Business plan:
Proper planning is an important and effective tool to finance your project or business and shape your future. It is important to understand how the planning process and the Business Plan can be applied to your business.
“Conversation would be greatly enhanced by the consistent use of four simple words: ‘I don’t know'” – Andre Maurois
Planning is a management attribute or character that helps and motivates a leader to make things happen, rather than doing nothing or allowing things to happen. Management can be an individual, a family, an entrepreneur, a director, or a project manager who organizes the finances of a project or business.
“In a presentation I gave recently, the questions from the audience were all along the same lines: ‘How do I contact venture capitalists? What percentage of the capital should I give them?’ Nobody asked me how to build a business!” – Arthur Rock, Founder and Chairman of Intel Corporation.
Surprisingly, many business owners do not consider a Business Plan as an important factor in building the business and raising money. They think it would be better to just outline basic financial projections. For a start-up project, it is necessary to prepare a complete business plan. This includes the financial organization with three years of projections and the detailed description of the objectives and strategy and why the business will succeed. It also helps create a good impression with stakeholders and lenders/investors. Once a complete business plan is prepared (which may take three to four weeks initially), it may be appropriate to spend a day or two every few months updating it. This will also help to evaluate previous decisions and improve or adjust the business model.
A Business Pan is only as good as the quality of efforts that go into the planning and preparation process or documentation of it. In general, a Business Plan is the end result of the planning process. The successful planning process engages management in a way that takes responsibility for the organization’s own actions (or actions) and the end results, with the goal of being successful and the willingness to take the necessary actions that address risks and avoid failure. Business planning requires one to develop goals and strategies that address all likely eventualities or risks one’s business might face in the future. It helps determine the best number of action steps necessary for management to achieve its business goals and to avoid, minimize, or overcome foreseeable obstacles.
Proper planning is an important and effective tool to build and finance your own project or business and shape your future.
Business planning consists of two key elements: the business planning process and the business plan.
The business planning process:
The planning process is a step-by-step approach that helps build the management plan by “thinking through” how to achieve the goals or desired results. In this process, the professional skills of collecting and analyzing information, setting realistic and challenging goals, how to face the competition in the market and making the right decisions at each step are used. Today’s business environment is very competitive and full of uncertainties, so management must pay due attention to the Planning Process. This process improves the chances of success of the project, since it also minimizes the chances of failure.
Management must address a series of relevant questions that help to clarify the past and present situation of the business, the desired future of a business, the means to achieve the future, and the systems of organization, delegation and control of responsibility or necessary to track and sustain progress. The Planning Process may require periodic reviews. Management must decide how often it should be reviewed or updated based on the value derived from the effort and expense incurred. As management moves through the planning process, it explores the possible end results of different courses of action. During this exploration process, management is forced to confront issues related to goals, purpose, vision, mission, core values, strategy, customer perception, and business priorities.
For example, when developing a business plan, management may decide not to invest more than a certain amount of capital in the business in order to provide the owners with adequate resources to achieve family, personal, or other investment objectives. Admittedly, given management’s decision, you cannot expect to receive the same business development considerations as someone willing to invest triple the amount of capital. Each business may have different objectives that will involve investment of resources and sacrifices (opportunity costs). For example, an opportunity or benefit may be lost or “missed” in the interest of seeking an alternative use for the same resources. Organizations may sacrifice business success or development opportunity, while someone else may sacrifice alternative investments. The business planning process includes these factors in the deliberations and realistically assesses the tradeoffs required for the management team to finalize the business goals.
The Business Plan: The end result of the Planning Process.
The Business Plan is the final document that defines management’s perception of the game plan as of a specific date, and is an end result that communicates management’s planning process for the project or business. It is a document that sets out the core assumptions, objectives, and strategies that management has decided to pursue by investing the necessary resources in terms of time, financial resources, and action steps that will be necessary to achieve the objectives. The business plan is derived from management deliberations and the final series of decisions in the planning process. The written business plan also serves as an important control tool to regularly monitor actual versus actual results. plan on different parameters and the corrective action to be taken so that overall success for the business or project is achieved. The parameters that are monitored can be time, cost, resources, quality, return on investment, employee morale, etc. Facilitating the planning process that generates the Business Plan requires experience both in the financial and general aspects of management and in the business planning process itself. The value of a business plan is in the decisions it influences during the planning process, as well as in monitoring progress; ultimately, how cash flows in and out of the company’s bank account and how it achieves stakeholder objectives over a period of time.
How I used Business Planning:
A California company produced a range of engineered products with a good technological base. However, for various reasons, the business had stagnated in recent years in terms of revenue and profitability. Evaluated the business model and management infrastructure, and facilitated the restructuring of the business with a focus on achieving growth. This planning process involved the production of additional revenue streams, the improvement of production processes, the replacement of machinery, and the relocation of the plant. The new Business Plan and Presentation Package allowed the raising of an additional commercial credit of $4 million dollars. This was used to triple revenue over a three-year period and also resulted in an increase in the number of employees. The business is now on a progressive path, is doing well, and is expected to achieve its goals.
