Effective Business Planning

Strategic business planning is crucial to success, especially when done right

12/19/2013

Business planning is crucial to a company’s success, especially when the process is undertaken strategically. Effective business planning, and the written business plans that result from it, begin with considering the important questions about one’s company and one’s industry and continue with conservative budgeting, brutal honesty, straightforward language, visual creativity and the strategic input of professionals.
 

Consider the Important Questions

“Spend most of your time” considering questions about your industry and your company’s challenges, Inc. states.
 
“This is where the heavy thinking happens. What do I think the economy is going to do? Will I need additional help? What product lines are apt to grow? Which aren’t? What kind of raises should I give my employees?”
 
Effective Business PlanningBudget Conservatively
 
From your assumptions, build a budget, but do so conservatively.
 
“You have to make sure that you can handle surprises, that your assumptions aren’t too optimistic,” Inc. adds. “Even in good times, there are challenges to manage…”
 

Brutal Honesty

During business planning, CEOs may encounter negative information. Don’t fear this information; instead, be brutally honest and alter the plan if necessary.
 
“If [the business idea] doesn't add up, take two steps back…” notes Inc. “Don't dismiss the negative information and only look for data that supports your idea. It is better at this point to go back to review and alter your idea and target market choice.”
 

Written Plans Should Be Straightforward…

Forbes recommends steering clear of cute language and longwinded sentences and explanations.
 
“You should always be as concise as possible and remove any filler language,” the magazine states. “Even if it sounds nice, fluff gets you nowhere and wastes space. Plus, no investors want to read a long business plan. Get to the point quickly.”
 

…And Visually Creative

While it may seem contrary to the above plea for straightforwardness, business planners should incorporate visual creativity.
 
“Whenever possible, and without overdoing it, use visuals in your business plan. Graphs, charts and images can help bring your concept to life. Plus, it breaks up the text and helps a plan flow better,” explains Forbes.
 

Be Even More Conservative

“When you’re done with your plan, go back and reduce the revenues by 10 percent. And then increase the costs by 10 percent,” says Inc. “You’re going to face surprises along the way” and “a 10 percent cushion on both sides of the equation will help you through those.”
 

Seek Professional Help

Second – and third and fourth – opinions are invaluable.
 
In fact, Inc. recommends “passing [a business plan] out to three pros. At least one of the three should be a successful professional with experience within your target industry while at least one should be an outsider.” The former “will help you with the areas of your business you don’t know you don’t know” and the latter “can tell you whether your plan is in plain English.”
 
Whether CEOs follow all of this advice or some, experts agree that business planning is essential to company’s success.
 
“Without a plan, you’ll find it more difficult to communicate your vision and see a path to growth,” Forbes explains, adding, “Although an idea is what often gets investors interested, a business plan is definitely needed to get financial support from them.”

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