Translating an inspired idea into a robust business plan
006 Business Planning Process Map
Successfully launching a new business or initiative requires careful planning and the results of a business planning process are usually captured in a business plan. Any investor or those in an existing business responsible for approving new initiatives will invariably want to see a business plan before making any financial commitment. The business plan, besides being a prerequisite for gaining access to finance, also provides the blueprint for successfully creating and running a new venture. Even in fast-moving markets where the plan itself may quickly become outdated the insight gained from the planning process that created it remains invaluable.
A business plan describes the business’s vision and objectives as well as the strategy and tactics that will be employed to achieve them. A plan may also provide the basis for operational budgets, targets, procedures and management controls. No two businesses are identical and no two business plans are ever exactly the same. There are different reasons for preparing a business plan and different audiences. The task of writing a business plan is a lot easier if you have a template that can be tailored to the specific needs of your business. The book “Guide to Business Planning” by Graham Friend and Stefan Zehle provides such template. It also explains how to design and present a business plan to maximise the likelihood of its gaining approval or funding.
Although the presentation of the final business plan is important, ultimately the substance of the plan is most crucial. The strategies and tactics described in the plan should be the outputs from a logical and appropriately comprehensive business planning process. The book provides a practical step-by-step business planning process and a reference for the tools and techniques necessary to complete it.
The stages of the business planning process are shown on the chart. The process should begin by evaluating the environment in which the business operates before analysing the specific industry and the suppliers, competitors and customers within it. The insight from this analysis and an understanding of the strengths and weaknesses of the business or new venture, combined with a set of expectations about the future, can be coupled with creative and innovative thinking to develop a range of strategic options for evaluation. The evaluation stage includes developing forecasts (notably for market demand), financial projections and, in some cases, a range of valuations, as well as calculating various measures of performance with which to validate and benchmark the forecasts.
The business planning process should test alternative ideas and assumptions, as one of the main reasons for planning is to help the business prepare for an uncertain future.