In every industry there is a business that stands out from the crowd. A business that leads the way and sets the path that others merely try to follow. These are businesses that have clear competitive strategies and a commitment to succeed. They are highly profitable and are always challenging themselves. They are businesses that know how to use business planning to drive their continuing success.
Successful business planning should provide:
- clear direction for your business;
- alignment of resources behind that direction;
- a focus on energy and effort.
There is a tendency to think of business planning as simply a document to be produced when the Bank Manager asks for it. And whilst a business plan will assist in these areas, its true purpose and intent is far more important than merely the production of a document seeking funds.
When your mind turns to business planning you must begin to think of the process of business planning, that is, something you pursue if you want to drive success, achieve your goals and improve your performance. Business planning is a continuous ongoing exercise and once you commence the process it will become an integral part of your business.
The process of business planning seeks to achieve three important outcomes. They are to:
- challenge and extend the way you think about your business;
- gain insights and understanding not only about your business but also your customers and the market in which you compete;
- build the confidence and knowledge that the course of action you are going to pursue is correct.
Key elements in business planning
In undertaking business planning there are a range of key elements that must be considered. Each element represents a step in the process of building an effective competitive strategy. These include:
- history of the business and how that impacts its future income or capital;
- strategic analysis of the markets in which the business competes;
- organisational capabilities and competencies;
- scenario planning;
- financial validation of the proposed business plan;
- risk mitigation strategies;
- implementation planning;
The format in which business planning takes place within a business may range from ‘strategic conversations’ between key persons to workshops where an external facilitator is engaged to assist the process. Regardless of the business planning format, business planning is a key ingredient to building a successful business and must be used as a tool to drive and craft an effective competitive strategy.