A plethora of legal and business operating documents builds the foundation for any organization.
But two of the most important are the business plan and the strategic plan. It doesn’t matter if you own a start-up enterprise or a mature existing business. The necessity for these core documents remains the same.
The primary difference between the two is one of intent. Both are complementary.
The business plan concentrates on structure, operations, markets and people – essentially, an explanation on how the business functions.
A strategic plan stresses direction, opportunities and advantages – it’s a higher-level view on where a company is going and how it plans to get there.
Leaders behaving badly
Ask almost any business, regardless of industry, and you’ll see that many don’t have a business plan.
Fewer have a strategic plan. Those that do probably have one that will become obsolete over time. That begs the question: would anyone want to cross an ocean without a clear destination and compass directions? Not likely.
Yet, in business, it’s quite common to see this scenario play itself out. And the reasons for inadequate planning – none of them good ones – are legion. Imagine how much more successful a company could be if the CEO stressed proper planning and plan execution.
The model of a successful business plan
Let’s begin this discussion with a focus on the business plan and leave details about the strategic plan for another time. A business plan includes these key elements:
- Cover page
- Table of contents
- Executive summary
- Mission, vision and values statements
- Company description and overview
- Organization and management team
- Product and service descriptions
- Industry analysis
- Target market(s)
- Competitive analysis
- Marketing and sales
- Financials (including break-even analysis, profit and loss, and cash flow statements)
At first, the task of developing a business plan might seem daunting. It might even feel challenging if all you’re doing is updating an existing plan. But the key to surviving any writer’s block is to first tackle areas crucial to business success, such as products/services, target markets, and marketing and sales.
The supporting statements behind each of those categories should be clear and concise. After all, this is the foundation upon which a company makes money. This process continues until you address all other components of the business plan. You must also complete the final component, the executive summary.
The aggressor makes the rules
As you develop the business plan, add some extra rigor by asking the plan development team to answer “dig down” questions, such as:
- What is our world domination plan?
- What problems are we trying to solve? What’s our solution? How will we monetize this?
- What are our greatest strengths and weaknesses? How will we leverage and defend each?
- How are we going to scale the business? And what will this cost?
- What’s the cost of customer acquisition? What is our customer’s lifetime value?
- What are our executional risks? What can go wrong with our process and procedure?
- Is the value proposition sustainable?
- Are the market and financial assumptions vetted?
- How will we know we’re winning?
If this conventional approach is too much to undertake, then consider using “The Five Most Important Questions,” an abbreviated model first introduced by Peter Drucker:
- What is our mission (the organization’s purpose and commitment)?
- Who is our customer? Identify specific target markets.
- What does the customer value as identified from the customer’s perspective?
- What are our results (sales, market share, margins, profits)?
- What is our plan? What are our focus, goals, actions, results to achieve?
Resistance is futile
All business plans, regardless of complexity or simplicity, should have a global perspective and be grounded in reality. Don’t expect to shoot for a goal without some challenges – this is just a fact of life. A business plan needs to evolve to function better against shifting market opportunities and threats.
A business plan, even if imperfect, will be much better than no plan at all. Again, it raises the question, how can any organization cross the ocean without a plan in place to guide its people, operations and investments?
George Satula is an executive leadership coach working primarily as a TEC chairman, leading two CEO mastermind groups in southeastern Wisconsin (TECmidwest.com). He is also a speaker and leadership development consultant. Contact him at (262) 786-7400 or GSatula@TECbuildsLeaders.com.