The Business Plan
A Business Plan is an essential element of running any business. Your firm can be a billion dollar multi-national or you and your dog working out of the garage, you need a plan. A plan’s value is not so much the finished product, but the thought process and decision making that go into building it. A plan forces you to think through what it is you want to do, where you want to go, how you are going to get there and what problems you might encounter along the way. It will force you to address the rationality and practicality of your goals. A plan is like a road map, it won’t guarantee that you won’t get lost, but it will help you figure out where you went wrong and how to get back on track.
You might consider a written document a burden of the large corporation. Instead, think of it as a sanity check on how you are investing your time and money. It’s a lot easier to spend other peoples’ money in a large corporation than it is to spend you own in your business.
You might think that a plan for your own business might never see the light of day. Sharing your plan with your CPA, banker and even your family would be a great way of communicating what it is you do and may encourage more enthusiastic support as well as critical thinking in helping you achieve your goals. A plan is also an essential element in proper succession planning.
So what is a plan? You can go to any library or bookstore and find dozens of books outlining the single best way to develop and construct a business or strategic plan. Fortunately, 90% of what they say is all the same relieving you of the burden of spending the rest of your career trying to figure out which one is correct. The things that business plans need to address are common to all. The last 10% is how to go about putting it together. There is no one best way, the important thing is to have a way to put your plan together and do it. The most common elements of a business plan are:
Identify where you are and where you want to get to with your business.
Describe the environment your business operates in.
- Other Stakeholders (people that has a vested interest in your business including you)
A SWOT analysis
- Strengths, your company’s competitive advantages
- Weaknesses, where you fall short of your competitors
- Opportunities, opportunities you see in the market place
- Threats, challenges to be recognized and reckoned with
An Action Plan to capitalize on your Strengths and Opportunities and defend against and correct your Weaknesses and Threats.
- Land, what facilities and equipment will you need
- Labor, will you have enough hands to make it happen
- Capital, what’s all of this going to cost
A PDCA methodology should also be included as a way of making sure you stay on course.