This is the second in a series of articles describing how small business owners and managers can drive their business growth and profitable development through the creation and implementation of a business plan.
I know the prevailing view among many small business people is that “planning” is for the larger, more substantial businesses and that they are “too busy running their business to have time to plan.” In fact, many small business owners are “too busy” running the business, but ignorant, at their own risk and survival, that “not planning is planning to fail.”
I am convinced that a small business owner will benefit from participating in this business planning process due to the nature of carefully examining and thinking about how their business competes and operates; – and how that will align with their determination of “what business they want to be in.”
This business planning process builds a stronger, more profitable business that delivers real value to your customers and the market.
The business planning process described in this article is the most logical, pragmatic, and practical examination of small business possible. This process is far from arcane or mysterious, but it is totally focused on the reality of small business environments (the business, the economy, the competition, the needs, wants and desires of customers), as well as the determination and allocation of company resources).
Business planning process: eight main steps
For the past thirty years, I have successfully used the following strategic marketing and business planning process. The following process consists of eight main steps that are sequential and continuous. I will describe the nature and function of each of these steps.
This process applies to all types of organizations; no matter the size, the products, the services or the industry … I have even used this process with a national religious organization.
1. DEVELOP THE MISSION AND POSITIONING STATEMENT
2. SITUATION OF THE AUDIT
to. Internal
B. External
3. WOTSUP ANALYSIS
4. MAKING ASSUMPTIONS
5. DEVELOPMENT OF OBJECTIVES
6. DEVELOPMENT OF STRATEGIES
7. SPECIFY TACTICS AND ACTIONS
8. PREPARE FORECASTS / BUDGETS / FINANCIAL
1. STATEMENT OF MISSION AND POSITIONING
Regarding the definition of the purpose and mission of your business, there is only one approach, a starting point; is the customer or user of their products / services. The user defines the mission of any function or business. The question “what is our mission or purpose?”, “What business do we want to be in?”, Can therefore be answered just by looking at your business from the outside, from the point of view of the customer or potential customer. What the user or customer sees, thinks or believes at a given moment must be accepted by the management of your company as an objective fact that must be taken seriously.
By definition, the customer is buying the satisfaction of a need or a desire.
For example, here is a known and real example of a business mission that defined how that business conducted its activities.
One drill manufacturer defined its mission as determining “what size holes customers need” and its focus was directly on the customer’s needs and not on the specifications of its products. They were customer focused and very successful.
Once the mission statement has been completed, develop the competitive advantage positioning statement and prepare the USP, your unique selling proposition. “Why the company is able to provide more effective and higher value solutions than the competition.”
2. THE SITUATION AUDIT – Internal and External
The situation audit is a description and analysis of past, present and future data (information) that provides the basis for following the business planning process. It is an organized method to:
- collect relevant information
- interpret its effect on the business environment (market conditions)
- analyzing significant trends
- project all relevant factors that may influence the activities of the company.
3. WOTSUP ANALYSIS
The acronym WOTSUP stands for Weaknesses, Opportunities, Threats and Strengths Underlying Planning. This step flows naturally from the factual base (Situation Audit). Weaknesses and strengths constitute an internal analysis, that is, “What are we good and bad at?” –
Opportunities and threats, on the other hand, form an external analysis. From this analysis, objectives can be formulated with specific action plans designed to overcome weaknesses and threats by exploiting the strengths and opportunities of the business.
4. MAKING ASSUMPTIONS:
Assumptions make planning possible. Without the use of assumptions, planning would be nearly impossible. Since planning deals with the “future of current decision making” and events in the future are nearly impossible to predict with unerring precision; – make planning assumptions possible.
5. DEVELOPMENT OF OBJECTIVES
Overall objectives are the real heart of the marketing and business planning process. They deserve every ounce of time and effort, often frustrating. The objectives form the umbrella under which the balance of the entire planning structure is built. Due to the key role they play, they must be thought and expressed in the most specific and concrete way. In simpler terms, a goal is … “what do you want to achieve?” Objectives are prepared to overcome the weaknesses and threats developed in the WOTSUP Analysis and take advantage of the opportunities and strengths.
6. DEVELOPMENT OF STRATEGY:
Once the objectives have been developed, preparing strategies is the next step in the process. The strategies must explain, in a broad sense, how the objectives will be achieved.
7. SPECIFY ACTION PROGRAMS:
Once the objectives and strategies have been developed, describe the work to be done. Actions must be very specific; what work is going to be done, who, how and when.
8. FORECASTS / BUDGETS / FINANCIAL PREPARED:
Action programs, when completed, form the basis for budget preparation. The cost of each action and the income derived from the detailed actions generate the operating budget and cash flows for the Business Plan.
Many organizations confuse planning with budgeting. An important purpose of the budget is to ensure that the business has adequate financial resources to operate. Budgeting is about not failing, planning is about what’s possible.