You’ve developed a product, and have determined that there is a real market for it. That’s an important first step. Now, how are you going to move your product from the drawing board to the consumer? Like embarking on any other major change in life, you need a plan.
Whether you’re a start-up or an established organization going through transition or transformation, the importance of a solid business plan cannot be overstated. The process of creating a business starts by formulating a five-year business plan.
Determining who you should include on the planning team is essential to a successful outcome. You should surround yourself with those who are believers, but who also bring a range of viewpoints: thinkers who are aspirational, pragmatic, and constructive – as well as someone in the role of “devil’s advocate” who will not hesitate to challenge flawed assumptions and thinking. The process also requires a facilitator, preferably somebody with some with planning experience to keep the team focused.
The Guiding Light
You’re constructing a blueprint, designing all of the elements that comprise a business. Taken together, these elements determine whether or not the venture is feasible, and how you’re going to achieve success over the next five years and beyond. This endeavor is laborious and sometimes frustrating. But it will test assumptions and identify any fatal flaws in your concept before too much is lost. “A Business Plan is like a dry run to see if there is a major problem with your business before losing any money,” says Mike McKeever, author of How to Write a Business Plan.
A business plan is an ideal medium for establishing and documenting concepts such as:
- Why you exist – the Vision, Mission, and Value Proposition
- Where you are going – the goals established to support the vision and mission
- How you will get there – the objectives and broad strategy to achieve your stated goals
- What resources you need – the capital, people, and processes
- Who and why should anyone care – market intelligence provides evidence and substantiates the need and market for your product
- How to launch – the business plan becomes the roadmap for developing your annual strategic and implementation plans to identify the specific short-term goals, objectives, and action steps to be accomplished over a one-year time frame
- Adaptability to changing conditions – the business plan is a compass that serves to keep you on course while providing flexibility to recalibrate and respond to unexpected internal and external events
To illustrate the last point, the collapse of the US Auto Industry from 2008-2010 forced each of the three majors to develop new business plans to confront the changing economic and market environments. One good example is Ford’s Business Plan submission to Congress.
During the course of a company’s existence, the business plan will be used for a variety of purposes such as securing funding or entering into strategic partnerships. But most importantly, your plan conveys your message, your aspirations, and commitment to all stakeholders. The Vision, Mission, and Value Proposition described in the plan underpin the business, and are at the core of why you exist.
As the Messenger, your plan will serve to:
- Build leadership and employee consensus around the purpose and goals of the company and how everybody is involved in the outcome
- Communicate a company’s core values, commitment, and dedication to everyone they touch
- Provide the theme that weaves through your marketing efforts, and forms the foundation of your brand, identity, and image
The Living Document
No matter the size or stage of evolution of your company, the business plan helps achieve success by keeping the organization on track, making certain resources are aligned with goals, and serving as a mechanism of checks and balances.
Keep your Plan alive and relevant – review and update it at least once a year to adapt to internal and external changes. This is critical because it forms the foundation for developing and driving your company’s annual strategic and implementation plans. At this point, your Business Plan goes into action.
If you need help preparing a business plan, we can help!