Business Planning

Doing business is a serious business.

Yes, you read it right. People often take up business for reasons such as; (1) I don’t like to work for others or I will work for myself (2) Create my own identity (3) I have enough experience, skill or knowledge, and adequate savings, why not to start something of my own. There could be some more and even nobler thoughts behind starting the business. And so they jump.

However, in few days, as they say – when the rubber hits the road you know the friction – they start realizing that it isn’t that easy as they perceived it to be. They start facing resistance from an established market, prevailing practices, and norms. Acceptability in the market suddenly seems to be an uphill effort. This could well be a story of a start-up but even in somewhat established enterprises or slightly successful business also, there are both external and internal challenges which stall the further growth and progress.

This is largely due to a lack of business planning. Business is not just about manufacturing the products, offering the services, or building the solution. With all due respect to the skills and knowledge that goes into all of that, they are all easier compared to being able to sell them effectively at the least and then making a much-deserved profit out of that. Thus the overarching purpose of the business is selling effectively and creating wealth that serves humanity. Both of these cannot be achieved without, Business Planning. It is one of the most important aspects of a business of any size and at any stage.

Before I lead you to the detailed aspect of the Business planning, I would like to put a disclaimer about the “planning” though. No amount of planning provides surety of success but if you do not plan, failure is certain.

Business Planning is a very crucial exercise and it helps in these areas;

1.     Introduces you to potential opportunities as well possible pitfalls

2.     Set the direction, take critical decisions, iron-out the kinks

3.     Set short-term targets, long-term objectives and clarify the purpose of business existence

4.     Know your do’s and don’ts

5.     Identify near term business needs such as space, people, machinery, vendors, associates

6.     Systematic spent on purchases, capacity expansion, hiring, etc.

7.     Formulate strategies to position the products (market), penetrate by securing early success

Business planning is never cast on the stone and it is always has a possibility to do necessary mid-course correction based on the results at different stages or milestones. Long story short; BP is nothing but “Who, What, Where, Why and How much”.

It is a process that takes you from where you are today to where you want to be tomorrow. In the journey between these two points, a Business plan is a roadmap, which has direction and milestones.

So what exactly, a business should comprise?

1.     Purpose of your business: The founder of the promoters of the business must know the purpose for which they are indulging in a particular business. Given that Creating Wealth and Creating and identity is the fundamental purpose of most of the business but the founders must find answers beyond those two purposes. The ultimate objective of any business is to serve humanity and/or the planet. In the process of finding the answers, you might realize why exactly you have picked up a particular business as a cause to that overarching and ultimate objective. The need to realize the purpose of your business is to synergize your passion. Else it might sound like “doing the work that you actually don’t love to do”

2.     Establish what exactly your business is: Essentially the business is one of the entities that fits somewhere between the two ends i.e. Supply and Demand. The nature of the entity could be one more of these; Manufacturer, Raw Material Provider, Research & Development, Processor, Stockiest, Distributor, Retailer, Service Provider, Supporting company, and many more. It’s important to know upfront, where exactly you fit, and that do helps you to clearly define the role, boundaries, do’s, and don’ts of your business.

3.     What are you trying solving/satisfying?: This is a very common and obvious question that has to be answered. There is broadly two kinds of businesses: One that solves the problem or the other that satisfied the unmet need. Apart from getting this clarity, it is also important to know how big is the problem or how desperate the needs are, and does your solution/product or services are the right fit. How the market (that you are targeting) does is currently coping up and how your business would find its headways in the same market.

4.     Why do you think your business stands a chance?: Unless you’re coming out with completely unique proposition through your product or service coupled with a strategy, in a market that is already occupied and overflowing with suppliers, it would be very difficult to penetrate. List out the reasons and lay-down the facts/evidence that tell you clearly that your business stands a chance to find a reasonable share, to begin with. The size of the opportunity and the possibility of growth is another important consideration.

5.     Projection – Volumes, Turnover, Profitability: You need not be a great financial planner but if you get one on board, this is a must exercise. If you are not projecting your growth at the beginning and also intermittently, it may lead to a mess or to the point of no return. Developing a budget, tracking the cash flow, and continually optimizing significantly help to build the financial strength of the business, which is vitally important.

6.     Success Criteria and How will measure them?: Just being busy in the business is obviously not a measure of success. Define your own criteria of success and measure them periodically. There have to be concrete evidence such as “addition of certain number new customers”, “a growing number of repeat customer”, “improvement in profit margins”, “satisfied customers and/or happy employees”, “steady conquering of segments or territories” – just a limited list to provoke thoughts and set your own success criteria