Effective business planning is the necessary cornerstone for commercial success. It’s not just financial planning in business that’s important, though of course that is critical, it’s about a holistic approach to the various key elements and key practices that go into planning.
Business Planning: An Introduction
Business planning ensures that your business has a guiding compass and can follow a structured roadmap to success. A well-crafted business plan should outline the vision and mission of a business, determine the strategic objectives and lay out the necessary steps to achieve those goals.
By following a business planning process, you and your team will be forced to meticulously analyse market conditions, competition, target markets and the industry landscape as a whole. Moreover, it also compels a business to consider its operational processes, risk management and conduct extensive human resources and financial planning.
One mistake that can be made by growing businesses is viewing the plan as a static document. It should be a live document and subject to ongoing review and evolution to suit the needs of the business and market. Without ongoing development it can be difficult to make informed business decisions. Designed and used correctly, business planning documents and processes are indispensable for a business to achieve success.
To help you out, we’ve listed some of the key elements and best practices for business planning.
Business Planning – Key Elements and Best Practices
1. Vision and Mission
A clear vision and mission lies at the heart of a business and its business plan. The more specific and defined the vision, the clearer the company’s direction and the easier it is to build out a purpose and accompanying values.
While not directly relevant to financial planning for a business, these essential elements set the foundation for the overall direction of a business.
2. Market Analysis
Analysing a business’s intended market audience is key for making informed business decisions of all kinds, from product offering to marketing strategies.
A thorough analysis will identify demand and opportunities, assess competitors operating in the same space and ensure that there is a solid understanding of the needs of customers/clients.
3. Target Audience
All businesses need to identify a target audience. Not only does this provide direction for tailoring products and services, but it also ensures that an ongoing understanding of their needs is achieved.
Businesses need to make strategic decisions based on the long term best interests of the company. The best decisions reflect the demand of one’s target audience, which underscores the importance of collecting data and gaining an understanding in regards to them.
4. Operational Plan
Business operations planning assists a business in outlining the processes, resources and technology required to successfully develop and deliver products/services.
A well thought out and documented operational plan ensures that everything from cost structures to financial performance is thought out and determined ahead of actual operations beginning.
5. Marketing and Sales Strategies
Without a comprehensive marketing and sales strategy, it can be difficult to know what next moves to make in growing awareness of your business and promoting your products to potential customers.
Nowadays, there are digital platforms, traditional advertising channels, and many other ways of reaching one’s target audience.
Again, having a clearly identified target audience allows more directed and effective marketing and sales strategies to be determined. Having a strong strategy outlined during the business planning process will best set up your business for financial success and growth.
6. Risk Management
Financial planning in business requires some consideration to be given to risk management. Developing strategies to mitigate risks to the extent that a business can will provide financial stability and operational preparedness in the event of anything from market fluctuations to pandemic catastrophes.
As with many adverse events, a business with pre-planned contingencies and in-built flexibility will prove to not just be a lifeline during disastrous events but also a strong competitive edge in the market.
7. Human Resources Planning
One of the more commonly ignored elements of business planning is human resource planning. This can include everything from training programs to hiring strategies and even retention plans.
Staff turnover can be an enormous drain on the financial resources (among others) of a business. A stable workforce, skilled and trained in ensuring streamlined productivity, can ensure positive financial outcomes.
8. Innovation and Adaptability
As we mentioned previously, it is best practice for business planning to have an ever-evolving business plan. This should not just allow for agility in the face of technological and market evolution but also foster a culture of innovation and adaptability that will allow your business to ride the waves of industry trends.
It is of course difficult during the day-to-day business of running a business to continuously review your planning process and ensure its relevance and effectiveness. However, scheduling in quarterly reminders–or reminders at other set intervals–will ensure that your business planning review is in your calendar and set so you don’t forget it.
9. Sustainability and Corporate Social Responsibility (CSR)
In the 21st century, environmental sustainability and corporate social responsibility (CSR) are more important initiatives than ever before.
Consumers and target audiences are being drawn more and more towards socially responsible and socially contributing businesses. While this might seem like a drain on precious resources, aside from the ethical responsibility involved, there is also a long term investment approach to spending time developing CSR initiatives that will resonate with your target market and ensure consumer loyalty in the long run.
10. Financial Planning in Business for Success
Last but not least, financial business planning is self-evidently critical for a business to succeed. Apart from integrating financial considerations into each previous element and aspect of your business plan, it’s important to consider access to working capital and cash flow management to facilitate daily operations and growth opportunities.
Fortunately, the lending specialists here at ScotPac are able to help find tailored, fast and seamless financial solutions to help your business access the working capital it needs, when it needs it, to truly succeed.