We need to look first at the process of planning
Let’s start with the basics, – what exactly is a business plan?
Business Plans have two parts,
The first part is the narrative plan– a description of what you expect your business to achieve and how you will accomplish these goals. It starts with an outline of where you are today, and includes a description of your “destination”, and how you will get there.
In plain terms, the narrative plan is the road map for the journey ahead.
The second piece of the business plan is the financial projections. These typically include:
- an annual budget which shows – your revenue, cost and profit projections,
- forecasted Balance Sheet changes, future expected asset growth,
- cash flow projections, and
- a Capital Budget that reflects the capital investments needed for the business to perform on its plan
Many companies create an annual budget, a forecast of revenue and expenses and call this their business plan. It is the narrative plan that usually falls by the wayside.
Note the order of these two pieces of your plan. It’s important to recognize that the narrative business plan leads this process. Without the narrative plan, you have no foundation to make financial projections. (other than repeating last year’s numbers and fudging in an arbitrary growth factor)
This workbook will help you put your narrative business plan together in a clear, easy to understand format. We’ll leave the financial projections to you to complete as a separate exercise.
So Why a businesses plan?
Lewis Carol’s “Alice in Wonderland” said it best.
He writes, “One day Alice came to a fork in the road and saw a Cheshire cat in a tree.
Which road do I take? she asked.
Where do you want to go? was his response.
I don’t know, Alice answered.
Then, said the cat, it doesn’t matter.”
In business, if we aren’t clear where we want to go, we run the risk of following the wrong path, leading to poor, if not disastrous results. If your employees do not know where you want go, they also may go down the wrong path.
There are several obvious reasons for writing a narrative business plan:
Firstly, to inspire your employees to deliver on a specific set of performance metrics, or goals.
We all like to know how we are doing, from the CEO to the sales team, the service reps or the admin group. The business plan provides the reference point to measure our progress
Secondly, to improve and strengthen teamwork and cohesiveness – people enjoy working with teammates to reach a goal, to achieve something worthwhile, doing it together, celebrating their successes, learning from their mistakes, and
Finally, and most importantly, writing your narrative business plan will help you to better understand your business – you need to truly understand your business if you want others to understand it and be engaged with you in achieving extraordinary results.
When you take the time to document your plan, using this workbook, you will gain a much deeper understanding of your business.
A well written business plan, understood at all levels of the company , is like a magnetic force – it creates a tension that pulls the company towards it’s goals, providing a strong motivational force for the entire organization –
Now, let’s look at the process of Planning
There is a process to planning, and it is a continuous process, and your plan will be constantly changing, as the situation around you changes.
Fixing regular review dates, in your corporate calendar, is critical to the success of this planning process!
If you commit to this discipline, you will find, after a couple of quarters, these regularly scheduled review meetings will
- create a planning habit in the company
- demonstrate your commitment to the plan, (which, by the way is the #1 reason most plans fail) and
- build in accountability for the execution.- I’ll talk more about how this accountability works later in the workbook in the action plans section
Good planning is a collaborative process. This workbook is designed to allow the company leaders to set the overall direction for the business and also engage appropriate level of employee participation.
Your plan gains momentum when employees are involved in creating the action plans – and are held accountable for it’s execution.
I find it interesting to watch the behaviour at the reporting out at the first quarterly review meeting, and then observe the changes as the team gets into motion in the following months
As the employees gain a clearer understanding of where you are, where you are going and how you intend to get there, they will align their efforts with yours to get you there.