Business Plan Innovations (10 Best Practices)

Business planning is changing in tandem with the massive shifts in the

economy, in innovation, and even in politics. Conventional business

planning previously relied on industry structure and provided best case

scenarios in economic forecasts and financial analysis. But when

whole industries are getting disrupted, and tech advances are coming faster

than we can embrace them, the optimal business plan needs to reflect the

speed of innovation and the flexibility to prepare for change by envisioning

alternative scenarios.

 

Here are ten suggestions about how to keep your business plan flexible,

dynamic, and effective.

 

1. Review the competition

Business plans that don’t include the competition are naive. You may

think there’s nothing on the market that competes with your idea, but that

shows a lack of research or imagination. Even if you have a great idea for

a new product that didn’t exist before (think iPhone), you need to anticipate

that success will spawn competition (think Android). Your business plan

should not only look at current competitors, but who might be drawn into

the market by your success. Information on the competition should explain

each company’s place in the market and unique selling proposition. Ideally,

the business plan describes not just the working of your business, but how

it fits into the constellation of competing firms in the field.

2. Highlight innovation

It is not enough to show that you have a product or service that’s in

demand. Investors want to see that you have a plan for staying in demand

through innovation.

• Detail your process for upgrading your products or services
• Include a schedule for product revisions or upgrades
• Outline investments in research and development
• Mention any connections with research institutes or facilities

 

3. Prepare for success

Success can kill a business just as quickly as failure. Rapid growth

requires capital that must be advanced to generate the cash flows

needed to repay lenders and investors. Many business owners outrun

themselves, putting their businesses at risk from even slight shifts in the

direction of the market. If you are anticipating rapid growth, your business

plan should attempt to outline how you plan to cope with it.

Your plan should include:

• Pro Forma Cash Flow Statements, illustrating the needs for cash as

the operation grows, and how those needs will be financed.

• Facilities Inventory, showing how much space the operation currently

needs, how much more space will be needed to accommodate

anticipated growth, and when existing facilities will have to be

upgraded to remain sufficient.

• Scenario Planning, showing how your business will handle a “worst

case scenario” of events not going your way.

4. Show how you will get buy-in

This might sounds obvious, but the whole company and all of your

employees should be committed to following the points included in your

business plan. How can you get everyone on the same page? How can

you prove it?

• Share the Business Plan. Make the business plan widely available to

employees as a printed document, an electronic document, and on the

company intranet. If part of the plan must be kept confidential, share

the portions that you can, such as the company mission statement,

goals, and vision.

Include the Plan in Orientation. New hires should be introduced to

the company’s business plan during the new hire process.

• Require Employees to Sign the Plan. If not all employees,

certainly the leadership team should be willing to sign off that they

have read the company’s business plan and are committed to

putting it into effect.

• Track Compliance with the Plan. The business plan should

include information on how you intend to measure actual progress

against the plan. Will this be done quarterly, annually, or at another

prescribed interval?

 

5. Retaining top employees

Keeping your employees engaged and rewarded is essential to

employee retention and achieving business plan goals. Your plan

should outline systems or methods you will use to identify and retain top

performers, such as:

• performance review process
• employee training and development programs
• employee recognition program
• compensation policies, including profit sharing
• advancement program

 

6. Exploring an exit strategy

A corporation has an unlimited lifespan, but the owners or managers

don’t. Just as many people put off estate planning because they don’t

want to face mortality, so business plans often fail to address the end

game for the entity. Are you grooming the business for sale? What

steps will you take to get it ready for market? Do you have a succession

plan? Who is going to run the business when the current management

is no longer able or willing to continue. Business plans should contain

guidance on how the company plans to sell itself, go public, or reach

other desired outcomes.

7. Include buyer personas

It’s not enough for your business plan to talk about your customers without

including detailed information about who, exactly, they are. Business plans

traditionally include buyer demographics, such as age, gender, income,

education, and other basics. The trend in business plans is to include

detailed buyer personas that provide a 360-degree look at who your

customers are. Beyond basic demographic information, buyer personas

often include the lifestyle, habits, interests, and aspirations of your ideal

customers or existing customers.

 

8. Include online media and content creation in the marketing strategy

More and more, businesses rely on the Internet and social networks to

attract prospects and distribute information about products and services.

More often, buyers are turning to the Internet and social networks for

business reviews, ratings and recommendations. The marketing portion

of your business plan should include information about how the company

intends to use Internet marketing, including:

• Social Networks. What is your strategy for marketing on Facebook,

Twitter, Google+, and LinkedIn? How do you plan to attract followers

and maintain these accounts?

• Multimedia Networks. It’s often more effective to market with

multimedia than text. How will your marketing operation use Pinterest,

YouTube, SlideShare, podcasting and webcasting to bring your

message to the target audience?

• Content Marketing. Businesses need an array of quality content to

attract prospects and boost search engine position. Your business plan

should address how you plan to use direct email, newsletters, blogging,

infographics and other content packages to your advantage online.

• Search Marketing. Your business plan should include a strategy for

achieving and maintaining high search engine rankings for target

keywords and phrases. It could take the form of a pay-per-click

advertising program, a guest blogging program, or some other content

marketing initiative.

9. Incorporate economic forecasting into your business plan

Customer needs evolve, new technology and competition emerge, and

markets change. Making “economic assumptions” when you develop

your business plan helps deal with those changes. Bill Conerly, Forbes

contributing writer and consultant, suggests that businesses incorporate

economic forecasts into their business plans. He offers these guidelines

along with some numbers:

• Don’t bet your company on one economic forecast. Use multiple

forecasts for a rounded view.

• Expect moderate economic growth. In 2013, the overall economy is

expected to grow by 2.6 percent inflation adjusted, according to the

Survey of Professional Forecasters (a free resource from the Federal

Reserve Bank of Philadelphia, and a good source for business forecasts).

• Inflation will likely remain mild. The Survey of Professional Forecasters

puts the Consumer Price Index increase at 2.1 percent in the coming

year. With the unemployment rate expected to be 7.1 percent in 2014,

it’s unlikely wages will rise much. In 2012-2013, wage and benefits costs

combined grew by only 1.9 percent

• Expect interest rates to rise. The increase in short-term interest rates

won’t begin until 2015, but long-term rates will rise slowly, according to

the consensus reported in both the Journal’s survey and the Survey of

Professional Forecasters.

10. Experts agree: Business plans need to see the downside

Why do some business strategies work and other fail? If yours fail, says

strategy consultant Steve Tobak, don’t feel bad, as few business owners

are business experts. Business owners start their businesses, Tobak

notes, because they’re passionate about their product or services, and

because they see opportunity, but don’t necessarily know how to sustain

growth. To achieve sustainable growth, Tobak says, business owners

should reevaluate their existing business plans often and include an

economic contingency. Meaning: Know when to walk away.

Conerly also advises incorporating economic contingency into your

business plan. “The Wall Street Journal’s economic forecast panel

estimates a 15 percent risk of recession in the coming 12 months,” he

writes. “That deserves some thought.”

Alejandro Crawford, senior consultant at Acceleration Group, also gives

great advice in his U.S. News & World Report article:

 

Dispense with the conventional business plan with its long range

predictions, its reliance on static assumptions about the market, and its

tendency to rationalize and defend a model and strategy built around

those assumptions. Instead, systematically embrace the potential shifts

that would challenge that model and that strategy. Focus on what it

would mean if these shifts occurred. And build a dynamic strategy by

developing a bold vision for what could happen, testing the market to see

what is happening, and positioning yourself to make the most of changes

as they occur.”

Source:  Business.com - October 2, 2014

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Kevin Minton
CEO
Chief Executive Boards International

http://www.chiefexecutiveboards.com/

KevinMinton@ChiefExecutiveBoards.com