Many people blanche at the thought of business planning, largely because there is a tacit expectation that the plan is supposed to be a weighty tome. It isn’t: it is a quantified and qualified assessment of the current and future positions, with a narrative of how you will get from one to the other. It might only be one page – but it would be a powerful page. Whatever, it will only have as many pages as it needs to set out where we are, where we want to be and how we will get there.
There is nothing to fear, here are my five steps:
- Preparing a business plan starts with assessing the current position and reviewing how the business got here. This is partly a financial exercise but more important is hearing the stories of how it happened, lessons learned, the strokes of good fortune …and the not-so-good fortune!
- The business’s structure will be considered with regard to accountabilities for the pillars of the enterprise at Board and management levels. In smaller enterprises more than one accountability may be held by one person, but it is important that the holder knows what they are holding – for instance one person may effectively be directing AND managing sales, or one person may be accountable for finance AND operations on the Board. In the future, those conjoined roles will require separation, or assistants.
- Business capacity. This is where it always gets really interesting. It is also the root of why many business plans fail. Capacity of ALL resources – human, capital, time, space and equipment – must be understood. Doubling revenue rarely results in double profit, and building ‘parametric models’ of a business is a priority to seek out obstructions to growth. The stories pages illustrate how easily and often capacity can be misunderstood.
- Process mapping. This is deconstructing what your business does, from first contact with a potential customer through to delivery and payment …and customer retention.
- Setting the targets. A tremendous amount is learned during the preceding steps so by the time targets are set for the plan they are far more substantive – not to mention far more likely to be achieved.
Just as everything is covered by my deceptively simple pillars of enterprise, so too is everything for planning covered in these five steps. What about ‘PESTs’? What about ‘SWOT’? They are all addressed, but in the context of structure, capacity and process – not in the old-fashioned way of “let’s make a list of them”.