Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 3: the business plan and what is included in it 1

Posted in book recommendations, startups, strategy and planning by Timothy Platt on December 15, 2014

This is my third posting to a series that addresses the issues of planning for and developing the right business model, and both for initial small business needs and for scalability and capacity to evolve from there (see Part 1 and Part 2.)

The specific order that I address issues in can be somewhat arbitrary for some of my series. As a case in point, I have recently been posting a series on what C level officers do and as of this writing, its first 11 installments have gone live to this blog (see Guide to Effective Job Search and Career Development – 3, postings 376 and following.) I have been raising a series of more general points in the course of that series, as to how to develop and maintain an effective overall executive team. But each of the positions that I have addressed there are in fact independent and separate from each other and each of them presents a distinct set of workplace requirements and responsibilities, and an at least somewhat unique set of challenges. So I could have successively written about them in any of a wide variety of other orders. And my only requirement there would have been to reorder how I presented and developed my more general connecting commentary on how executive positions appropriate to the specific business in its current stage of development, would be determined.

This is a series where the order I post my installments in is much more constrained as it is one where I write about a business development process with obligatorily earlier and later steps. With that in mind, my goal here is to at least begin a discussion of the formally developed and prepared business plan as a tool and resource for developing and executing a contextually effective business model. But I do so from the grounding that I developed in my first two series installments and by building from Part 2 in particular.

• A business plan is a formally organized and systematically written blueprint of a business-to-be, and how it would reach out to and competitively function in a real world market with a significant enough target customer base so as to make this venture a viable prospect financially.
• As such, a well-written, systematically conceived and developed business plan consists of a series of specific documented analyses, and about what this business would do – what it would offer,
• What market or markets it would function in,
• What its competition would be and how it would stand out from them as a source of perceived value to the customers of its intended marketplaces,
• And how it would carry through on goals and intentions set in making this business a reality.
• That means marketplace and competitive analyses – outwardly facing analyses,
• Just as it means operational and strategic planning and analyses of what the business would do internally.
• And all of this, of course depends upon and would need to refer to a sound financial analysis, based on realistic assumptions as to startup funds available and costs likely to arise, and timeframes for when revenue would begin coming in to pay those business expenses and at what levels of revenue received.
• I have made at least brief note of these points in earlier postings, and in that regard cite Online Store, Online Market Space – part 9: business plans and filling in the gaps with its references.

As a specific reference that I have found helpful I repeat here a book recommendation that I have shared with others in the past when working with startups, adding that it would make sense to look for a newer addition than the one I have on my shelves too, as this book and edition to it are seven years old now:

• Balanko-Dickson, G. (2007) Tips and Traps for Writing an Effective Business Plan. McGraw-Hill.

Still, the basic message and the approach offered in that book are well presented and helpful.

Balanko-Dickson divides the business plan as an overall document into 10 distinct sections as noted in my earlier cited posting and repeated here:

1. An industry analysis – an external focus on your competitive environment and on industry trends and the market environment.
2. A market analysis – identifying and characterizing your competitors and their specific strengths and weaknesses, and gaps in what is not being met but that constitutes genuine value to potential customers.
3. A products and services analysis – what you offer, and as a unique value proposition that would meet these real marketplace needs.
4. A business description – setting your vision and mission statements and defining your business goals, and your operational approach to addressing them.
5. A marketing and sales strategy analysis – and this includes price point and pricing determination with your reasoning behind decisions made here.
6. An operations and management analysis – I have seen more startups fail for a lack of coherent planning and follow-through here than from any other aspect of setting up a business.
7. A financial plans analysis – with three scenarios offered representing best case, nominal expected, and worse case business development situations potentially faced.
8. An implementation plan – with steps and time tables so you can do ongoing due diligence and performance reviews and know when you may be going off track or encountering quantifiable and prioritizable problems.
9. A contingency and emergency planning discussion – which you follow through on, on the basis of your ongoing due diligence and performance reviews, when and as needed.
10. And an executive summary, which may appear at the start of your finished business plan but that you always write last, and based on all of the planning and writing that goes into the other sections.

If you are planning on or already working on building a startup you need an effectively drafted, realistically appraising business plan and I recommend that you find a book like the above recommended one so that you, at the very least know what questions you need to ask and what you need to be prepared to say when it is your turn to speak.

But now a cautionary note: some of the businesses that I have worked with, and certainly from among pre-bubble burst dot-coms that I had dealings with, that did not succeed had business plans. So simply following a seemingly rote analysis and presentation process per se, is no guarantee of success – and even when the findings going into that seem straightforward and reliable.

My goal here is not to outline how to write a business plan in all of its various steps. I leave that to the many well-written books out there on how to do that. My goal here is to discuss the foundation of consideration and thought that would go into this endeavor, and the assumptions made that are simply taken for granted as if business axioms. And I will at least begin discussing that in my next series installment where I will discuss axiomatic systems and assumptions per se, and the impact of disruptive novelty on business planning and on business plans. As a foretaste of discussion to come that only begins with consideration of disruptively new products and services that would be brought to market. That also has to include consideration of new and novel markets and of new and novel channels for reaching out to and connecting with them, and more.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 3 and also at Page 1 and Page 2 of that directory. And you can find this and related material at my Startups and Early Stage Businesses directory too.

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