Business Planning: What's New? A 5-Part Series

“Results-Driven” Business Planning – New Perspectives for Success
As more Americans seek to create new businesses later in their career they might benefit from a refresher on the all important business plan.  I’m writing this series of articles to guide people who have prepared some form of business plan, financial plan earlier in their career.  The emergence of globalization, economic cycles, and cheap, far-reaching technology does not make fundamental planning concepts obsolete.  However, these changes require much more focused treatment in almost every new business plan, particularly if the objective of the plan is to obtain funding or external support.

 In 1993 I co-wrote a book (with Grant Thornton colleagues) titled “How To Prepare A Results-Driven Business Plan”.  At Grant Thornton we observed that most clients seeking bank or investment funding took either a cookie cutter or overly academic approach to preparing their business plans and supporting documents.  These business plans typically took a great deal of time to prepare, yet seldom “closed the deal” when presented for financing.  In many cases, the “worst” business plans were prepared by a third party.  The objective behind our book was to provide models and a leading practice approach that closely integrated business concepts and strategy to defendable finance and operating details – hence the “results-driven” premise.

So, with more than 15 years of water over the dam have the fundamentals of ‘results-driven” business planning changed?  What can you do to fine-tune your business plan in order to obtain funding and support in today’s world?

I’d like to work from the basic premise of the Grant Thornton book and provide some new perspective based on my experiences as a consultant and entrepreneur.  My focus will primarily be  on business plan components used for funding or external support.  I also assume that you have developed a basic business concept and strategy.  For a broader primer on business planning I’d suggest that you take a look at some of the primer resources in the ActSeed Marketplace.

The topics I’ll cover include:

  1. Understanding Your Audience
  2. Organizing the Process and Assessing Your Environment
  3. Strategy and Goal Setting by Function
  4. The Financial Plan
  5. Assembling and Refining the Components

The first topic is addressed in this article.  The others will be addressed in weekly articles at  

 1. Understanding Your Audience

 The business planning process should begin with the identification of your audience and the evaluation of their interests.  By translating their interests into a set of business plan “deliverables” you can efficiently organize the efforts your team efforts in translating your strategy into goal setting and planning.  First you need to identify your audience segments and determine your objectives for meeting and presenting your business concept.  Second, you need to define the information and level of detail they need.  Then you need to use that information to develop a work plan and timeline to develop specific deliverable “components” according to your priorities.  Through interaction with your team (as I will describe in a later article) you can bring together and integrate the components.  Having interim, or in some cases draft, materials is valuable for early stage meetings and web content.      

Most of us would like to think that our great business idea could be grasped by anyone with modest intelligence.  After all, we’ve developed it to the point that we are convinced it is airtight.  What many underestimate is the fact that securing money, talent, organization, and outside support requires an overt and sustained communication to key constituent groups.  The interests of these groups can vary widely, so it is apparent that no one document or level of detail is appropriate to meet all needs:

The primary interests of the internal audience – management, employees, advisors 

  • Integrated and actionable operational details
  • Financial planning and forecasting
  • Performance management

Primary interests of external audience – investors, vendors, and acquirers  

  • Viability of product or service in the market
  • Achievability of goals
  • Organizational capacity and discipline to execute
  • Mitigation of risk

While the needs of these two groups might appear reasonably distinct, the growing integration of discontinuous supply and distribution channels has created a hybrid party – the business or channel partner that acts as an operational extension of your company as well as an investor.  This hybrid might help you quickly access new markets or distribution channels, reduce operational costs, and fund the costs of expansion or systems development.

Primary interests of channel hybrid audience – supplier/distributor/funding source

  • Operational synergy and cost avoidance
  • Elimination of channel redundancy
  • Deeper, more real-time market “insight” and increased sell-through

Add to this the opportunities to out-source, off-source pieces of operations, or have third parties host or integrate information systems and data.  Clearly, today’s operational environment can be much more enabling, but also much more complex and integrated.  But, a non-linear business model and supporting plan can be powerful if explained properly.

I suggest preparing a simple matrix with the horizontal axis representing the stakeholders or “audiences” for your business plan, and the vertical access representing the functional topics to be addressed.  After preparing this straw model, get your team and/or advisors involved in a discussion regarding the level of detail required for each stakeholder.  Individual team members will be responsible to prepare drafts for their functional area of responsibility, so a clear definition on the level of detail, timelines to complete, and the process to integrate components is an important step.  Also you’ll want to achieve agreement on the format and method for collecting and keeping version control over draft documents.  The use of software collaboration tools (to be addressed in the next article) can be incredibly valuable, particularly if team members do not reside in one physical location.  After agreement on formats and responsibilities, the next stage of your discussion should address the level of detail required for each stakeholder.

 The following graphic depicts a simplified and iterative approach to developing and refining a set of business plan components.  Stakeholders and key business functions are identified.  A sequence for completion is defined, and the level of detail appropriate to the stakeholder is specified.  The logical sequence for completing and integrating each component into the overall deliverable for each stakeholder should be clear.

Audience Focused Planning

Audience Focused Planning

Perhaps the most important thing to consider is that each of the functional components will go through many changes and levels of detail as they are prepared.  There is no such thing as a static business plan, but if you are able to work from solid draft deliverables it will be much easier to make and integrate comprehensive changes.  When changes, such as the opportunity to work with a new channel partner, unfold it is best to re-assemble your team and have a discussion on the implications of the change to each of the business plan components.

 It is easy enough a few copies of business proposal formats used by investors.  However, your business plan will be much stronger and focused if you borrow some of the concepts of Customer Experience Management – beginning with the needs of your customer or stakeholder, then working backwards to efficiently produce the component deliverables that will address their interests and needs.  This will help you avoid time spend on non-relevant topics and allow you to prepare “just in time” content.  It will also enable you to tell a compelling story about your planning process.

More ideas on the planning process and assessment of your environment will be included in my next article.

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