About the importance of the business planning
Recently, I have been called to advise new clients, already in the stage in which they are selling and making profit. Nowadays, the well is dry; why is that?
They never stopped to plan their way and decide what is the strategy they will take, and where they want to see themselves in the next few years. They succeeded so far, since they are excellent people, possessing a superb technological ability, and therefore developed their products and succeeded in reaching the condition in which they are today.
Suddenly, they are afraid they will not live up to their schedules, they do not have the required capital for growing; they do not have the capacity to decide whether to expand or not; whether to accept a larger company’s offer in their field interested in buy them out; the company also lacks the suitable person to provide the appropriate guidance for this kind of circumstances.
I sat down with them and saw the existing business plan they had is totally unfitting their situation and does not represent what is what they require for any business possibility they choose; as a matter of fact, their current business plan does not stand the definition of a business plan, as any decision-maker in any organization knows and would like to look into.
If this is the situation, therefore what is the means guiding you to avoid this sort of situations?
The right way to promote your company from Day 1 in a way that whatever happens will be what you plan rather than you will have to plan what has already happened, is strategic planning of your steps from the moment you decide to turn to business.
A study made in San Diego, California, including 500 start-ups in primary stages (Pre-Seed) found, that only 13 percent of those young start-up firms prepared a financial planning for one year ahead! Only 14 percent made a written business plan, and only 12 percent of companies made a long-term financial plan. It turned out that there was an almost perfect match between these fields, and usually, those who planned made the plans for all required areas. Most companies that succeeded to achieve capital from investors were the companies that prepared a business and financial program.
What is strategic planning?
In order to steer your company in the right direction, you must build its strategy
.There are several approaches for developing the business plan; firstly, before preparing the strategy it is important to examine the business environment, within which the company is to operate. It is very important to learn deeply the competitors and competition (The competitive analysis). Furthermore, one must define the following parameters: what are the company’s strong points and what are the weak points, what the threats existent in the environment are and what are the opportunities it is worthwhile to use, in order for the company to succeed. There are many models, assisting the analysis of these points, and it is advisable to use them in order to cover as many fields and topics as possible.
While building the business model, one should put a great deal of thought, in order to create a logical income and profit model, allowing the company to reach a balanced state in a reasonable period of time, and in a logical and realistic rate of income and profit growth.
Main points in strategy and business plan
a. Define a number of strategic goals (a strategic goal defines where you want to be in several years’
time, what are the main things you wish to accomplish etc).
b. Define possible strategies for accomplishing these goals (for example, cooperation with certain
bodies, what you do by yourself and what you contract out).
c. Define the company’s business model (see article in the business model archive).
d. Chart company advancement by indicating landmarks and fixed dates for achieving every landmark.
e. Define the company financial strategy (from where will the required capital come? In which stages
and under what terms will capital be raised?, etc).
f. Define company marketing strategy. How will you market your products? How will you enter the market? How will you distribute the products? Define the pricing strategy of your products; do not forget to refer to customer segmentation (market shares), competitors, state of the market and any other factor you believe to be influential on occurrences.
These are not all the points to be considered (although they are the main ones), and there are more strategic issues to be thoroughly weighed. However who ever plans his or her way properly, and see to it that the business plan is checked once in a while and readjusted to the changing reality. Will reduce the uncertainty factors that may surprise him or her to a minimum, and increase the company’s chances for success.
Of course, business plan or strategy can change, but the important thing is that there will be a strategy, and that company activity will indeed derive from this strategy, for this way you can steer your company to a safe shore, and when seeing a sandbank you will be able to bypass it, instead of topping it blindfolded.
May your business plan be fruitful!
Tags: larger company, san diego california, start ups, suitable person, technological ability