Many years ago, I had the good fortune to begin my formal business career with IBM.
After spending the first five years in software development and support, I transitioned to a marketing position and for the next eight years, had the opportunity to work with several outstanding business organizations and their top level decision makers. It was during those years that I was exposed to the business planning process and its contributory value to the success of an organization. I not only participated in the development of business plans with my clients, but also served in conducting the business planning sessions that formed the foundation for their plans. A business plan helps an organization anticipate or predict future events and helps to lay out a roadmap for attaining your future success. From a more practical sense a business plan may be used to buy or finance a new business, introduce a new product or service or to redirect or enhance the performance and efficiency of a business operation. While most in business recognize the need for development of a formal business plan, few understand that there is a formal methodology that should be used to facilitate the creation of the business plan. There is a popular misconception that places the emphasis on the written document or the plan…when in fact the real payoff is in the planning process.
Planning is a necessary requirement of any organization regardless of the size and type of business. The scope and complexity of the planning process varies widely and tends to mirror the size and complexity of the organization and their management team. Some multi million dollar businesses have been started with a simple sketch on a dinner napkin over lunch. Some have involved volumes of research and studies with hired professional planners and consultants. However the principal objective of the plan is the same…to develop a roadmap over a defined planning horizon for achieving the organizations goals and objectives. The ultimate success of the organization can be tied directly to the clarity of the vision defined within the plan.
The planning session is a structured methodology which brings together the responsible management team for a focused and concentrated group thought process. Often conducted by an independent moderator, it allows the participants to co-author the plan and facilitates their commitment to its implementation. Business planning can take on many forms, sizes and shapes and can be used in a variety of settings for a variety of purposes. When you fully engage in the planning process, you establish a clear focus on the future and better prepare your organization to address the challenges and opportunities that lie ahead.
However, regardless of the scope or depth of the business planning session, the methodology is based on five principles:
- Planning cannot be done to or for an organization; it must be done by the responsible managers.
- An individual’s commitment to a plan is self generated and follows naturally as a consequence of involvement in the planning function.
- The planning process is an on-going process and does not end with the creation of a business plan. It is continual.
- Planning will involve the use of valid assumptions.
- The way to solve problems is: Divide and conquer.
The purpose of any business plan is to define both long range strategic action plans as well as a short term tactical plans f or attaining your organization’s goals and objectives. The planning process is a tool that helps you identify and gain a clear understanding of your goals and objectives. It helps to identify, debate and reach consensus regarding the development of a business plan that reduces risk and improves your chance for success. It can also serve as the foundation for the development of specific action plans, responsibilities and specific assignments and timeframes.
My IBM years were followed by over 25 years of entrepreneurial and business planning experience using real dollars and common sense…and I learned that… Business outcomes are driven by reality. Planning outcomes are driven by assumptions. I also discovered that most assumptions are indispensable…but wrong. When you use the wrong assumptions, then your planning will be affected. For example…I had a client in the retail music business who assumed that the copyright laws would protect his retail store sales from Internet competition. The reality of the emerging technologies opened new distribution channels requiring a complete reengineering of their retail concepts. It is there- fore necessary, as you work your plan, to manage and continually test your assumptions. Unmanaged assumptions can get imbedded and can get you off track. You need to manage and overcome bad assumptions by continually monitoring your business performance in relation to your pre-determined goals.
Meeting your business objectives and overcoming the challenges that you face is a formidable task…but can be accomplished more readily with a business plan. Regardless of whether it is on a napkin or a computer, the business plan is a vital tool for business success. But remember, you can achieve better results when you recognize that good business planning is a continual process. The popular emphasis is on the formal document. The real payoff is in the process itself.