Everyone wants to talk about business planning for newly-created businesses or startups. But the truth is, existing businesses need business plans, too. They are critical for rallying the troops, crucial to figuring out how much new capital is needed, and necessary to set priorities for actions to be taken during the coming year — among many other things.
I have worked with literally thousands of companies on their business plans over the years, and I’ve learned a lot about what works and what doesn’t. Here are some of my thoughts:
Start with a simple outline that addresses five areas, those being mission, vision, strategies, goals and action items. Each of these elements has a gray area about what it is or isn’t, but they certainly are not all interchangeable.
“Mission” is all about why you are in business. It should be something lofty that inspires your employees.
“Vision” is what you are trying to become by some point in time, such as “We will be a $20 million revenue company and have 100 employees by 2025.”
“Strategies” are what your basic philosophies are for how you do business in virtually every area of the company, such as marketing, cash flow, recruiting, organization structure and much more.
“Goals” should be quantitative and measurable such as “earn a 10% profit,” and not things, such as “We will be a top design firm” that could be subject to debate as to whether they were accomplished.
“Action items” answer the questions of “who, what, when, where and why?” Sometimes “core values” are also part of the plan, although you have to be careful here or it can get hokey. Certainly, many other crucial areas can be included in the plan but these five elements must be addressed.
Do your homework. Too often, the front-end legwork that should be done prior to planning doesn’t get done. I will never understand how any company can embark on business planning without talking to their clients and employees first. It just seems to make sense that these critical stakeholders have input that would be valuable since you’d be out of business if you didn’t have either of their support.
Don’t get too many people involved in the actual creation of the plan. I don’t know why so many privately-held firms think all of their owners, or all of their managers should sit down in one room at the same time and work out a business plan. But I do know this approach doesn’t work! It makes it hard to confront the really tough stuff. People aren’t honest. The whole thing takes too long. Any one person can derail the meeting. Having everyone weigh in on everything is also crazily inefficient.
Stay away from buzzwords, clichés and trendy acronyms. Some people are like junkies on this stuff. They read every book and article and jump on every new thing as if it is some kind of panacea. And then they assume that everyone else understands their gobbledygook. Keep the language clear and straightforward or you risk turning off everyone who reads your plan.
Have swift and clear communications with the rest of the company, both pre- and post-planning. When the top people go off for a business planning “retreat” or meeting, people want to know what the meeting will be about. Then post-meeting, the rest of the employees are all waiting to hear what happened. Too often the planning meeting participants forget that having this meeting could scare the rank and file employees who may automatically (and incorrectly) assume that this means the firm is for sale or that there will be mass firings or something else negative is going to happen. You have to tell your people what is going to happen and what the resulting plan is without delay.
I hope these five points prove useful to you as you embark on your planning for the coming year.
Mark Zweig is the founder of two Fayetteville-based Inc. 500/5000 companies. He is also an executive in-residence teaching entrepreneurship in the Sam M. Walton College of Business at the University of Arkansas. The opinions expressed are those of the author.