November 09, 2009
The Role of Business Planning
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Russ Henke - Contributing Editor


by Russ Henke - Contributing Editor
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Like many tasks carried out by designers and/or managers, there is both an “art” and a “science” in developing (writing) a Business Plan, and one proven approach is described in this Planning Tool Kit. A successful business plan goes well beyond “forecasting” and “budgeting”, which many companies substitute for real business planning.


It is believed that the information requested by this Planning Tool Kit is CUSTOMIZED for and NECESSARY to a new business plan, yet no more than necessary.


Whether a new business plan is to be very simple or comprehensive, it is important that the effort to develop said plan be rapid, efficient and uniform.


While impossible to predict precisely, the level of effort to create a business plan document of medium complexity, all things being equal, should take once begun some 40-60 hours of effort each, among several key people familiar with the new idea’s basics, spread out over an elapsed time between 4 weeks on the one extreme and 8 weeks on the other.


This elapsed time estimate assumes you and your associates doing the planning all have regular full time responsibilities that must be executed in parallel to any planning effort.


Benefits:


The resulting Business Plan will not remove your flexibility as the planning period unfolds or ends; indeed, it will increase your flexibility, since you and your team will know the exact points of departure from which selected changes can be consciously made, as needed to respond to the market as well as unpredictable external events beyond your reach.


A good business plan will give you and your team control of all the things WITHIN your sphere of influence and gives you a GIANT advantage over others (competitors, etc.) that may have weaker plans or no documented plan at all!


With a good business plan, communications with the people within your company, or with outside parties, can be considerably enhanced.


The end result will help management address and resolve nagging questions and help excite and align individuals around consistent values, vision and a clear mission.


On a daily basis without detailed supervision, a clear mission will further empower people to take business actions aimed properly at making the overall business plan a reality, in the same way that, say, following a preferred software development process allows R&D people in general to get better project results without constant reviews.


Moreover, you can communicate with confidence and obtain more cooperation among colleagues, if you share the business plan with those colleagues and with selected others, both orally AND in writing.


A good plan often works wonders as a RECRUITING TOOL as well, especially to attract and retain the upper echelon of talented people that you may want to attract (with suitable confidentiality safeguards, of course).


Finally, depending on the final objectives chosen for the business plan, the business plan document will allow you to communicate effectively with outside people, possible strategic partners, potential funding sources, and last but not least - - potential customers & prospective customers.


The writer believes that most successes in business ultimately comes from the persistent pursuit of a sufficient number of sound underlying business processes, and not primarily from some single great idea or from some grand vision.


Remember also, that completing a new Business Plan is only half the equation for ultimate success; “excellent execution” of the Plan is the other critical half. By its very definition, excellent execution implies comprehensiveness and thoroughness, with attention to details. The genius of a successful business plan is in the execution details.




                   B. Executive Summary


The importance of the eventual
Executive Summary of an overall Business Plan cannot be overemphasized. Choose any favorite expression for absorbing and acting on this immutable fact:


  
a) The Executive Summary will make or break the plan”;

    b) It is the key to the whole plan”;

    c) If we can’t prepare a clear, concise and compelling condensation of our design idea or business right up front, no one inside or outside will spend time wading through the rest of our plan”;

    d) The Executive Summary is the heart of our plan”; etc.


In their hearts, all business people know this is true. The Executive Summary is where insiders, outsiders, potential supporters or investors, et al, will look first.


As you write successive versions of your Executive Summary, you must constantly ask, “If presented with THIS Executive Summary, would I invest (time, money, resources, etc.) in this design idea or business enterprise?”


What IS a “good” Executive Summary?


A good executive summary is one that gives the reader an immediate sense of why this particular design idea or business entity is interesting. It answers, “What IS this design idea or business?” “Who is going use these products and/or these services?” “Why would anyone buy into this design idea or from this business enterprise?”


The Executive Summary encapsulates the ENTIRE PLAN into ‘a few’ succinct paragraphs. It’s NOT an introduction, not a preface, not an abstract nor a random collection of thoughts. Rather, it must become (eventually) a “stand-alone Business Plan in miniature”.


After 10 to 15 minutes of reading the Executive Summary, a reader MUST come away excited, knowing exactly what you or your team would be up to, going forward.


The Executive Summary may (accordingly) be the most difficult Section of the Business Plan to write, or among the most difficult. Ultimately, it must be hard hitting, written in simple language, and it must avoid jargon and other “TLA’s or FLA’s” (three or four letter acronyms). It should exude confidence but not hype.


The Executive Summary should be one to three pages of total text, but certainly not more than five pages long, all depending on the scope of your design idea or business plan. Additionally, graphs and illustrations are fine, even recommended, but only if they are immediately obvious in meaning.


Writing the early drafts of the Executive Summary will help you to:


   a) quickly yield the gaps in the basics for your design idea or business and where additional work must be done immediately;


   b) make the “rest” of the business plan sections less intimidating to write; and


   c) Create a far better “final” Executive Summary, because of the natural refinement of multiple versions.


In any fresh draft of the Executive Summary, you and/or your planning cohorts that you may enlist, should try to touch on all topic areas in Sections C. through J. of the business plan TABLE OF CONTENTS provided at the beginning of this PTK, even if some of the sections are still very preliminary.


Additional guidance for the Executive Summary will come from the “stimulating questions” set out below in this Section B.


Stimulating Questions:


Generally, the Executive Summary should give its readers a feeling:


   a) for your basic design idea and/or business concepts,

   b) that the way forward is well-thought-out,

   c) that all people associated with you are very capable;

   d) that there are definitely rich market niches to tap;

   e) that your new idea has unfair product/service/market advantages; and

   f) that the new plan’s financials are realistic and achievable.


Start out by crisply stating the MISSION (or refreshed Mission) of your or your company’s business, why new revenue and profit from your ideas & plans are important to the overall corporation, why your new idea or business will be important to your customers’ success and might be more important in the future, how the current company’s business came about (a little history), and describe any current products and services, and what your company’s “core competencies” are.


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-- Russ Henke, EDACafe.com Contributing Editor.


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