Platt Perspective on Business and Technology

Planning for and building the right business model 101 – 6: implementing a business plan 2

Posted in startups, strategy and planning by Timothy Platt on March 23, 2015

This is my sixth 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 Business Strategy and Operations – 3, postings 499 and loosely following for Parts 1-5.)

I focused in Part 4 and again in Part 5 of this series on the underlying assumptions that go into a business plan. And I began a discussion of the issues that arise when executing that business plan in Part 5 too. I continue that phase of this overall discussion here, where I will delve into:

• The issues of consistency in follow-through and adherence to the business plan as a pre-planned blueprint for moving forward, and
• Deviation from that plan when circumstances dictate that doing so would lead to a better business development path going forward.

A well-considered and carefully drafted business plan is a flexible document with a range of alternative contingencies thought through and prepared for within it, and certainly where carefully considered foresight and experience would suggest them to be necessary. To take that out of the abstract, I note the essentially universally considered suite of financial analysis alternatives that are included in essentially any good business plan: three scenarios that would alternatively be executed from depending on whether business development and early revenue generation proceeded as nominally expected, with delays and unexpected challenges, or ahead of schedule and with the business developing more strongly and more quickly than nominally expected.

All three of these basic alternative scenarios need to be included in the basic business plan in place, so you as a business founder and owner can be ready for both unexpected challenges and for unexpected opportunity that you can build from, and so that you will have benchmarks and development goals that you need to have, thought through and carefully planned for in any case. But I am taking a wider view of contingency planning and execution than that here. And I begin addressing that by raising two reality-check questions.

• What should you as a new business owner and founder do if you find yourself confronting the completely unexpected and unplanned for when actually building your startup?
• And how do you plan for and prepare for responding smoothly to the novel and unexpected, and flexibly and creatively while retaining the value that you have developed in creating your business plan?

It is never possible to anticipate and pre-plan for any and every contingency or surprise that could arise. And at least some unexpected contingencies always do seem to occur. Most of the ones that do occur are more minor in impact and can be accommodated within the business plan framework in place. But sometimes these events have massively significant impact and implications, and call for significant business plan reconsideration and redevelopment.

• When should you make more minor adjustments and basically stay the course of your business plan in place and when should you set at least some specific key aspect of it aside and strike off on a less considered path in actually building your new business for that part of your original plan?

Let’s consider some specific possibilities:

• You plan your business in terms of selling your manufactured products to a specific wholesaler or to another specific manufacturer as a supply chain partner that you would build preassembled parts for. But then this expected buyer becomes unavailable and any contractual agreements that you have entered into with them become moot.
• Or you plan your business with the assumption that a key raw material or preassembled part that you would need, can be secured from a single, up to now reliable source. Now that source of supply dries up and you have to either find a reasonably priced alternative, or do a product redesign so this resource is no longer needed in your manufacturing processes or finished products, while still offering the same product functionality and quality that you have planned on in what you offer, and at essentially the same price point to market.

If your financial plan normative business development scenario, as noted above plays out, you will probably want to follow your overall business plan fairly exactly. If you find yourself facing a better business development reality than that, with the better-case scenario of the three playing out, you may need to accelerate your timetable and collapse in your performance benchmark schedule so as to capture this larger market share and profitability opportunity. But once again, you are probably going to cover most of the business plan details that you have in place in your basic blueprint document, even if you do so according to a newly reconsidered and accelerated schedule. If you find yourself facing a more challenging scenario than your normative alternative, you have to ask yourself if there are specific parts of your basic business plan that you have started your business from, that you might have to rethink and rewrite. And then you would develop carefully considered new contingency plans to address those emerging needs – but only where significant deviation from your original business plan would make sense, and in ways that would work with the rest of that plan.

• Planning and preparing for the expected and the more readily predictable can go a long way towards helping you to quickly identify an emerging unexpected contingency, and it can help you to more rapidly and successfully understand it for its novel unexpected features and their implications.
• Your business plan can give you a baseline for more fully and rapidly understanding what an unexpected contingency really means and really is.
• And your business plan gives you a stable approach for more routinely addressing everything else that remains predictably stable for your startup, while finding a best approach for dealing with the novel and unexpected that arise.
• But throughout all of this, you need to know when your basic assumptions have become a fundamental source of challenge to you, as well as when changing outside circumstances might have. And you need to be able to see where you would be better off stepping back and at least from some part of your underlying assumptions as well as from the details of your operational plan, in finding new alternative business development scenarios to pursue.

I am going to change direction in my next series installment and consider bricks and mortar, online, and combination businesses, and how business plan development and execution can differ between them. In anticipation of that, I will discuss the issues of product and service focus, and I will do so at least in part in terms of capital investment and related fiscal considerations. But I will also do so with the fuller business process cycle in mind. 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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