The Contents of the Ideal Business Plan

Every business irrespective of size should have a business plan. Why, you may ask? Because a business plan is like a GPS (global positioning satellite). It shows:

a. the current position on a map (current state),
b. the ultimate destination (desired state),
c. the route (how management intend getting there),
d. the estimated time it should take to navigate to the intended destination.

It also allows the driver to monitor his or her progress towards the destination. If the driver meets an unexpected obstacle, such as an accident, road closures or a traffic jam, then the GPS can calculate an alternative route (contingency or scenario planning).

The business plan provides the organization with a road map for the future. If it is well crafted, it will inspire and unite everyone, engage and involve them.

How detailed should it be?

The business plan should contain enough information to provide a basis for action and for monitoring progress but not too detailed that it becomes a ‘paper weight’ that is never referred to.

What information does it contain?

1. Vision statement (What we ultimately want to become)

The vision provides a vivid mental picture of our desired state. It is perhaps one of the most challenging and difficult leadership tasks because it needs to be short, imaginative and aspirational. It is a statement of what the business will look like, feel like and be like once the vision is achieved. It needs to unite and inspire every person such that they understand what they need to do day-by-day to move towards achieving the vision. People need to become emotionally invested in the vision such that they are motivated to focused action.

Regrettably, many companies spend millions of dollars creating visions that have no meaning to its people.

An example of an inspirational vision is “We Make Unique Places in Sydney that the World Talks About.”

An example of an unimaginative vision statement is “We will be the Best Property Manager in Sydney”

2. Mission Statement (What we do and where we do it)

Our mission is a clear statement of our business boundaries. It clearly articulates what we do and the markets in which we operate – both now and in the future.

3. The Context within which the Business Operates

This is a summary of the current state of the marketplace and how it is likely to unfold in the future. Businesses undertake an ‘environmental scan’ that analyses and evaluates the relative attractiveness of the macro-environment and the business’s marketplace.

Analysis of the macro-environment includes the political, economic, social, ecological, technological, and international or global environments.

The marketplace will include an analysis of our customer groups and the competitive landscape.

Because this can be a really detailed analysis, you will want to have a summary of the key points in the business plan and place the detail in an appendix.

4. Our Key Objectives

This section talks to the desired future state in the short, medium and longer-terms. In order to ensure that we have focus, there should be no more than 3 – 7 key objectives. To qualify as an objective, each must comply with the SMARTE acronym so that management can effectively navigate from the current state to the desired state by measuring and managing performance to the objective. A SMARTE objective is:

– Specific
– Measurable
– Achievable
– Realistic
– Timely
– Ecological

5. Our Strategies and Action Plans

How management will move from the current state to the desired state is covered by our strategies and action plans. A precursor to developing strategies and action plans is to identify the Critical Strategic Issues. These are the issues that are preventing you from achieving more of your objectives.

We use the critical strategic issues as a point of reference to develop our strategies and action plans.

When developing strategies, management should consider every potential undesirable outcome or unintended consequence of their initiatives. These take the form of what is called contingency planning or scenario planning.

Strategies should contain:

–  Critical issues (why)
–  The assumptions we have made (what)
– The steps we will take (how)
–  Those responsible (who)
–  The timing of each strategy and action step (when)
–  Resources required, including capital expenditure, people, materials etc. (what)
–  Key performance indicators – KPIs (what)
–  Contingency plans (what if)

6. Financial Information Including Budgets

This section shows how the strategies and action plans will translate month-by-month into cash flow, profit or loss and a balance sheet for the business. Budgets showing income, costs and expenses and capital expenditure are prepared by function or division.

What’s Next?

Once you have developed your business plan, it is important to realise that “the map is not the territory”. It just helps you navigate the territory. To get to the desired destination, we must flawlessly execute, execute, execute.

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One Response to “The Contents of the Ideal Business Plan”

  1. Harry says:

    great post, very useful, thanks!

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