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Strategic Business Planning - Part 2
By Sandro Azzopardi
THE PLANNING TEAM
Before embarking on writing the plan, the business must ensure that it is written by someone or a team to whom it really matters, because of the enthusiasm and commitment that they put into it. Besides, such a team would in all probability be in possession of a substantial amount of information to determine the goals, targets and resources needed by the organisation. Of paramount importance is perhaps the message to be conveyed to the compilers of the plan. The team has to clearly and effectively show that it satisfies the following criteria:
•It has the necessary experience in compiling good plans. The various disciplines in the organisation have to come together, thus ensuring a holistic approach.
. It can realise successfully the targets set, meaning that the compilers of the plan should also possibly be or include those same managers who will actually implement and monitor the plan's performance; •It has already done what is being proposed - this means there is enough competence and experience to link to past plans, in terms of objectives and achievements; . It fully understands all the risks and pitfalls. Contingency planning is an integral part of a strategic business plan, where realistic risks are carefully planned for;
• It can relate the business plan to current and anticipated resource levels. Generally, each organisation has an element, large or small, of un utilised resources. The strategic business plan is the tool that identifies and effectively uses such dormant resources.
BUSINESS PLANNING TOOLS
Once the team has been identified and given the necessary powers and responsibilities, what remains is the identification and provision of the necessary tools to produce the strategic business plan. Each and every organisation should choose its tools for good planning, considering such issues as structures, staff competencies, organisational cultures, current resources, etc. However, the following list of commonly-used tools is neither exhaustive nor binding, but is an extremely efficient checklist, which is a valuable form of reference:
•Clear and concise planning forms and guidelines
•A set of planning definitions
.Internal and external surveys
.Financial modelling packages 'Organisation-wide availability and sharing of information
.Identification of standards to assess whether the targets are achieved
.Training programmes for planning staff
.Task force/Focus groups
Of course, the adoption of such tools depends on the size of the business. For example, in the case of Task Force/Focus Group, these approaches are used where the organisation tends to be rather large in size. This also applies for Internal/External Surveys, where the cost and time of collecting such information has to be viewed in terms of the accruing benefits to the quality of the plan itself.
AN EFFECTIVE PLAN
What remains is therefore the organisation of all the data collected and the composition of the strategic business plan itself. The executive summary itself is built up after the rigorous exercise of establishing the comments, figures and messages contained in the plan. The summary must be seen as conveying to its readers, in a short but effective message, where the business is to-day, and what future scenarios the plan is proposing.
It is the norm for Executive Summaries to be limited to one page of prose, but the most important element, be it one or two pages long, or even three, is that the summary, when read must immediately provide the reader with what to expect in the plan itself and what the plan's conclusions are, the targets to be achieved, how they will be attained and what monitoring systems will assure their delivery. Exhibit D (in Part 3) is a good example of an effective executive summary.
Another important issue for a successful strategic business plan is the way that data is applied and the manner in which it is communicated through the plan. Top management is interested in the specific targets to be achieved and will not tolerate statements with inadequate information, or which give rise to ambiguities or worse still are very generic in approach. Exhibit E (in Part 3) compares and contrasts two different statements, illustrating what quality of data conveys in an effective manner, the message of the plan. Notice how the first statement is full of generic fluff, which does not mean a thing, and worse still, leaves the reader completely more perplexed than when he/she started.
But perhaps, the focus of the business plan user should be directed on the financial analysis and projections that support the scenarios being proposed by the plan. The financial analysis provides the effects of the strategic business plan into numbers that could be crunched. What should form part of this integral and important financial section of the plan?
-Only a Summary
-Historical performance and how it relates to the proposed scenarios
-Comments on the accuracy of previous plans, profit/loss trends, fixed costs patterns, cash flows
-An exercise in sensitivity analysis of possible scenarios
-Justification of assumptions
-Risk guarantees to investors
Other data demonstrating that the proposed plan is financially sound, cost effective and a profit motivator.
Besides the above elements, we must not over assess the other parts of the plan, especially the marketing, management and operational aspects. The team must ensure that they are able to produce a cohesive, well structured plan that will definitely deliver the message. The need for good business planning is therefore evidenced by the need for the organisation to maintain a truly effective thrust in the treacherous business environment it operates in. Business planning is a highly specialised and skilled form of determining the strategic direction, which demands and deserves some good quality effort. Without a business plan, the organisation, like an armoured tank without any ammunition, will flounder in the face of any weak opposition. Adherence to strategic business planning disciplines is not a bad indicator of those businesses likely to survive and those destined for the scrap heap.
About the Author
Sandro Azzopardi is a professional author who writes several articles on various subjects on his web site and local newspapers and magazines. You can visit information about this article and others on: http://www.theinfopit.com/business/planning/strategicbusinessplanning-2.php
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