Business planning is often perceived to be associated with large companies, a luxury that Small companies cannot afford for want of time! The completion of the immediate order seems to override all other considerations. The reality is that most large companies are large since they invested in “planning” while attending to the immediate demands of the business. Business planning is critical as it helps in setting the ‘goals’ for the business and helps make ‘strategic choices’ to achieve those goals. Time invested by top management to engage with all key constituents of the business to arrive at goals and the course of action to achieve the set goals can go a long way in shaping the future of a business.
Clarity on what the business is set to achieve is critical to satisfying stakeholders – internal and external. The interests of shareholders, employees, government, customers, and society at large may seem to be at variance at most times. However, the diverse interests converge to the profits the business would need to make – the reason for its very existence. A clear Rupee figure for revenue and profits to be achieved in the short and long term ensures the understanding is uniform across the organization. The diverse interests of stakeholders can be converged by evaluating all the quantifiable ‘strategic choices’ available to the business.
Purpose of Goals:
The primary purpose of having defined goals to behave a measure for the company’s progress. For a business to succeed, all members of the management team and staff must make a coordinated effort. Hence, converting the business goals into aligned SBU level goals and individual goals is imperative. While the goals can be set by top management and communicated across the organization, a co-created set of goals ensures ownership for the seamless delivery of the set goals.
A company needs to take specific actions based on limited resources to be deployed to achieve the business objectives. There are several approaches offered by business strategists, but the one that I prefer is a bottom-line driven thinking. A strong focus on the revenue and profit numbers distilled through the following lens, that ensures that all stakeholders are taken on-board:
- Clear definition of the value proposition of the business – what is it that glues the stakeholders to the business
- Arrive at the Cost structure of delivering the value proposition –
- Choose the key Activities that the business needs to undertake to deliver the value
- Map & select the resources required to perform the activities
- Identify and choose your partners who would support in undertaking the activities
- Choose the Revenue streams that the company wants to undertake and the means for achieving the same –
- What are the customer segments to focus on
- Which distribution channels help the business to reach out to the target customer segments
- The relationships that are critical for short term and long-term business
The clarity on cost structure before defining the revenue streams ensures that the business is profit-oriented while defining its long term and short-term strategies. A co-created business plan with constituents who are in control of each of the business elements will ensure that the ‘choices’ made are indeed strategic!