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10 Innovations in Business Plan Creation

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Contents

Review the Competition 4

Highlight Innovation 5

Prepare for Success 5

Show How You Will Get Buy-In 6

Retaining Top Employees 7

Exploring an Exit Strategy 8

Include Buyer Personas 9

Include Online Media and Content Creation in the Marketing Strategy 9

Incorporate Economic Forecasting into Your Business Plan 11

Experts Agree: Business Plans Need to See the Downside 12

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Welcome

Business planning is changing in tandem with the massive shifts in the economy, in innovation, and even in politics. Conventional business planning previously relied on industry structure and provided best-

case scenarios in economic forecasts and financial analysis. But when whole industries are getting disrupted, and tech advances are coming faster than we can embrace them, the optimal business plan needs to reflect the speed of innovation and the flexibility to prepare for change by envisioning alternative scenarios.

Here are ten suggestions about how to keep your business plan flexible, dynamic, and effective.

1. Review the competition Business plans that don’t include the competition are naive. You may think there’s nothing on the market that competes with your idea, but that shows a lack of research or imagination. Even if you have a great idea for a new product that didn’t exist before (think iPhone), you need to anticipate that success will spawn competition (think Android). Your business plan should not only look at current competitors, but who might be drawn into the market by your success. Information on the competition should explain each company’s place in the market and unique selling proposition. Ideally, the business plan describes not just the working of your business, but how it fits into the constellation of competing firms in the field.

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2. Highlight innovation It is not enough to show that you have a product or service that’s in demand. Investors want to see that you have a plan for staying in demand through innovation.

¾ Detail your process for upgrading your products or services

¾ Include a schedule for product revisions or upgrades

¾ Outline investments in research and development

¾ Mention any connections with research institutes or facilities

3. Prepare for success Success can kill a business just as quickly as failure. Rapid growth requires capital that must be advanced to generate the cash flows needed to repay lenders and investors. Many business owners outrun themselves, putting their businesses at risk from even slight shifts in the direction of the market. If you are anticipating rapid growth, your business plan should attempt to outline how you plan to cope with it.

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Your plan should include:

¾ Pro Forma Cash Flow Statements, illustrating the needs for cash as the operation grows, and how those needs will be financed.

¾ Facilities Inventory, showing how much space the operation currently needs, how much more space will be needed to accommodate anticipated growth, and when existing facilities will have to be upgraded to remain sufficient.

¾ Scenario Planning, showing how your business will handle a “worst case scenario” of events not going your way.

4. Show how you will get buy-in This might sounds obvious, but the whole company and all of your employees should be committed to following the points included in your business plan. How can you get everyone on the same page? How can you prove it?

¾ Share the Business Plan. Make the business plan widely available to employees as a printed document, an electronic document, and on the company intranet. If part of the plan must be kept confidential, share the portions that you can, such as the company mission statement, goals, and vision.

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¾ Include the Plan in Orientation. New hires should be introduced to the company’s business plan during the new hire process.

¾ Require Employees to Sign the Plan. If not all employees, certainly the leadership team should be willing to sign off that they have read the company’s business plan and are committed to putting it into effect.

¾ Track Compliance with the Plan. The business plan should include information on how you intend to measure actual progress against the plan. Will this be done quarterly, annually, or at another prescribed interval?

5. Retaining top employees Keeping your employees engaged and rewarded is essential to employee retention and achieving business plan goals. Your plan should outline systems or methods you will use to identify and retain top performers, such as:

¾ performance review process

¾ employee training and development programs

¾ employee recognition program

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¾ compensation policies, including profit sharing

¾ advancement program

6. Exploring an exit strategy A corporation has an unlimited lifespan, but the owners or managers don’t. Just as many people put off estate planning because they don’t want to face mortality, so business plans often fail to address the end game for the entity. Are you grooming the business for sale? What steps will you take to get it ready for market? Do you have a succession plan? Who is going to run the business when the current management is no longer able or willing to continue. Business plans should contain guidance on how the company plans to sell itself, go public, or reach other desired outcomes.

Just as many people put off estate planning because they don’t want to face mortality, so business plans often fail to address the end game for the entity.

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7. Include buyer personas It’s not enough for your business plan to talk about your customers without including detailed information about who, exactly, they are. Business plans traditionally include buyer demographics, such as age, gender, income, education, and other basics. The trend in business plans is to include detailed buyer personas that provide a 360-degree look at who your customers are. Beyond basic demographic information, buyer personas often include the lifestyle, habits, interests, and aspirations of your ideal customers or existing customers.

8. Include online media and content creation in the marketing strategy More and more, businesses rely on the Internet and social networks to attract prospects and distribute information about products and services. More often, buyers are turning to the Internet and social networks for business reviews, ratings and recommendations. The marketing portion of your business plan should include information about how the company intends to use Internet marketing, including:

¾ Social Networks. What is your strategy for marketing on Facebook, Twitter, Google+, and LinkedIn? How do you plan to attract followers and maintain these accounts?

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¾ Multimedia Networks. It’s often more effective to market with multimedia than text. How will your marketing operation use Pinterest, YouTube, SlideShare, podcasting and webcasting to bring your message to the target audience?

¾ Content Marketing. Businesses need an array of quality content to attract prospects and boost search engine position. Your business plan should address how you plan to use direct email, newsletters, blogging, infographics and other content packages to your advantage online.

¾ Search Marketing. Your business plan should include a strategy for achieving and maintaining high search engine rankings for target keywords and phrases. It could take the form of a pay-per-click advertising program, a guest blogging program, or some other content marketing initiative.

Your business plan should include a strategy for achieving and maintaining high search engine rankings for target keywords and phrases.

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9. Incorporate economic forecasting into your business planCustomer needs evolve, new technology and competition emerge, and markets change. Making “economic assumptions” when you develop your business plan helps deal with those changes. Bill Conerly, Forbes contributing writer and consultant, suggests that businesses incorporate economic forecasts into their business plans. He offers these guidelines along with some numbers:

¾ Don’t bet your company on one economic forecast. Use multiple forecasts for a rounded view.

¾ Expect moderate economic growth. In 2013, the overall economy is expected to grow by 2.6 percent inflation adjusted, according to the Survey of Professional Forecasters (a free resource from the Federal Reserve Bank of Philadelphia, and a good source for business forecasts).

¾ Inflation will likely remain mild. The Survey of Professional Forecasters puts the Consumer Price Index increase at 2.1 percent in the coming year. With the unemployment rate expected to be 7.1 percent in 2014, it’s unlikely wages will rise much. In 2012-2013, wage and benefits costs combined grew by only 1.9 percent.

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¾ Expect interest rates to rise. The increase in short-term interest rates won’t begin until 2015, but long-term rates will rise slowly, according to the consensus reported in both the Journal’s survey and the Survey of Professional Forecasters.

10. Experts agree: Business plans need to see the downsideWhy do some business strategies work and other fail? If yours fail, says strategy consultant Steve Tobak, don’t feel bad, as few business owners are business experts. Business owners start their businesses, Tobak notes, because they’re passionate about their product or services, and because they see opportunity, but don’t necessarily know how to sustain growth. To achieve sustainable growth, Tobak says, business owners should reevaluate their existing business plans often and include an economic contingency. Meaning: Know when to walk away.

To achieve sustainable growth, Tobak says, business owners should reevaluate their existing business plans often and include an economic contingency. Meaning: Know when to walk away.

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Conerly also advises incorporating economic contingency into your business plan. “The Wall Street Journal’s economic forecast panel estimates a 15 percent risk of recession in the coming 12 months,” he writes. “That deserves some thought.”

Alejandro Crawford, senior consultant at Acceleration Group, also gives great advice in his U.S. News & World Report article:

Dispense with the conventional business plan with its long range predictions, its reliance on static assumptions about the market, and its tendency to rationalize and defend a model and strategy built around those assumptions. Instead, systematically embrace the potential shifts that would challenge that model and that strategy. Focus on what it would mean if these shifts occurred. And build a dynamic strategy by developing a bold vision for what could happen, testing the market to see what is happening, and positioning yourself to make the most of changes as they occur.”

Source: “10 Unexpected Things Every Business Plan Needs,” by David Mielach, BusinessNewsDaily.

Source: “Economic Assumptions For Your 2014 Business Plan,” by Bill Conerly, Forbes.

Source: “Business Planning’s as Easy as 1, 2, 3,” by Steve Tobak, FOXBusiness.

Source: “Learning from the Rise and Fall of BlackBerry,” by Alejandro Crawford in “Economic Intelligence”

by U.S. News and World Report.