Category: Business Planning

Depends. All too often, these two terms have become blurred. But they are different concepts. Here’s a good way to distinguish them, quoting from the Free Management Library’s strategic plan blogger, Carter McNamara:

Strategic Planning Should Be Organization-Wide

Strategic planning is best viewed as clarifying the overall purpose and priorities of the organization. There are many different ways to do strategic planning, and the contents of the plan vary, depending on the purpose of the planning. However, the focus of the planning should primarily be organization-wide.

Business Planning Should Be Product- or Service-Specific

Business planning is best viewed as planning for a specific product or service. The customers and clients for a particular product or service might be very different than for another product or service. You wouldn’t advertise or sell race cars the same way you’d advertise or sell minivans. Each needs a different business plan.

I would add several things to Carter’s description. First, while some strategic plans include financial projections and others do not, financials are an essential component of every credible business plan. Secondly, strategic plans often take a longer term perspective of 3-5 years or more as they envision an organization’s future; in most cases, business plans look out at most three years, as they focus on the more immediate changing realities of the marketplace. Finally, while it is possible to imagine that the strategic plan could be implemented by someone other than the current management team, a business plan is meaningless without identifying who will do it and why they will be successful.

Carter’s weekly strategic planning blog provides useful information on how to do strategic planning. We’ll provide the same service here in the business planning blog.

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For more resources, see our Library topic Business Planning.

Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010
Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own
Read my weekly blogs on Social Enterprise and Business Planning

Good business plans do not need to be long business plans. With rare exceptions, keep your plan to no more than twenty pages, including financials and appendix. If you can say what needs to be said in fewer pages, that’s even better. It’s unlikely anyone will actually read a longer plan, so don’t waste your time writing it. Short plans get read.

Of course, it has to be compelling, credible, and well written. But all that doesn’t matter if they need to plow through fifty pages to understand what you’re talking about. Your business concept might be novel, but you shouldn’t need to write a novel to explain it.

Speaking of length, it’s also a good idea to keep your financial projections brief as well. Forecast out only three years at most, and put them on two pages – one page would be even better. All too often I see extremely long and complex excel spreadsheets with tiny print spread out across five, ten pages, with more pages of financial notes. Trust me, they won’t get read. Instead, create a one or two page financial projection summary, along with key ratios and metrics. Add a page of notes explaining key assumptions and you’re done.

Writing a short plan forces your management team to focus: a important criteria for success in starting or growing a business. And if you’re using your plan to seek financing, a short plan is more likely to get read. That will increase your odds of getting the financing you seek.

For business plans, short is beautiful.

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For more resources, see our Library topic Business Planning.

It seems that the two phrases “strategic planning” and “business planning” are used interchangeably, much more than ever. I believe it’s better to see the phrases as different than to generalize them as the same.

Strategic Planning Should Be Organization-Wide

Strategic planning is best viewed as clarifying the overall purpose and priorities of the organization. There are many different ways to do strategic planning, and the contents of the plan vary, depending on the purpose of the planning. However, the focus of the planning should primarily be organization-wide.

Business Planning Should Be Product- or Service-Specific

Business planning is best viewed as planning for a specific product or service. The customers and clients for a particular product or service might be very different than for another product or service. You wouldn’t advertise or sell race cars the same way you’d advertise or sell minivans. Each needs a different business plan.

What do you think?

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.

The most important section of your business plan is its executive summary. That’s right. It’s the first thing that people read, and it should crystallize everything that’s compelling and essential about your business and how you will succeed with it. And you need to do that all on one page. Gulp.

If you’re looking for investors, they won’t read past the first page if it doesn’t grab them. That doesn’t just mean great writing, but also great content that demonstrates that you know what you’re talking about.

Who will be running your business is clearly the most important part of your business. But for the business plan, it’s the executive summary that has to be good or they’ll never get around to reading about your amazing management team or anything else in your plan.

Now, please don’t conclude from this that a compelling executive summary is all you need. That compelling executive summary only works if it’s well supported in the body of the plan. Grandiose assertions don’t win over investors, and a business strategy built around such assertions will fail also.

So you need a powerful plan that’s topped off with the best executive summary you can write. And rewrite and rewrite and rewrite until it’s just right.

Indeed, Guy Kawasaki argues that you should spend 80% of your time writing a great executive summary. I think that overstates priorities a bit, but the point is, this section needs to do more than just summarize the plan. It “says it all” on one page in what might be your only chance to get in front of a key investor.

So work on it until it sings. And if you can’t make it sing, it might just be that your great idea is not (yet) such a great idea. Work on it until it is.

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For more resources, see our Library topic Business Planning.

-Written by Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010 – LinkedIn
Twitter: RolfeLarson — Author of Venture Forth! Endorsed by Paul Newman of Newman’s Own

A vision, during strategic planning, is depiction of the organization and its customers at some point in the future. Like mission statements, there are many different perspectives about what should be in a vision statement.

Vision statements can depict the overall result sought by the organization. They also can be used to inspire and motivate members of the organization. However, depending on the culture of the organization, vision statements can breed distrust and cynicism if they’re used only for that reason. Also, because they can be so very broad in nature, they often don’t provide focus and direction during planning. That’s why it’s useful to have a grand vision and a strategic vision in planning.

What’s a Grand Vision?

A grand vision is broad depiction of the organization and preferably its stakeholders as they will be far into the future, for example, “Our organization is seen world-wide as the most respected in our industry, and our customers agree our services are a benchmark in our industry.”

What’s a Strategic Vision?

A strategic vision is depiction of the organization and its customers as they will be shortly after implementing the strategic plan, for example, “Our organization commands 10% market share in our industry, as a result of market expansion and increase in sales across those markets.” The strategic vision can provide clear focus and direction for planners during planning and later on when implementing the plan.

Use Both Grand Vision and Strategic Vision in Your Planning

You might start by having planners articulate a grand vision that is truly inspirational and motivational to all members of the organization. Don’t stop there. Either at the beginning of planning or near the end when planners have discussed goals for the plan, articulate a strategic vision that provides clear focus and direction.

What do you think?

Here’s many more resources about strategic planning.

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.

Business plans tend to be mostly head, and mostly left brain at that. They describe a business idea for making and selling stuff, and good ones present strong reasons and compelling data. That’s important, and trumps so many plans that offer little more than grandiose assertions and generic arguments.

But the heart of any business plan – and the heart of any business – can only be found in the hearts of its customers. And by heart I mean the kernel feeling this business will satisfy. What core need or desire or emotion will your products or services satisfy among your customers? What itch will it scratch, what nagging problem will it solve, what deep satisfaction will it give?

At our core, we humans are driven far more by our emotions than by our analysis, however much we may justify our decisions with arguments and data. And that applies to what we buy as well.

So as you plan your business, and do your research to understand your customers, drill down to what will truly drive them to desire your product or service. Find that core feeling, and organize your business around feeding it.

If you need help with this, think Steve Jobs. Somehow Apple has been able to figure out what millions of us really want, without us knowing it beforehand. And once that product comes out, be it the iPad or the iPhone or the iPad, millions find they cannot live without it. Research helps, but it never gets you all the way.

You don’t have to be Steve Jobs to do this. Just find the feeling and feed it. That’s the core of your business plan.

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For more resources, see our Library topic Business Planning.

It’s common that a client will want to start strategic planning with “updating the mission statement.” After all, that’s what a lot of experts suggest. Mission statements get a lot of attention from writers and consultants. Many of them assert that the statements should be highly inspirational and easy-to-read. They give examples of mission statements that roll off the tongue.

However, far too often, what usually occurs is a word-smithing session. “Should our mission include ‘transformational’ or ‘transcendental’?” “Are we ‘serving our customers’ or ‘collaborating with our customers’?”

Those session starts out with great energy and exhilaration, and planners greatly appreciate the facilitator’s guidance and presence in the planning. However, all that soon dissipates as planners become increasingly frustrated with not knowing which words to include. Soon they begin to wonder if the word-smithing really is providing any value to the process. They suspect there are more important matters to decide.

And that’s how much of the planners’ precious time is spent.

I assert that it’s often best first to answer – even to validate answers to – certain questions. The answers to those questions make it much easier to know what should be in the mission statement, and it makes the mission statement a true compass for the organization’s strategies, plans and practices.

Planners should first address:

• What needs and wants exist among our customers? How do we know?
• What needs and wants do we want to address? How do we know?
• What group(s) of customers do we want to serve? How do we know?
• What makes us different than our competitors? How do we know?

Sure, answering those questions is not as energizing or as exhilarating as fantasizing words on a mission statement, but the questions are a lot more useful.

Planners might do the word-smithing in a couple of strategic planning cycles, but they’ll usually start to feel that it’s not really planning, rather it’s just a way to avoid the hard work of answering the hard questions.

Word-smithing the mission statement might lend the illusion that it is indeed the heart of planning — but it’s not.

What do you think?

Here’s many more resources about strategic planning.

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 763-971-8890
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.

The benefits of having a business plan include:

• Helping you to clarify your vision and deciding whether or not to forge ahead with the idea.

• Determining if your product and/or service has a sufficient market to support it and whether or not it will be profitable.

• Providing an estimate of your start-up costs and how much you’ll need to invest or finance.

• Convincing investors and lenders to fund your business.

• Defining your target market (who your customers are or will be) and how to best reach them through strategic marketing actions or expanding market coverage or reach.

• Establishing or reevaluating your competitive position within the marketplace, by conducting a thorough analysis of the competition (finding out where your competitor’s weaknesses are and how you can take advantage of them).

• Defining corporate objectives and programs to achieve those objectives.

• Helping your business make money from the start by developing effective operational strategies.

• Understanding the risks involved and anticipating potential problems so you that can solve them before they become disasters.

• Setting a value on a business for sale or for legal purposes.

[Source: Wikipedia]

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For more resources, see our Library topic Business Planning.

Recently someone asked for a simple definition. As it turns out, business plans mean different things to different people. I tend to think of them as presenting the vision or goals for a business, along with a road map for achieving those goals. It can be sketched on a napkin, written on a few pages, or compiled into a huge stack of paper.

Here’s Wikipedia’s definition:

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

The business goals may be defined for for-profit or for non-profit organizations. For-profit business plans typically focus on financial goals, such as profit or creation of wealth. Non-profit and government agency business plans tend to focus on organizational mission which is the basis for their governmental status or their non-profit, tax-exempt status, respectively—although non-profits may also focus on optimizing revenue. In non-profit organizations, creative tensions may develop in the effort to balance mission with “margin” (or revenue).

Here’s what I would add. First, business plans need to demonstrate a solid understanding of customers and markets, which are all too often under-emphasized. Second, a plan is not complete until it indicates who will be responsible for running the business (its leadership), and why they are suited to achieve success. Third, it should have credible financial projections that can be tested independently. Finally, a business plan needs to indicate its most likely risks, and present well thought-out strategies for overcoming them.

OK, it’s hard to do all that on the back of a napkin. But however you define a business plan, be sure your plan indicates clearly where you are going and how you’ll get there.

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For more resources, see our Library topic Business Planning.

In Parts 1, 2, 3 and 4 of this topic, we reviewed the first 12 of the 15 questions to be answered during the “plan for a plan” portion of strategic planning. This Part 5 describes questions 13-15.

13. How will you get buy-in of members of the organization?

There seems to be growing cynicism about strategic planning. Far too often, the process is overwhelming and confusing for planners. Far too often, the process does not result in implementation of a relevant, realistic and flexible plan. The commitment and ownership of members of the organization is crucial to the success of the planning process and the plan. Consider these guidelines:

• Show visible top-leadership support – the CEO and Board Chair should visibly announce the process and show their continuing support of it.
• Explain if previous planning efforts failed and why – don’t expect members to simply ignore the past.
• Explain why you are planning now and how it benefits the organization.
• Involve those who will implement the plan – don’t somehow bestow the plan on the rest of the organization.
• Tie planning to important issues – you won’t have buy-in of members to a grand vision if their hearts and minds are worried about current issues in the workplace.
• Show how the planning is realistic – unrealistic plans are one of the biggest reasons for cynicism about planning.

14. How will you ensure implementation of the plan?

One of the biggest frustrations with planning is when it produces a plan that doesn’t get implemented.

• Involve those in planning who will end up implementing the plan – that helps to get their commitment to implementing the plan.
• When identifying goals, always ask “Are these goals realistic? How do we know?”
• Include action plans in the overall plan – actions plans specify who will do what and by when, in order to achieve goals.
• Assign specific people to monitor implementation of the plan.
• Be open to changing the plan – plans are rarely implemented as first written.

15. How will you change the plan as needed?

Plans can be changed. They just need to be changed in a systematic approach.

• Before a plan is formally approved, put “DRAFT” on each page of the plan. After approval, remove the word.
• On each page, put a revision date, e.g., “Revision – April 15, 2010”.
• If a change seems to be needed, propose the change to the appropriate leadership, e.g. the Board or the CEO.
• When the leadership approves the change, then put a new revision date on the plan.

This post completes the series. To see Parts 1, 2, 3 and 4, click on the category “Plan for a Plan” on the sidebar.

What do you think?

Your thoughts about the plan for a plan?

Here’s many more resources about strategic planning.

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Carter McNamara, MBA, PhD – Authenticity Consulting, LLC – 800-971-2250
Read my weekly blogs: Boards, Consulting and OD, Nonprofits and Strategic Planning.