated units and functions will likely not be used or followed by those units and functions.
Gather data: Gather information about your company, industry, markets, and business.
Utilize secondary research to look for trends and data about your industry and markets (see Secondary Research/Library Resources).
Interview experts inside and outside your company to gather more insights into trends and facts (see Expert Interview).
Complete focus groups and market surveys if needed to gather data (see Focus Group and Survey Development).
Utilize the SWOT Analysis process to gather data about customers and competitors as well as your own company (see SWOT Analysis).
Analyze the markets, industries, and trends of the external environment.
Analyze the data: There are many analytical tools you can use to help you create greater clarity around your customers, competitors, and relationships to them.
Complete a market analysis to understand what markets you are involved in (see Market Analysis).
Complete a customer segmentation analysis to find the groupings of customers that you will serve (see Customer Segmentation).
Complete a customer analysis of your largest group of customers to ensure you understand their needs and your business plan will serve them effectively (see Customer Analysis).
Complete an industry analysis to characterize the competitive environment in which you will participate (see Industry Analysis Using Porter's 5 Forces and Defining the Industry and Competitors).
Complete a competitor analysis to understand your key competitors and how they will interact with you in the industry (see Competitor Analysis).
Complete a SWOT Analysis on each key competitor or competitor type to understand how you must compete with them (see SWOT Analysis).
Consider benchmarking your key functions (HR, marketing, finance, etc.) against other businesses in your industry and best-in-class companies to look for opportunities for improvement (see Best Practice and Bench-Marking).
Interpret the results: With all the analysis complete, interpret the outcomes to drive key strategic decisions. Document them in writing and in financial reporting and forecasting.
Review your strategy development process to ensure you have carefully crafted the business strategy that will be documented in the business plan (see Overview of Business Strategy Development).
Complete an overview of your sources of competitive advanatage and document your current situation (see Overview of Sources of Competitive Advantage).
Determine whether your business has current low-cost advanatge or whether could you create the advantage profitably (see Cost Advantage Strategy).
Determine whether your current or planned advantages are sustainable or could be made sustainable (see Sustaining Competitive Advantage and Unique Value).
Compare strategic alternatives and identify the selected strategy and its financial impact (see Efficient Frontier).
Complete financial analysis to document past and forecasted financial performance of the business (see Financial Modeling and Estimating Returns For a Recommendation).
Present results: All of the data and analysis should be in the written business plan as well as the forecasts and plans. You can also create a PowerPoint can to support the verbal delivery of the business plan to key stakeholders and potential investors of the business.
A business plan will almost always have a written document, such as in the template above or the example below. Often an illustrative PowerPoint version summarizes the information, charts, and tables from the written plan.
This content is provided to you freely by Ensign College.
Access it online or download it at https://ensign.edtechbooks.org/projectbased_internships/business_plan_development.
