Business Planning Step-y-Step

In order to get buy-in, your entire management team should be actively involved in the business planning process. Plan to spend one or two days in a location where you can work with relatively few distractions. Have your staff follow the "100 mile rule"; unless a problem is so urgent that someone would actually drive 100 miles to your location to tell you about it, the matter can probably wait until you get back.

In developing your business plan:

1. Review current operations: Review your financials, your operating results, your current business plan, summaries of what your competitors are doing, industry trends, the state of your resources including employees, current issues in the workplace, the status of initiatives undertaken last year and anything else that you measure or keep track of in your business.

   Examine your competitive internal drivers; the services or processes in which you excel and that set you apart. The idea is to determine whether these drivers can be performed differently or at less cost to enhance their value to your customer. What drivers can you expand, enhance, create or drop to refine the customer's buying experience?

   Evaluate whether you can expand the boundaries of your industry and create a new market niche. Starbucks, for example, redefined "coffee shop" to open up a whole new coffee experience for customers.

2. Identify your core values, those beliefs that are important and will drive decision-making. Core values summarize your belief system in terms of how you will do business.

   A value is a core value if it will remain essentially unchanged regardless of what else may change. It is a value taken so seriously that if your industry changes to a point that the value is no longer appreciated, you would change markets rather than change what you value.

   Examples might include excellent customer service, honesty in all dealings, concern for the well-being and growth of employees, or social responsibility.

3. Describe your vision, your idea of what the business will become. A vision statement is a description of the future:

   - What you want the business to accomplish.

   - What the business will "look like" in the future.

   - Who you want to serve.

   - What you want to provide your customers.

   - The benefits your customers will receive.

   Vision can address the scope and type of operations or how you want your customers and employees to experience the business.

4. Outline your mission, the purpose of your business, what you are in business to accomplish, and your firm's core values.

   Pfizer Pharmaceutical's mission, for example, is: "We dedicate ourselves to humanity's quest for longer, healthier, happier lives (purpose) through innovation (value) in pharmaceutical, consumer and animal, health care products (the business they are in).

5. Establish firm goals and measures: Firm goals, as the name implies, exist at the firm level, not at the department or individual contributor level. In setting firm goals, consider:

   - Your firm's critical success factors; those things you have to do well to succeed.

   - Projected accomplishments relating to the firm's financial health, customer base, internal processes, and learning and growth.

6. Establish key measures, targets, and milestones. For example:

   - Increase net revenue (measure) by 8% (target) by the end of the 4th quarter (milestone).

   - Hire (measure) three new salespeople (target) within 90 days (milestone).

   Effective measures are those that are simple to calculate, have long-term strategic value, and best communicate the meaning of the goal.

7. Identify key initiatives that will support each objective. For example, if you have decided to increase revenue by 8%, you would be faced with several chaoices. You could:

   - Raise prices

   - Reduce costs

   - Sell more to existing customers

   - Find new customers to sell to

   If you decided that your strategy is to reduce cost, one initiative may be to identify where in the firm you could reduce costs that would give you all or a portion of the margin improvement you want.

8. Define individual goals for each member of the executive team. Each of these functional or department level goals should serve to support and reinforce firm goals. Each goal should also be stated in terms of measures, targets and milestones. All of your firm-wide goals must be supported at the department or functional level either as a primary or secondary contribution.
9. Set individual objectives for each employee: Objectives cascade from goals and may impact more than one group and certainly more than one employee. A goal to increase net revenue, for example, could result in separate objectives for marketing, sales, human resources and finance.

   Each department should develop objectives to support firm goals. In turn, each employee should have objectives supporting their department objectives.

   Like goals, objectives should all have measurable targets.

10. Communicate your business strategy in a way that assures buy-in. It is not enough to have the plan. The full plan must be reflected in how people talk about the future and the ways that they participate in achieving the future.

The Business Planning Process

Communicating Your Business Plan