On Business Planning

A colleague asked for my advise regarding the best methodology to build a business plan. As a rule, there is not a single methodology that offers one-size-fits-all. Also, methodology, like process, technology, people are just tools and they are great as far as they allow you to reach -and ideally, excel- your objectives in a timely manner.

What is important in a business plan:

- A clear objective and time-framed goals. The extension of the business plan will depend on them. The longer the term and broader the objective the wider, more complex and more uncertain the plan. Western culture privileges certainty -therefore, you can do well only planning in the short term, while Eastern culture privilege long-term objectives -therefore, they plan in a more flexible but uncertain way. East meets West is an approach were you use both ways. You plan in certainty -therefore with great detail and limited flexibility- for the short term and you outline in a more versatile and flexible way for the long-term planning. I like to use this approach.
- A throughout analysis of the product, its market, competition, etc. Key information, friendly displayed and synthesized (here, as some pointed: Marketing Mix, SWOT, BCG Matrix and other tools play their role)
- Then, you need to analyze the possible avenues to reach from A to B and select those that seems feasible depending on financing, K demand, other resources, blockades, etc.
- For each one of the feasible alternatives, you need to do a quick simulation to identify pros and cons (like cash flow generation, competitive reaction, timing, etc.)

A good business planning model for these steps was designed by Alex Osterwalder

- Select the 2-3 best possible options. The best option will be your main plan while the other/s will be your reserve (plan B or contingency options)
- Prepare throughout projected financial statements as well as clear description of the strategies, goals, KPI, actions, etc. for 2 years.
- Prepare big-picture -adjustable- projections on KPI for longer periods (like years 3, 4 or 5)

The detailed financial part -with which I started- is usually placed by the end in appendixes. The non-financial part is the key of the main presentation of a business plan:

- The Management Team
- The Marketing Plan
- The Operational Plan

Finally, create an Executive Summary in few pages -a Power Point or any other platform you like- where in a concise and simple way, you will show why the business plan is feasible and worth pursuing, why success is the most probably outcome.

Again, there is not magic recipes here. The way you do it -as another commenter wrote- varies greatly if you are starting from scratch or just taking in someone's previous work, if you are innovating with a new product or market or just following the tides. If you are planning a major expansion or just entering in a new small venture. The extension, detail, amount of resources and time invested in preparing the business plan are in direct proportion of the size of the business you are planning. Never forget that... (your son doesn't need to go to great extent to borrow $20 from you and setup a lemonade stand in the neighborhood but whatever I may have described here falls short if Toyota plans in acquiring GM operations worldwide)

Hope I was of help. Good luck!