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    Establishing a sound business plan

    Management | August 31, 2009 | By:

    Dwight Eisenhower, when contemplating the plan for the invasion of Normandy and northwest Europe during World War II, said, “Plans are nothing. Planning is everything.” His view was that while both are necessary, plans are nothing but static documents, yet planning is a responsive and dynamic action that brings focus to uncertainty.

    In business, planning is just as vital, especially when things are rapidly changing and the economy seems to be in constant flux. With the market in less-than-perfect shape and so much uncertainty in the air, many business owners forego the discipline of establishing a business plan under the assumption that it is a waste of time. This is a mistake. The most essential reason to write a business plan isn’t to set a course of action, but to provide a management tool to use in the present and the future.

    Business planning is fraught with misconceptions. The biggest is assuming that the planning process needs to be complicated and burdensome. A sound business plan only needs to address four questions:

    Where are we?

    The plan should clearly define the financial, environmental and market realities facing the business. This should not be addressed in overly technical language, but rather with straightforward words that define the health of the business and its competitive position. Someone reading this section of the plan should understand the strengths and weaknesses of the business and have a sense of the company’s potential given the current reality.

    Where are we going?

    The plan should spell out what the organization wants to accomplish in the coming years. This section is a statement of business aspiration, balanced by the reality set forth in section I of the plan. It is foolish, for example, to state an aspiratin that is no more than a pipe dream—aspirations need to be tied to reality. This section of the plan allows the reader to understand the potential of the business based on three factors:

    • Financial: Why should one invest in us?
    • External: Why should clients and prospects do businesses with us?
    • Internal: Why should employees work here?

    How will we get there?

    The plan should set forth the tasks that are non-negotiable to achieve success. This section not only defines a critical path for the business, but it identifies the important but non-essential objectives. By doing this, leaders define where they are willing to fail in order to secure the critical path, such as delaying a product launch in order to achieve bottom-line results. After reading this section of the plan, the reader should know what keeps the owners of the business up at night and what lengths they are willing to go for a good night’s sleep.

    Are we on track?

    The plan needs to define what success looks like, who is accountable for which measure, when measurements will be taken, and the corrective actions to be taken in the event of a deviation from the plan. The plan should be referenced and amended regularly. This section should flow directly into the formulation of team and individual goal documents.

    During uncertain times, clients, prospects and employees need to receive heightened levels of information. The business plan provides an excellent communication tool and sets forth a clear path of action—generating confidence in the business, its leaders and the planning.

    John Baker is the author of “READY Thinking—Primed For Change.” As a leadership expert, speaker and founder of READY Thinking LLC, Baker has helped hundreds of organizations achieve success by adopting a practical framework of thinking during times of change and opportunity. He has over 20 years experience as a senior executive with companies including American Express and Ameriprise Financial, specializing in sales, client loyalty and customer service.

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