In our society, the most valued work is that which relates to strategy. CEOs of the largest corporations earn more than professional athletes and entertainers. For entrepreneurs and executives, setting aside time to develop the strategy for their business is the highest priority task. Successful entrepreneurs and executives work ON, as well as IN their business.
A strategy is a clear plan of action to achieve your objectives. We define strategy as the alignment of your objectives or outputs, the capabilities and resources you have to realize them, and the opportunities and challenges the environment presents. The articulation of your strategy is your Business Plan.
Your Business Plan consists of four areas:
- Defining Your Business – Identify your Vision, Mission, Values & Business Opportunity.
- Setting Objectives – Your One and Three Year Objectives and the analysis of your Current Situation.
- Systems and Processes – Describing your Marketing, Sales, Service Activities, Resource Plan, Major Tasks, and Roadblocks.
- Financial Management – The Historical and Pro Forma analysis of your business.
Let’s examine these four areas in more detail:
1. Defining Your Business – Vision, Mission, Values & Business Opportunity:
Your Business Plan begins with you Vision Statement, the clear articulation of your mental picture of your business and the direction in which you are taking it. Your Mission Statement answers the question, “Why are you here?”. Your Values describe what is important to you and what you want to express in your work. The final element in Defining Your Business is to describe your business opportunity. This segment addresses:
- Where do you make your money?
- How do you spend your time?
- Who do you sell to?
- What do you sell them?
2. Setting Objectives:
An objective is a specific, measurable result within a stated timeframe. Typically, the starting point is identifying your three year key objectives. Then, you work back to identify your one year objectives. The final step is analyzing your current situation i.e. where you are today. This involves a SWOT Analysis (Strengths, Weaknesses, Opportunities & Threats).
3. Systems and Processes:
This section is the clear articulation of what you will do to achieve your objectives. The first step is to prepare your Marketing Plan. This plan is a sub-set of the business plan. It is required to build your brand and create a unique identity in your chosen market(s).
The next step is to prepare your Sales Plan. The Sales Plan outlines whom you will sell, what you will sell them, and when you will sell them.
Now, you are in a position to prepare your Service Plan. This plan outlines the service activities in which you will engage to get and to keep clients. Your Service Plan also highlights the unique value proposition you offer to your clients.
Your Resource Plan describes how you will deploy people, capital and technology to implement your marketing, sales, and service plans and reach your objectives. Then, you identify Three Major Tasks that are your priorities in the next year and any roadblocks that will potentially derail your efforts. In any given timeframe, there will be a small number of tasks that are critical to your business success. A lack of focus on these major tasks can lead to business failure. The identification of roadblocks can help you to anticipate how you will adapt if circumstances change.
4. Financial Management:
Too often, entrepreneurs do not adequately address the financial aspects of their business. To be successful as entrepreneurs, we must take the time to fully comprehend the financial statements. The Business Plan will include historical financial information about the business and a pro forma projection of revenue and expenses over the next One and Five Years. The financial pro formas allow for the tracking of projected versus actual revenues and expenses month by month to ensure the business stays on plan.
The starting point for taking your business to the next level is your Business Plan. Winston Churchill said: “Plans are useless and planning is invaluable.” A Business Plan is not a static document. At its best, it is like a flight plan, constantly adapting to an ever changing environment. For the entrepreneur starting out or in the early stages, the business plan sets the course for finding success. For an established enterprise, the business plan outlines what will be required to achieve sustainability and significance.
At every stage of the entrepreneurial journey, taking time to work ON the business is critically important. Strategy is the highest value work you do.