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Lou Lasday: Plan for Success
There are nine words a business owner must know to create a dynamite business plan.
You can't take a cross-country motor trip without a road map. You wouldn't know where you're going; the time lines, how the driving is shared, the cost of getting there, where to stay and what to do along the way. You would need coordination, a watchful eye and determination to follow the travel plan. Even with this detailed direction, you can certainly deviate, go off the road or even detour if conditions require. The point is simple and easily comparable to preparing a winning business plan.
Until committed to paper, your best thinking for a new product, a new company or a new thrust with an existing enterprise is just that; a collection of thoughts. They are seeds without soil and sails without wind. Without the organized coming together of critical aspects of the journey - where you are going, how you will get there and who is taking you - good business thinking may in reality just be wishful thinking.
The process of committing plans to paper is easy to postpone under the press of day-to-day events. In the absence of a written document, the ability to fully coordinate usage of resources in the business is unlikely. Each stakeholder travels along a different route to a destination of his or her choosing. Decisions are made independently, without a map. Time is lost. Energy dissipated. Finances squandered.
What is consciously in the entrepreneur's head can never be as complete and developed as he thinks. At the Stanford Graduate School of Business, Professor Steven Brandt who teaches business strategy in the MBA program says, "The entrepreneur may have a melody, but without a written score, it's not yet a symphony."
There are several popular misconceptions about the basic purpose of business plans, particularly those describing a brand new venture. Some people promote them as documents for raising money. It certainly is that. Others stress the preparation of a plan as a rite of passage, a cleansing experience that separates the players from the spectators. In reality, it is a blueprint for building a business.
In truth, while you may be required to submit a strategic business plan to satisfy attorneys, bankers or investors. It has much longer lasting merit. It is most usefully thought of as an internal operating document to be top of mind for continual discussion, review and edit. And, that goes for a new startup or an existing enterprise moving up.
In any event, you need only nine basic words to get you started on what may be the most important written document of your corporate life. You may wish to save this single page for your personal action file if you find it valuable as all-encompassing, while at the same time, brief and to the point.
Here then, are the nine words outlining your roadmap to future success:
1. Overview: Often referred to as the executive summary, this section brings together the total thinking of the plan. It highlights all the material in a synopsis-like fashion. Although it may be written last, it appears first to set the tone for the philosophy of the company. The conclusion of this most important section will recap the economic viability of the business unit that will be detailed in the following sections.
2. Concept: This is the fundamental idea; the Unique Selling Proposition, the "business we are in" along with futuristic products or services that may be synergetic or complementary to the main concept.
3. Objectives: Here, you'll discuss the intentions of the entrepreneur and the operational intentions for sales, profits, market share and margins. Generally, this section answers the question: "What do we intend to make happen?" It is the end result to which all resources - physical, financial and human - will be allocated and measured.
4. Markets: Who, where, what and when usually answers this section. Are you targeting big companies or small? Are they geographically in Florida or all over the United States? Are you using sales reps in those sales? This is the comprehensive picture of your roadmap.
5. Production: Here, you'll discuss hardware, software, engineering and equipment, importing or fabrication, computers and systems. Whether you offer a service or an actual product, it still must be produced and remember, if you can win the battle of cost, you'll have a better chance to win the war on price.
6. Marketing: Here, you'll discuss all aspects of identifying, soliciting, creating, developing and keeping customers. It's fair to discuss competition and how you'll relate, including the share you hope to carve. This is the interface between the enterprise and the environment it faces. You'll refer to advertising, product or service benefits, time lines of programming, budget expectations and contingency plans.
7. Organization: Your officers and board will naturally have a specialized expertise in your particular industry that you'll be proud to delineate. Additionally, you want to show expertise in department heads and professional advisors. Properly utilized, your board can be an internal consulting group. You'll refer to accountability, budget, charting and expected results.
8. Financials: The funds flow and financial projections summarize the comings and goings of your cash flow. You'll refer to balance sheets, provided by your accounting firm along with verbage on monitoring and controls to maintain cash flow.
9. Ownership: Assuming you are a privately owned entity, you still have shareholders, financial commitments and a legal structure you will detail. Who owns what and are there any long-term issues. You'll refer to funding requirements, program for raising equity projected returns to investors and ownership distribution.
In summary, such a written plan may turn out to be nothing more than an exercise. If that is the case, consider it more of a dress rehearsal for a near-term performance.
Henry David Thoreau once said, "In the long run, men can only hit at what they aim." In the case of entrepreneuring, we could add, "You may not hit the target with your initial round, but you'll never hit it if you do not focus, load up your ammunition, take aim and slowly but deliberately pull the trigger."
Lou Lasday, an independent marketing adviser residing on Longboat Key, creates action-oriented strategic corporate initiatives for emerging companies. A career direct response executive, he has been a senior partner of a national advertising agency and a regional president of the American Marketing Association.
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