One of the major reasons businesses fail is either because they do not have a business plan, or have not updated the plan that they once developed.
A business plan is a story about your business: Where are you now? Where do you want to be? And, most importantly – How are you going to get there, and by when?
After helping hundreds of company’s develop business plans and teaching business strategy for many years, I explain my five step Plan-for-Planning Process in my book.
Step One – Where are we now?
Typically called – “The Executive Summary” – this section/chapter explains where a company finds itself at the beginning of a new planning period in terms of:
- Their sales and profitability at the end of last year.
- Their position in their marketplace vis-à-vis their competitors.
- The results of the most recent SWOT analysis.
- What their unique value proposition is.
- Management’s description of their vision for the future of the company.
This section can only be completed after the management team has gone through an evaluation of the current situation the company finds itself in. This encompasses an honest SWOT analysis. SWOT being:
- Strengths – What is our core technology i.e. what do we do better than our competition?
- Weaknesses – What don’t we do well i.e. in terms of execution of our strategies?
- Opportunities – What immediate options do we have that we need to implement as soon as possible?
- Threats – What can cause us to lose customers, and what can we do about it?
Since a business plan is a story about a business, and as a story it has to be interesting and motivating for stakeholders to want to know more. Think about the introduction to any good book that you have read – hasn’t it encouraged you to want to read on?
Another important value to a well done business plan is that it can be shared with all the company’s stakeholders to give them confidence that they are part of a growing successful and profitable business. The most successful companies broadcast their unique value proposition, as well as the implementation of well thought through strategies that support their vision for their future.
A well done business plan is akin to reading the annual report of any successful public company wherein the company explains: where they are now, where they plan to be in the next 3 to 5 years, and the strategies they expect to implement to get to where they want to be. The continuing ability of the management team to achieve their goals supports and grows the brand equity of the company. This should be the goal for your business plan, too.