Following on from our Business Planning Part 1, where we touched on the business plan, and how it is the first asset you create in your business. This asset gives you a direction to follow, it creates the blueprint of your relationships and enables you to establish your legacy defined by your vision.
In this blog, I now expand further into the 5 broad plan categories I mentioned in part one. As a reminder those are;
- The Business WHY (Vision)
- The Business WHAT (Mission)
- The Business WHO (Stakeholders)
- The Business HOW (Processes)
- The Business WHEN (Forecasts)
This is in part a “how-to” for the business plan, and also it is a “what to” in the business plan and more importantly, “why to” do a business plan.
What you are doing with a business plan is creating permanency. By giving your time and energy to documenting your business, dream, and intention, you establish the foundation. And the deeper your foundations, the more stable and long-lasting your business.
And the reason you do your business plan is to have a clear guide. It is like a map that will serve you through the emotional and mental challenges that you will experience. It will remind you why you started and what you intended and will put you back on the right path.
As Benjamin Franklin put it, “By failing to prepare, you are preparing to fail”. Now, let’s explore these a little deeper….
THE BUSINESS WHY – Vision
Starting with your vision, or the power of identifying your business WHY, is best summarised in Simon Sinek’s work “Start With Why”. When you communicate your WHY successfully, you fully engage and inspire all who deal with your business, including your staff and clients. That happens because in life and business, why we do things, is what connects us to like-minded others. Build the following business plan headings
- The Vision Statement – What is the dream you are seeking to achieve? What is the deepest reason for your business? Think of Nike, “just do it” or Apple “think different”
- Client Outcomes from Service or Product – What do your clients get out of using your product or service. Link that to your WHY. What is the problem you solve for them
- Your Culture – What are the qualities that you will be known for by everyone your deal with. What is the legacy that you leave
- Team Trademark – What are the behaviours that will be acceptable and honoured within your team
THE BUSINESS WHAT – Mission
Here you are describing your Mission. What will be achieved through your business existence and how far a reach will you have. Determine what will change in consumer habits because of your product or service. Build the following business plan headings;
- The Mission Statement – Describe the intention you have with your business. For example, “to be the leader in Australian luxury home construction”
- Product or Service Description – Simply define your main products/services
- Geographic Distribution – Where will you be based and where will you sell to
THE BUSINESS WHO – Stakeholders
The key to a successful business is the relationships you build. Treat your customers, staff, suppliers, etc as you would your family. Because it is this family that will be part of the journey, and it’s the moments you share with them that will create joy or difficulty. Nurture these relationships and your business will blossom
- Ideal Clients – What do they look like, who are they, what do they like, how old are they, etc etc
- Staff and HR systems – Define your organisational Hierarchy, position descriptions and how the human resources will be managed
- Benchmark Competitors – Study your strongest competitors and note their strengths and weaknesses
- Advisors – Decide who will be on your advisory team, such as your solicitor, accountant, insurance broker, finance broker, and of course coach!
- Funders – Make a plan for how you will seek funding and from whom. Will it be debt or equity? Will it be banks or private money?
THE BUSINESS HOW – Processes
This is the nuts and bolts of how your business will operate. Bring on your technical know-how and document it through manuals, checklists, instructions, guidelines, and protocols. By systemising and documenting your business, you ensure effective and efficient operations, which in turn maximises profitability and impact.
- Marketing Systems and Processes – Detail your steps of how you will find clients and how those prospects will be converted from a lead to a sale.
- Sales Systems & Process – Detail what your actions will be when you have the opportunity to present your product. Consider the sales techniques, the communications, the follow-ups, etc
- Production Systems & Process – Details of how you will create your good or service. From raw materials into a finished good
- Distribution Systems & Process – Detail how you will connect your product to the customer. This isn’t just about transportation. You may also consider here how you create alliances and partnerships with other businesses that can distribute your goods/service.
THE BUSINESS WHEN – Forecasts & Analysis
Nothing creates a clearer path than the numbers. The universe is measured by numbers, and your visualisation to success becomes much easier when you clearly have a target. Daily, weekly, monthly, yearly. These targets provide motivation, guidance, and feedback. More importantly, it creates a very clear focus.
- SWOT – A study of your strengths, weaknesses, opportunities, and threats
- Project Time Lines – create clear deadlines for various outcomes. The first project deadline should be this business plan! Will you meet this? Will you focus on this? Will you put energy and love into this? How you do one thing, is how you do everything! And from there, create specific due dates for every other output required to realise the business
- Significant Events & Dates – This is a macro summary of the major business items for the first 10 years.
- Initial Formation Costs – A breakdown of all initial outlays required to get the business started
- 24 months Income & Expense Cashflow Forecasts – A detailed line by line breakdown of the monthly income and expenses expected. The first line is, how many sales units you expect each month. And break it down from there
- Actual V Budget – measure monthly your actual results, against the forecasts you had made. Assess the variances and investigate the key drivers that have caused the variance.
- Funding Schedule – Timeline your funding requirements, along with the source of funding and its related costs (such as interest or dividends). Ensure that you plan for expansion, that way you are already gearing your mindset for success and growth.
In the 30 years, I have been involved in business, whether as an advisor, accountant, CFO, CEO, or Director, I have seen a 100% correlation between success and planning. How you do one thing, is how you do everything. I warmly recommend you take your time to create a well-considered business plan. From there you will find that your journey in business becomes an enjoyable and highly lucrative adventure.
