A business plan will include the integration of all of the business' knowledge, priorities, and activities and focus them into a concentrated strategy and implementation plan to meet the business' goals.
What it is: An operating business needs to constantly evolve to continue to grow revenues and profits and adapt to the changing industry trends, customer needs, and competitive environment. Developing a well-crafted business plan focuses on the resources and activities of a business on maximizing revenues and profit. A business plan will include the integration of all of the business' knowledge, priorities, and activities and focus them into a concentrated strategy and implementation to meet the business' goals.
What does it do: 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 developed to implement the chosen strategy. By 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 of the organization.
Uses:
How is it used: A business plan can be used to give focus and direction to all of the 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 create a synergistic effect to 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 a number of venues
To operate an existing business and create transparency and clarity of the businesses plans and priorities for everyone in the business
To garner the support of corporate leaders for the business' goals and activities
To support the request for capital in the capital planning process of a corporation
To support the request 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 at odds with each other and destroy value. To achieve the business unit goals every unit and function must work in concert to achieve the desired ends. The business plan provides the strategy and plans which have taken into account the internal and external analysis as well as the capabilities and priorities of each business unit and function.
Limitations:
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 to 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 sub-optimal 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.
Utilize the SWOT Analysis process to gather data about customers and competitors as well as your own company: SWOT Analysis
Analyze the Markets, Industries, and Trends of the external environment of the business
Analysis of data: there are a number of analytical tools that can be used to help you create greater clarity around your customers, competitors and your relationships to them
Complete a Market Analysis to understand what markets you are involved in: Market Analysis
Complete a Customer Analysis of your largest customers to be sure you understand their needs and your business plan will serve them effectively: Customer Analysis
Complete a Competitor Analysis to understand your key competitors and how they will interact with you in the industry: Competitor Analysis
Complete a SWOT Analysis on each key competitor or competitor type to understand how you will have to compete with them: 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: Best Practice and Bench-MarkingLinks to an external site.
Interpretation of results: With all the analysis complete, interpret the outcomes to drive key strategic decisions and document them in writing and in financial reporting and forecasting
Review your Strategy Development Process to be sure that you have carefully crafted the business strategy that will be documented in the business plan: Overview of Business Strategy Development
Presentation of results: All of the data and analysis should be contained in the written business plan as well as the forecasts and plans. A PowerPoint can also be created 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 as in the template above or the example below. Many times an illustrative PowerPoint version is created that summarizes the information and charts and tables from the written plan.
