Effective Business Planning

Written by: Alan Rodway - Your Coach Online

I’ve seen too many business plans that don’t work .. not because they lack quality but because they don’t get implemented. Sometimes they are just too long to revisit frequently or are loaded with commentary rather than action, or they are just structured in ways that make implementation difficult. Business planning is fundamentally about goals, direction, strategy, actions and measurement, so the actual business plan itself should only include these elements. The analysis behind the plan should be kept elsewhere.

Here’s how to effectively run business planning:

  1. It’s critical to distinguish between ‘business planning’ and the ‘business plan’ document. Business planning is a process of gathering information, determining and aligning goals, setting up directions and strategies, being clear on the end game, and agreeing on actions and implementing them. The business plan document is simply a reflection of a point in time’s planning summary. That is, business planning is a process and the business plan is the document that represents that process at a point in time … and therefore the document MUST be regarded as fluid and updated frequently. Soon after a business plan is written things start changing, so it cannot be regarded as a document to represent the next twelve months. Sure there are things like capital expenditure items that have to be planned well in advance but there are many other aspects of running a successful business that must remain fluid.
  2. The stakeholders’ goals need to be examined, as in identified, in truth, and looked at in terms of their alignment . They don’t have to be the same but they do have to be aligned; otherwise, the stakeholders’ input to the planning process (and many other parts of the business) can be driven by unaligned, sometimes subliminal, motives and that can lead to impure and ineffective planning. This examination requires total honesty and therefore courage from the stakeholders, and often is best teased out by an external.
  3. The more people involved in the planning process the better it will be and the higher the buy in to the actions that will result. Planning that is done predominantly top-down is often less effective, so a broad (if not total) involvement of personnel is best.
  4. The fact that change is happening so rapidly and speeding up, means that the planning process horizon has lessened , so the days of five year horizons are way gone. It’s more about one to two year planning horizons now, with supplementary planning around the longer term items (such as high capital expenditure items or construction).
  5. Brainstorming should precede business planning . Whilst they’re related they are also different. The brainstorming should be about new and creative ways of taking the business into the future. Once in planning mode, it can be difficult to change the thinking mode back to brainstorming. The planning should then accommodate the agreed ideas from the brainstorming and how to implement them.
  6. An anonymous SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis should be completed prior to formal group planning sessions. All personnel in the business should complete a SWOT bullet point summary and these must be done anonymously so there is no fear of retribution for any criticisms made. If the business is just too large to allow everyone to complete a SWOT then as many people as possible should do so. A summary of the SWOT should be created and supplied to the planning group sessions.
  7. The planning process should involve people of various ages, male and female, various knowledge and expertise bases, different thinking styles, and people from inside as well as outside the business . (Technology has become so important to being successful in business that high level expertise in this area is a critical component of the planning process and deserves singling out here for a special mention).

As part of the planning, determine or create the answer to this question for your business:

  1. Why should anyone buy from you rather than from other providers? Without having a solid answer to the two components of this question, the business will struggle for revenue and margin.
  2. Prior to the planning sessions, source accurate and comprehensive benchmarking information for your industry and comparable businesses , to framework the planning and decisions. This helps set the bar.
  3. List the criteria for your target client (the ones you hunt) and your acceptable client (the ones you will accept) . These need to be built into the planning re marketing, the value proposition, training of personnel to deliver on the proposition to clients and profitability analysis of the client base.
  4. The business plan document itself must include the following sections: 
    1. What We Are / Who We Are / What We Do / Why We Do It
    2. The End Game
    3. Key Measurable Outcomes (along the way to the End Game)
    4. Key Directions
    5. Key Strategies
    6. Actions to implement each Key Strategy (with an owner and time frame for each action)
  5. The formal business planning sessions should be held twice per year , in October (pre calendar year) and April (pre financial year) and should take no more than a day once the preparation is done.
  6. The business plan document should run to no more than 3 or 4 ‘pages’ , to keep it workable. Any more than this and it is just too difficult to run effective implementation and adaptation (and probably includes commentary).
  7. Monthly implementation sessions (of around 2 hours) must be held , involving all people involved, to do three things:
    1. Track actual outcomes against the targets.
    2. Account for the implementation of the actions.
    3. Adapt the actions within the plan to make / keep them effective.

Previous Newsletter Articles

Bookkeeping Tips

Business Tips

HR Information

Contact Us

1300 022 270

enquiries@myabbs.com.au