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Planning, We Don’t Need No Stinking Planning!

Business planning is another step in the process of developing your business that many people would rather skip all together.

“Planning? We don’t need no stinking planning!”

If you’re not familiar with the line then you’ve been deprived of a comedic masterpiece, but I digress. The point is that many of us prefer to “do” vs. “plan.” Nevertheless, it is sometimes necessary to bite the bullet and do some planning. This is one of those times.

A business plan serves as the roadmap for your business and as its primary sales tool for financing. Even if you have no intention of going to a bank to get startup funds for your e-commerce business, you should still develop a business plan.

A business plan will help you to develop a real course of action to get your business off the ground. Most business plans contain the following:

Executive Summary – discusses the high level goals, mission statement and keys to success for the business.

Startup Costs – a list of the initial costs to open the business.

Product Overview – what are you selling and why will it work?

Market Analysis – find out who are your target customers and how will you attract them?

Competitive (SWOT) Analysis – determine your competitors and how will you beat them?

Sales Strategy – how will you sell your products?

Sales Projections – how much do you expect to sell in the next 3 years?

Website Development Plan – how will you get online? Who will make it happen?

Operational Plans – Who will run the business? How will it operate?

Financial Plan – When will you break even? What’s the projected profit/loss for 3 years? Cash flow? Balance sheet?

Seems like a lot, right? Sure the concept can be overwhelming, but you don’t need to start from scratch either. What if I told you there was a place to go and find over 500 different sample business plans you could use to model for your own business? Okay, so there is and I’m telling you.

I know you’re ready to skip ahead to the next chapter and avoid this important but intimidating step in the launch of your business. Don’t do it. Even if you’re not planning on seeking financing from traditional sources like a bank, this is a valuable process that will help you understand more about running a business.

If you are going to seek financing from a bank or even mom and dad, having a solid business plan will make you more confident. Would you invest in a business that didn’t even have a plan?

Benefits Of Enterprise Resource Planning (ERP) Systems

Business owners demand instant and low-cost solutions that are easy to upkeep and maximize return on their investment. Enterprise resource planning – ERP systems fit the bill perfectly and hence have become popular with many businesses, especially in implementing the the resource efficiency lessons learned during recent recessionary periods. In fact, now not only multi-million dollar businesses that deploy such systems, but also small-sized units and even start-ups.

So how will your business benefit from an Enterprise resource planning software system? Here are the lures that have prompted business owners to walk the ERP road:

Reduction in Operational Costs: Deploying an ERP software system holds benefits for all three process streams of an organization-strategic planning, production control, and management control. Such a system integrates varied business processes across the myriad of departments in an organization into a single and comprehensive information repository. This integration makes communication smooth in-between departments and this improved communication, in turn, imparts a degree of efficiency in the production, planning, and decision making processes. This efficiency is manifested in various ways-lower production costs, less marketing expenses incurred, and less need for securing help desk support.

Facilitating Inventory Management: Businesses these days are located in various geographical regions. Administrative units, warehouses, and back-end support offices are spread all over the world and this leads to complexities in managing the inventory in these locations. An Enterprise Resource Planning (ERP) software system lets you maintain detailed inventory records, keep a track of materials and lot, thus simplifying your inventory transactions. With an ERP system empowering you, you can keep inventory volumes at optimum levels.

Streamlining Day-to-Day Management: An Enterprise Resource Planning (ERP) system streamlines the process involved in carrying out the day-to-day tasks of managing a business. This is primarily because an ERP software system facilitates the creation of a backbone data warehousing system. This makes it easy for the employees of an organization to easily gain access to updated business-related data. This ready access to data eases the process of decision-making and exerting managerial control over key factors of production.

Support to Resource Planning: Resource planning forms an integral component of the strategic planning process that is carried out in an organization. Enterprise Resource Planning (ERP) systems are therefore designed to take on the tasks involved in planning resources effectively and efficiently, and over the years, this functionality has improved in leaps and bounds.

So where can you obtain an Enterprise Resource planning (ERP) software system that will provide you with all these strategic benefits? ABAS Software Partner has ERP software solutions that will take care of the varied resource planning needs of your business.

Strategic Planning Using Strategic Filters and Wildly Important Goals

Abstract

The strategic planning process can take many paths. It can require months of preparatory analysis or simply use the collective knowledge of the management team. Either method requires that the company make decisions on its future course. In this paper we will show how to use Strategic Filters as a way to sift through the data and make the best decisions. Then, we will focus these decisions into a few Wildly Important Goals (WIGs) that will be resourced and completed.

Strategic Planning: Strategic Filters & Wildly Important Goals

Driving Force Filter – The Competitive Advantage you can Prove
Emerging Trend Filter
Customer Filter
Wildly Important Goals
Strategy Map

Driving Force Filter

The driving force is the key differentiator or competitive advantage of the company. The most important element of the driving force is the proof. If you want your employees and your customers to believe it, then you must find the data that backs up your claim.

Here is a list of things that are NOT acceptable examples of driving force:

Knowledgeable employees
Customer Service
Quality
Trust
Responsiveness
Reputation
Innovation
Etc.

The reason these are not good examples is that any company can claim these and everyone is saying it. If everyone is saying it, then no one will believe it.

Here are some driving force examples that the marketplace can believe are real differentiators:

Innovation / Experience – We invented surgical-adhesive to replace sutures. The use of surgical-adhesive reduces surgical time by 20 – 90% with lower risk of infection.
Speed – We will produce any custom product in 2 weeks or less versus our competitors who are at 6 weeks or more.
Rugged – We produce the most rugged portable power generation equipment for military use. Our mean-time-between-failure is 10,000 + hours.
Customer Service / Training – We trained 1580 customer-mechanics in service/repair techniques last year and have two mechanics dedicated to assisting customer-mechanics over the phone.
Product Leadership – We are the only Consulting Firm in the Midwest with experience applying quantitative process improvement tools to streamline sales and marketing; reducing costs and growing sales.

Once you know and agree on the Driving Force for your company, you can use this to understand:

What you did to be the best
The core competencies that support your Driving Force
How you stay the best

Emerging Trend Filter

Emerging trends are outside forces that you cannot control and may impact your business. These may include:

Economic/monetary trends
Political/regulatory trends
Social/demographic trends
Market conditions
Customer attributes/habits
Competitor profiles/mix
Technology evolution
Manufacturing capabilities
Product design/content
Sales & marketing methods
Distribution methods/systems
Resources – natural/human/financial

We want these to be a strategic filter because they may require you to change your business model beyond internal competencies and customer requirements. They will impact how you:

Sell
Distribute
Purchase
Plan acquisitions
Develop new products and services

We have lived during a time of great external disruption. Books and newspapers are a great example. Amazon changed book buying by making almost every book ever published available, either new through its warehouses or used via used-book partners. Instead of buying just what is in the bookstore you can buy whatever you want, get recommendations for new books based on what you previously bought and read comments from other consumers before you buy.

Then Amazon changed again by offering the Kindle E-reader linked to its online bookstore. Now you can have thousands of books 1 minute after you, buy delivered wirelessly over cell networks. Newspapers and magazines are delivered to your Kindle every night at 3 AM. No ink, no printing, no late or missing delivery service, no problem when you travel. Instead, you get perfect service.

Now we now have the iPad from Apple, which promises to embed graphics and videos within books, magazines and newspapers. This will incorporate the e-delivery features of the Kindle and make the reading experience completely different.

Printers and Publishers needed to see these trends coming, to survive and thrive. These developments can shut down huge companies and make others clear winners.

Other trends of note are environmental/clean-tech, monetary/interest rates and global markets/supply chains.

Customer Filter

Understanding your customers completes the filter-puzzle and will allow you to make the best decisions on your strategic plan. A significant time is spent understanding who are your best customers. We recommend a quantitative approach of choosing the key measureable characteristics that are important to your organization and then using Pareto Analysis to sort your customers from best to worst based on these measures.

Once you know who your best customers are you can determine the characteristics that they share. Communicating through the sales force or directly with these customers you need to ask two critical questions:

Why do they buy from you?
What pain do they have?

At the end of the Customer-Filter session you will know:

Who your best customer are
The characteristics of the best (what differentiates them from everyone else)
Why customers buy from you
What pain customers have that you may be able to solve (with special emphasis put on the best customers

Wildly Important Goals (WIGs)

With all the preparatory work complete you can now create your strategic plan. The best companies always focus on achieving a few wildly important goals. Everyone in your organization is working on the important things every day. Serving customers, delivering product, coaching employees, buying, etc. are all important and need to happen every day, week and month. Strategic Planning looks out on a longer time horizon. Therefore we need to go above the important and focus on a few (3 or less) Wildly Important Goals that will take longer but will create breakthrough results for your organization.

This focus gives the plan a sense of reality. Lots of organizations try to do too many things and end up either not getting most done or doing an average job. You want to be great!

These WIGs can include:

Acquisitions or divestitures
Major capital expenditures
Product development
Geographic expansions
Entire new businesses or brands
Marketing campaigns
Globalize the supply chain
Internal process improvement efforts (Lean Six Sigma)
Implementing new information technology systems
And endless other ideas

Strategy Map

The last step is too align the organization with the Wildly Important Goals. A Strategy Map is a simple tool to visually show how each department is going to support each WIG.

To view an example of a Strategy Map go to http://supplyvelocity.com/whitepapers.asp.

The example you will see is of a medical technology company whose Wildly Important Goals was to dramatically ramp-up new product development. The map shows how Marketing, Research, Development/Engineering and Manufacturing all support this strategy.

Creative Use of KPI-SWOT Strategic Planning

A key performance indicator SWOT is an assessment tool of crucial outcomes of the performance of a particular company or an essential indicator of exact health status of an institution. Key performance indicators are procedures that stakeholders and managers use to determine their firm’s achievements. SWOT analysis an approach to planning which involves the checking and measuring of performance against expectations. This type of strategic planning is known as performance-driven planning. Strategic planning key objective is to instigate and agree on effective strategic planning processes.

This article focuses on how the SWOT analysis creates, classifies and prioritizes key performance indicators and identifies internal potential and weaknesses and external opportunities by conducting an environmental assessment. The swot analysis strategy is a tool used to conducts brainstorming to come up with ways to improve the performance of an institution and minimize the weaknesses and threats and augmenting strengths. There are several procedure involved in strategic planning engine: the performance of kip SWOT-idea cross impact analysis, formulating of plans, objectives, missions and goals.

After selecting the proposed plan, strategic planning engine performs a cross-impact analysis to establish the impact of the proposed plan on the firm’s ability to accomplish its kip-SWOT. It is also the role of strategic planning to finalize and implement, monitor and evaluate plans and their influence on strategies and goals of the institutional kip-SWOT. For an institution to come up with an effective working set of kip’s SWOT, the organizing committee must create a scheme of prioritizing the company’s activities and events. The main aim is to develop a feasible plan that represents the long-term survival and development plan of the organization.

It is advisable for the company to formulate a number of prospective plans so as to be in a position of trying out some of them to come up with the best and most effective plan that is compatible with the company’s objectives and goals. For a performance driven plan to be effective, valuable measures must be implemented and its value ascertained. Identification of SWOTs is crucial because successive steps in the course of planning for accomplishments of the chosen objective may result from the SWOTs. First, the committee members must make certain whether the objective is achievable, given the SWOTs. If it is not attainable, the organization must come up with different objectives and the process should be repeated again.

Once an appropriate SWOT has been established, the strategies should be sufficiently defined and correctly categorized. As they plan this data, organizers should also create a kpi update calendar that shows each data cycle and knows when new numbers will be there, who will gather the data, who will be in charge of the reports, calculations and giving out the outcome. All members of the company should agree upon a certain plan and should work together to ensure that their business achieves its long-term objectives and becomes successful. SWOT analysis is an effectual development tool that companies should use to assess their performance and identify various situations that will assist them to attain their objective goals.

Stragetic Planning for Family and Private Business

First of all it is beneficial to briefly summaries strategy and strategic planning.

Strategy is the longterm direction of the business that:

achieves a competitive advantage for the business in its chosen market

positions the business in the market in relation to its competitors

defines the scope of the businesses functions, capabilities and capacity

matches the businesses resources and activities to the business environment

Strategic planning is the process (and thinking) that underpins the development and analysis of the options available to the business when choosing its strategy.

For the purposes of this article the focus will be on the higher level strategic planning, or corporate planning, as this is where the company’s direction is set and what drives its operational performance that delivers shareholder value. In addition, it defines the company’s business model, the corporate culture and its reputation from a corporate, social responsibility perspective regardless of its size or structure.

Broadly speaking there are only four types of corporate strategies being:

Growth or market penetration – Same products / services into same market

Market development – Same product / service into a new market

Product / service development – New product / service into the same market

Diversification – New product / service into a new market

Once we accept this then the planning process can be followed to develop a robust and valuable strategic plan for the business.

We apply a rigorous structured process to strategic planning that incorporates a range of activities and analysis designed to achieve the clear direction for the business, its structure, its employees and all business activities.

The first part of the process includes:

Core values of the owners – These are critical as they make up the philosophy and ethics of the business and the people

Goals of the individuals and for the business these are critical as it focuses everyone of the type of strategic direction of the business.

Core competencies of the business – These may be based on the technical expertise of the owners however it is best to think about what competencies the business will leverage to develop the business model it will adopt

Development of the businesses VISION and MISSION – These provide the focus for all future activities. A Mission statement should not be any more than two sentences of between 8 and 10 words otherwise they lack focus and are of little value to the business

Your VISION is an internal statement that drives its direction and performance

Your MISSION is a statement to internal and external stakeholders of how you conduct your business

The second part of the planning process is where the real power of strategic planning is developed as it consists of a series of analysis – Four in fact, which are all designed to provoke a breath and depth of thought that will have a major impact on the structure and operational performance of the business.

Environmental analysis – this is the business environment you operate in and it includes six elements:

Political

Economic

Social

Technical

Environmental

Legal

Industry analysis – this analyses the industry environment you are operating in and competing with and is based on Porter’s Five Forces:

Power of buyers (the buyers of your products / services)

Power of suppliers (those that supply your business)

Threat of new entrants into the market (is it easy for another like business to establish)

Threat of competitive rivalry – How competitive is the market and how do / will competitors react to your business

Threat of substitutes – What is substituting your product / service in the market

Resource analysis – this is the compartmentalization of your resources and is the critical link between the businesses mission / core values, structure and operational strategies / performance. It includes:

Physical – Your location and physical assets

Reputation – The reputation of your business at all levels

Organisational – Goes to the heart of the operational structures and includes what type of human resources is required for the business

Financial – The financial requirements for the business now and into the future

Information – This ranges from your operational information i.e. SOP, policies, T&C of Trade etc to IP that you want to protect / hold separate to the day to day operations of the business

Technical – The technology utilised within the business and the future technology requirements of the business be it systems or software or the use of media

The good old swot analysis – The strengths, weaknesses (or constraints), opportunities and threats (challenges). The swot analysis is infinitely more valuable to the process after the above three analysis have been completed because the business owner will have a greater understanding of their business and will be able to conduct this analysis with clarity and purpose.

Phase three of the process is the development of the businesses strategies. This pulls together everything done to date and results setting a clear direction for the business. We have a three step process for the development of these higher level strategies, which includes

Matrix for offensive and defensive strategies through the matching of:

Strengths and Opportunities – Offensive

Strengths and Challenges (threats) – Offensive

Opportunities and Constraints (weaknesses) – Defensive

Constraints (weaknesses) and Challenges (threats) – Defensive

Prioritising the strategies by filtering then through a specific framework to assess their:

Feasibility (do you have the capacity and capability to implement the strategy)

Suitability (does the strategy suit the current circumstances of the owners and business environment)

Acceptability (this is the risk / return assessment, which includes the possible reaction of stakeholders i.e. employees, your financier, suppliers, customers and competitors)

Strategic choice – Based on the above select the most appropriate direction for your business.

While this process appears involved, complex and time consuming it can be tailored to suit the business. However it is important to have a clear focus on the end game, which is to be a strategically focussed business that has a clear direction and purpose that can be measured.

What Is a Strategy? Fundamentals of Successful Strategic Planning

Have you ever noticed how the question of “What is a strategy?” rarely comes up in the context of strategic planning? The word strategy is frequently used with the assumption that anyone involved in developing strategies knows exactly what a strategy is. It has been my experience that such an assumption is often wrong. Far too often, those charged with the task of strategic planning for their organization do not know or understand the definition of strategy. The result is that what they end up calling a strategy is not really a strategy. With this consequence in mind, I’ll start by discussing what a strategy is not.

Before I begin, please keep in mind that the goal of this discussion is not to get caught up in semantics. The goal is for you and your planning team to have a unified basis for evaluating ideas so that you can begin the process of deliberately converting ideas into actionable strategies.

Strategy versus Tactic

As a strategic planning expert for more than fifteen years, it has been the case most often that I am given a series of tactics when I ask a potential client what is their current strategy for achieving their objective. Most people think they have a strategy when all they really have are tactics. This confusion is common and can undermine the entire strategic planning process. It will serve your strategic planning efforts well to understand and be able to distinguish strategies versus tactics.

Tactics are specific actions that promote achievement of a strategy. The hierarchical order goes like this:

A tactic supports achievement of a strategy.

A strategy supports achievement of an objective.

An objective supports achievement of a mission.

A mission supports achievement of a vision.

Achievement of a vision fulfills purpose.

Only having tactics without actionable and integrated strategies is a primary reason why so many business owners and executives are frustrated and simply spinning their wheels. In other words, they are busier than ever before and investing significant resources, but not experiencing significant progress on their objectives or anything close to the expected return on their investment.

Please do not think for a moment that tactics play a less valuable role in the success of an objective. The right tactics are just as important as the right strategy. Ineffective tactical support can render an otherwise effective strategy useless in (and sometimes destructive to) achieving an objective.

What is a Strategy?

In its simplest form, a strategy is a clear decision and statement about a chosen course of action for obtaining a specific goal or result. While this definition is succinct and suffices for a general discussion, this definition and those like it have no practical value for organizational strategic planning efforts. Why? It provides no basis for evaluating whether a strategy is actionable. Actionable strategies are the only kind that matter in business.

What is an Actionable Strategy?

From the perspective of successful strategic planning, there are two kinds of strategies: actionable strategies and all other strategies. My definition of an actionable strategy states:

An actionable strategy is a comprehensively scrutinized decision about the most effective and efficient use of specific resources for systematically increasing competitive advantage and profits over a specific period of time.

Side note: If increasing competitive advantage and profits over a specific period of time is not the goal of your current strategic planning efforts, then just substitute your goal in this definition to make it specific to your needs.

Actionable strategies are a fundamental part of the Actionable Strategic Planning® process as they support business growth in multiple ways and enhance your chances of success if the right minds are engaged in consistently monitoring, evaluating and integrating new information and adapting the strategy as necessary.

Business Planning – Setting SMART Goals For Your Business

Getting your business off the ground requires a great deal of planning. You cannot reach your destination without the roads you will take being well mapped out. This is the same with your business.

In order to know where you would like your business to go, you will not only need to know what you want to achieve, but also what steps will be necessary to get there. In this case, you are wise to use the SMART goal setting system. SMART stands for: Specific, Measurable, Achievable, Relevant and Timely.

Let’s take a look at these 5 steps for business planning success:

Be Specific: When you are setting your goals, you need to be as specific as possible in order to really plan them out effectively. Avoid using broad or generics when setting your objectives. For example, if your goal is to generate more sales, put a number to it. This gives you a much better target to hit. If it is 10% more sales, then calculate exactly how many dollars that represents.
You Have To Be Able To Measure It. Setting an objective for your business is no good if you cannot monitor your progress to see if you are on target. Using the example above of increased sales, you can easily measure month-to month if you are meeting your goals or if you need to ramp it up a bit in order to meet your objective.
Can You Achieve Your Goal? Being hopeful is all well and good, but having unrealistic goals is just being a dreamer. If you have a big plan, break it down into smaller, attainable increments. You will still get there in time, but you will not feel overwhelmed in the meantime. Your goals need to be realistic, setting the bar too high is setting yourself up for failure. Setting the bar too low and you will not reach your full potential. Finding the right balance can be difficult, but not impossible. Start small and work hard to meet your self-demands. If you find you reach them easily, then set the bar a little higher the next time.
Make it Relevant to Each Person Involved. Communicating the objective to the various people who will be involved with implementing the action should be specific to their role within your business. Telling your staff that the company’s goal is a 10% increase in sales will mean absolutely nothing to them. Telling your sales staff that they each need to sell 2 more units per month or your production manager that they need to produce an additional 100 units each month is relevant and understandable and measurable to them. It gives everyone concrete objectives that they will have to put in place in order for you to attain the desired outcome.
Set a Time-line. One of the surest ways to fail is to leave an open-ended time to achieve your goals. You have a tendency to want to do this because you are not accountable if you have all the time in the world to meet a goal. Set a date for the completion of your objective. This ties into the measurability of the goal. It also makes you work harder to achieve it if you know you only have a specific amount of time to do it in. Another reason you might be tempted to not set a deadline is if you believe your goal is unattainable. If you can’t bring yourself to set a date for completion, then perhaps you need to revisit the steps above and set more realistic objectives.

By having to set a deadline for completion, you can sit down on that date and review whether to objective was met or if you missed the mark. If it was met, then pat yourself on the back for a job well done and start the process over again with your next set of SMART goals.

If, however, you did not meet your objectives, this gives you time to reflect on where you went wrong in the planning process. Did you set your goals too high? What happened during the process that made it unattainable? Is there something you could have done differently?

It is only through this process of reviewing the outcome at the deadline that you can improve your business and push it to the next level. Without this analysis and review, your business will continue to operate without direction.

This whole process of setting business goals is the only smart way to push your business beyond what it is today. Making sure you set objectives that are specific, measurable, achievable, relevant and timely will keep you focused on success.

Qualities of an Effective Corporate Planning Process

Corporate strategic planning is intended to provide both the direction (strategy) and the actions (execution) needed to achieve strategic goals. The combination of smart strategy and successful execution is the hallmark of a great planning process.

So what does this process look like?

It creates a hard link between planning and execution.
It reduces risk by eliminating variability and ambiguity in language, outcomes, and process.
It provides a customer-centered perspective.
It facilitates bidirectional communication.
It enforces accountability.
It empowers executives and staff with “business truth.”
It provides clarity and steps to achieve outcomes.
It can be applied in any context (internally, externally / business, technical).
It provides repeatable, predictable, measurable results.
It enables the organization to develop plans more efficiently with precision delivery.
It provides cost savings through a repeatable set of processes.
It creates minimal intrusion to the organization.

Yet, in recent years we have seen executives grow increasingly skeptical of traditional strategic planning exercises. Why is this? What’s gone wrong with the strategic planning process?

Consider that many planning exercises are carried out in one of two ways: At a fevered pace to set objectives very quickly; or over a very long period of time that has constant interruptions, short meetings, and is primarily focused on current or ad hoc issues that the organization is facing. Either way, we find that management staff is usually focused on short term goals and issues with the most financially significant concerns taking the most attention.

Additionally, in traditional planning, the people who will be most affected by the organization’s plans are often unaware of what the end goals are and have been given varying levels of information to carry out their goals. There is usually a team or set of teams that have been given the “go ahead” to carry out the plans but they often fall prey to office politics, cliques, and business friendships that all impact the ultimate success of the plan and more importantly, the realization of the outcomes that the business is trying to achieve.

All of this adds up to an ineffective strategic planning process that leaves organizations and executives bewildered and wondering why their plans don’t deliver the intended results. Meanwhile, organizations that have managed to create an effective strategic planning process are able to remain focused on delivering value to customers and gaining market share, while also moving toward defined corporate objectives. It is this ability to balance strategy and execution that gives advantage to today’s most successful organizations.

Integrative Business Planning – Managing Complexity

Introduction

Business Planning is normally done when a business plan is needed for financing purposes or to use as a guideline on running and growing a business (as a start-up or for the next time frame). Many crucial features of a business need to be addressed and balanced in this planning process. Various options, problems and risks relating to these features will be considered.

Entrepreneurs often assume that one variable has a linear relationship with another (e.g. $x spending on marketing will create $y income in sales). Business is, however, seldom that simple. Many multi-directional relationships tend to occur between the various features. Sales would for instance also be influenced by product quality, price, etc. Sales on the other hand will influence future expansions. To cater for this phenomenon an integrative business planning process is required.

Crucial Issues in Business Planning

Every business is different and the crucial issues in one does not necessary occur in another. What is, however, important is that the business planners ensure that they analyse and plan for all the relevant features for their specific business. This would normally include the issues that is highlighted below.

The Business – It is essential to ensure that the opportunity, the business concept, its products, services and strategies and the industry that it operates in are sound.
Marketing – Marketing strategy needs to be considered. This include aspects such as pricing and promotion.
Market Research – This is a crucial issue that is often neglected. It is important to know and understand the customers, the market size and trends and who the competition is.
Development – All issues regarding the development of new products, services, markets and facilities need to be planned for.
Operations – All aspects regarding the what, where and how of operations must be considered.
The Team – The management team need to match the requirements of a business. It would be preferable to establish what skills/jobs are needed and then to link the people to it. Where there are a lack of skills, training programmes can be implemented and new people can be hired. The whole organigram and composition of board of directors, management teams, etc. need to be planned for.
Finances – Finances are the ultimate yardstick of the success of a business, but it can not stand on its own. Important financial issues would typically include investment-, financing- and dividend decisions and policies. It is also crucial to plan for turnover (sales), gross profit margins and cost control (of expenses). The relationships between these issues (financial ratios) need further planning to establish if the business will be profitable, liquid and solvent. Return on investment (ROI) and sustainable business growth would for instance be specific aspects to consider.
Risk Management – The various risks that occur need to be determined, analysed and catered for. Fatal flaws need to be eliminated. Operational- and financial risks can often be hedged. This would incur certain costs and strategies such as manufacturing in various countries and buying and selling futures and options in different currencies.

The Complexity of Detailed Business Planning

A quick review of the brief summary of the crucial issues that need to be considered gives a glimpse of the complexity involved in business planning. If we just look at the financial issues we will see that the price will have an impact on the sales (turnover). The lower the price the more the physical volumes will normally be (except if image requires a high price). Turnover and total profits will, however, not necessary be higher. There is normally a fine balance that exist between the price, volume sales, turnover and profits.

To complicate this even further the turnover, costs and profits and there timings have a direct impact on the cashflow of the company (a very critical issue). This whole aspect is then further complicated by the investment- (capital expenditure), financing- (equity or debt?) and dividend decisions. By spending too much on a plant, having too much debt and paying out too much to shareholders will have a negative effect on the sustainable business growth of the company and this will reduce the targets that are achievable. This scenario shows only a portion of the various aspects that need to balance within the broader financial sphere.

Unfortunately the complication of the example does not stop with the finances. The finances influence many other crucial aspects of the business. On the other hand many of the other crucial aspects also have an effect on the finances as well as on each other.

The financial decisions would for instance have a direct bearing on the growth of the business (e.g. geographical expansions and new product development), marketing spending and people employment and development. All these issues would similar have an impact on the financial issues and on each other.

An Integrative Business Planning Approach

The general tendency in business planning would be to tackle each issue independently and then to just add the pieces together and re-plan if something is not making sense. Business planning often starts with some projected turnover and profit figures in mind. Everything is then worked backwards from there.

A much better option would be to have an integrative business planning approach. In order to do this the following steps are needed:

Determine all the salient features of the business.
Determine the relationships between these salient features.
Try and solve every feature by keeping the casualties and effects with other features in mind.
Use “what-if” questions to create better holistic solutions.

Summary

The idea in business planning is not to optimise the one aspect of the business and neglect or ignore some of the others. The various relationships (causes and effects) need to be catered for in an integrative way. One crucial salient feature or relationship that is ignored can put the existence of the whole business in jeopardy.

7 Steps Effective Strategic Planning Process

This TQM article provides an insight of a typical Strategic Planning Process that was used in several organizations and proven to be very practical in implementation. the key processes of this typical Strategic Planning Process are lined up into 7 steps. Detail of each steps are illustrated below:-

Step 1 – Review or develop Vision & Mission

Able to obtain first hand information from various stakeholders (Shareholders, customers, employee, suppliers communities etc).

You may use templates to evaluate how the stakeholders think about your organization. To find out whether their action are aligned with the organization’s objectives.

To review or develop company’s Vision and Mission with the involvement of other stakeholders to ensure it is still current with the business changes and new challenges. Also use this session as a mean for communication.

Step 2 – Business and operation analysis (SWOT Analysis etc)

One of the key consideration of strategic planning is to understand internal (own organization) Strengths and Weaknesses as well as external Threats and Opportunities. These are commonly known as the four factors of a S.W.O.T. analysis.

Involvement from various stakeholders to provide their points of view about your organization is key. In the process, you will gain better buy-in from these implementers of strategies and policies.

Step 3 – Develop and Select Strategic Options

You may use templates to develop several key possible strategies to address the organization’s objectives. More important, these possible strategies are develop based on the inputs from stakeholders (step 1) and Business and Operation analysis (step 2).

It is often several possible strategies are developed and everyone of them seems important. Since it is quite normal that an organization would have several key issues to tackle, you will be able to use a proper tools to select a few from the possible strategies. You will b e able to apply several prioritizing tools as introduced in this step.

Step 4 – Establish Strategic Objectives

During this step, you will be able to view the overall picture about the organization and able to select a few strategic options objectively. Template may be used to understand various strategic options, set key measures and broad time line to ensure the selected strategic options are achieved.

While it is quite common that measures and timeline is given by top management, it is the intention of this step 4 that these measures and timeline is SMART . What it meant was Specific (S), Measurable (M), Achievable (A), Realistic (R) and Time-bound (T). when the strategic options are SMART, it will help to ease the communication toward the lower level of the organizational hierarchy for implementation.

Step 5 – Strategy Execution Plan

Many organization failed to realize its full potential of its strategies are due to weak implementation. In this Step 5, a proper deployment plan is developed to implement these strategies.

Step 6 – Establish Resource Allocation

Very often, management team assigned selected strategies to key personnel and left it to the individual to carry out the task. While most organizations operate with minimum resources, it often ends up work overloaded by individual.

Step 7 – Execution Review

One of the key success factors for an effective strategy deployment is constant review of its progress and make decision for any deviations to plan. It is vital to decide what to review and with who the review is done. New decision may be required as the status of the strategies progressed.

In summary: Follow this 7-steps in Strategic Planning will ensure various options are considered including its execution, resource allocation d and Execution Review. This 7-Steps form a complete cycle for new or existing Strategic Planning initiatives