Some tips and instructions, on how to create a business development plan for your small business.
Large, international corporations may spend significant sums of money to retain planners, to hold meetings and to print documents, as part of their business development planning. Your small business may not involve elaborate and expensive planning systems and procedures, but you do still need to plan for the future. The elements of business development planning remain essentially the same, regardless of the size and reach of the enterprise. The 8 stages in business development planning are Environment Scanning, Objective Setting, SWOT Analysis, Strategy Formulation, Resource Planning, Budgeting, Review Systems and Risk Management. Most of these stages are iterative and have to be revisited to make them feasible and realistic.
The primary purpose of the exercise is to consider matters that impact your future and that you may not think of otherwise, immersed in the routine of everyday business. A secondary but important reason for business development planning is to share a common vision with your family and employees who are in the business with you, on how you see the future and the direction the business should take. It makes sense to spend a few days at a place away from your office, with your key colleagues and associates, to make the planning process meaningful. You are likely to return with decisions and commitment that would make the disruption and expense of business development planning worthwhile.
Let us now turn to the first stage of Environmental Scanning. The object is to identify major changes that may affect the manner and scope of your business. Technology is the major driver of such change, and it is worth speaking to scientists and technical experts from your field, on changes that they expect in the future with respect to the goods and services with which you are involved. Government and youth are two other major forces of change and you should consider the major moves of political parties and the habits and thinking of the generation that will follow yours.
The next stage is to set Objectives for your business. How fast would you like to grow? Does profitability matter more than the top line? Are you satisfied with your market share and rank? Is your profitability adequate to enable fresh investment? Image, apart from growth and profits, is another area for which you should state Objectives. How do all stakeholders see you today? How would you like them to see you? You may start this exercise thinking that you are spending time on the obvious, but are likely to finish it satisfied that it has helped you develop clear goals for the future, and ones that your colleagues in the business share.
The third stage is to identify Strengths, Weaknesses, Opportunities and Threats or SWOT. Strengths have to be relevant for your business and they should be relative to the competition. It is not useful to list “honesty” as strength unless you are in a business in which integrity is a driving factor. Similarly, you should not list “goodwill” as strength unless you are certain that you score over the competition in this respect. “Location” is a good example of Strength if you are the only store selling travel related products next to or near a railway station. This logic applies to Weaknesses as well; you should identify things needed for success in your business, which you lack or do not have as much of as others in the business. “Funds for investment” would be an example. Remember that Strengths and Weaknesses need not remain so for all time. You may not have “Human Resources” as Strength today, but can go ahead and recruit the right people. You might therefore wish to list both existing and desired strengths. Do not be surprised if you find that Strengths and Weaknesses are two sides of the same coin. “Extensive distribution network” may also be “High fixed costs,” for example. Your colleagues and key clients can help you list Opportunities. What do they like about your business? Are there other things they would like to buy from you? Are there any major expansions they plan? Are there new uses for the things that you sell? Threats are more difficult to distinguish. Natural disasters are a universal threat but they are unlikely. Rain or theft can cause losses, but they are too small to concern you. You have to list Threats that are both serious as well as probable. These commonly arise from new Technology, inadequate profitability, paucity of the right people and mismatch of demand and physical resources. It inevitably resides in a competitor, new or existing, providing your goods and services at lower cost or offering better merchandise.
We are now at the most important part of the business development planning process. This is the formulation of Strategy. Strategy is a military term and it defines how you will use your Strengths to reach your Objectives. Strategy must give you flexibility because the march to your goals will be paved with obstacles that you cannot always foresee. Strategy has to be long term; you may change tactics but you cannot change basic course every now and then. Strategy involves deep thinking and should be articulated in a single sentence. Strategy, as in all warfare, must be kept secret from your “enemies.” Some examples of effective Strategy statements are:
- “Extend the product line to enter new market segments “
- “Integrate vertically to improve cost effectiveness”
- “Achieve zero complaint status and excel in customer satisfaction.”
- “Improve productivity by simultaneous promotion of a related product.”
The fifth stage of business development planning is a routine and mundane task of resource planning. Consider people, physical assets, finance, systems and procedures and skills. Do you have enough for your future plans? Do some resources have to be shed or redeployed? Are you fit enough to set out for the Objectives and Strategy you have made? List all the things you will need as you from where your business is now to where you wish to take it.
Plans are generally made for 5-year periods and updated on an annual basis. You may reduce the plan period to 3 years for volatile business and extend it to 10 years for business with long gestation. However, an annual budget should accompany or immediately follow the business development plan. The annual budget with monthly forecasts and quarterly reviews is a useful control document to ensure that your Plans do not remain just on paper or in the back of your mind.
The seventh stage of business development planning is to establish milestones and check points. Your Plan may fail. There may be major changes that you failed to see. Your efforts may not bear fruit. You have to prepare for failure, unpleasant as it is, and know when to withdraw. Set time and cost limits for all the new projects and ideas that have surfaced from the planning process. Have a process by which you can abandon a new initiative that does not produce some minimum results in a reasonable period of time.
The eighth and last stage is related to the previous one. It is called Risk Management. The bulk of the planning process is designed to painting a rosy picture of the future, full of hope and optimism. The reality, however, is that the future may not be as bright and the foundations of the present business may erode even as we turn attention to new things. Risk Management consists of taking a negative point of view and listing all the things that can go wrong with the existing business. The aim is to design containment and recovery measures so that foreseeable downturns do not harm your fundamental viability.
This 8 stage business development process will put a small business on a sound platform, with a clear vision of the future, with commitment shared by key employees and a host of decisions that might never have been occurred without the thinking and review involved.