template of a business plan

template of a business plan

Developing an Effective Business Plan

1. Introduction

This essay focuses on developing an effective business plan and the potential role of information technology (IT) for achieving the competitive edge. The high failure rate of IT projects, on-time and on-budget, using IT for competitive advantage, the new procurement process, and system support for global operations are examined. A refrain throughout many iterations in the research, that IT doesn’t matter, was found in different contexts including IT as commodity, the PC paradox, and the death of competitive advantage. This lead to an exploration of when IT does and does not matter, resulting in an eight-factor model for IT’s strategic impact. The case for this Strategic Impact Model is established in two constructs of higher and lower IT savvy, and is supported by findings on the IT savvy of the Fortune 500. The significance of IT for competitive edge is further verified through an examination of stock price trends in industry sectors and testing for the impact of IT spending on performance differences among rival firms. Given that IT is crucial to firm performance, there must still be alignment between business and IT objectives to create real value. The firm has many ways of aligning IT with business, which are categorized by functional integration and behavioral integration. The research suggests that, although higher firms do more with IT, IT enables doing the same things with fewer costly assets. A hypothetical ‘IT productivity paradox’ is proposed and an increase in IT productivity is linked to a shift towards more virtual environments. Finally, the values derived from various business systems are dependent on when the system is adopted, how long it is held, and what complementary assets are in place.

2. Identifying Business Goals and Objectives

Establishing a mission statement, goal setting, or even a vision of the future of your business is a challenging and exciting process. It forces business owners to think about what they want to achieve out of their business venture, and create a clearly defined plan of action towards those aspirations. As the business environment is constantly changing, and seldom predictable, it is important that clear and realistic objectives are identified. It is important for all business owners to consider the nature and timing of specific business achievements and strive towards attaining clearly defined, realistic and sustainable goals. The first stage in defining your business mission, vision or objectives is conducting an honest SWOT analysis. This is a self-examination of your business consisting of a comparison between internal strengths and weaknesses against external opportunities and threats. By completing a SWOT analysis, the business owner establishes the current standing of the business and what it is capable of doing. It can also be used to evaluate if a business opportunity is capable of helping to fulfill your business’s mission. Managing the results of analysis can be displayed using a SWOT matrix. The next stage involves creating a solution to any problems highlighted within the SWOT analysis. Primarily, the business should focus on its strengths and using them to mitigate weaknesses or to avoid external threats and seize opportunities. Using the information obtained from SWOT analysis, business owners can change the wording into goal statements. For example, a business strength is a wide product range, and a goal derived from this would be to increase sales volume by further meeting customer needs. Measures and targets should be set to provide a method of evaluating if goals have been attained and to determine how successful the solution was. Targets should be specific, measurable, agreed upon, realistic, and time-based (SMART). This method can also be used for new objectives that link to the mission and vision of the business.

3. Conducting Market Research

1. Clearly defining the product or service. 2. Primary research is field research; it is original and collected to solve the problem in hand. Some examples of this research might include: a telephone or street survey, a personal interview, or an open meeting. 3. There are a number of ways to collect the information required for market research. The most cost-effective method would be secondary research. Secondary research draws upon information previously researched for other purposes. Some examples of this might be looking at existing reports, reviewing the company’s internal data, and also seeking out free information on the internet. This type of work can be found at the later stages of a product or service development. 4. There is a considerable amount of time and effort involved in doing research; time should not be spared on being thorough. In many ways, the research can be ongoing, maintaining an awareness of market trends and competitor activity. Research is only relevant and current to its time, and the information can go out of date.

There are numerous aspects to market research.

Market research provides a critical look at the existing market and the probability of achievement for a proposed product or service. It can be utilized to recognize the needs of clients, survey existing and potential products and services, and the relative accomplishment of a vendor. The goal is to determine the suitability of a specific market for a product or service. This can be accomplished through specifying the value of a product or service, analyzing potential clients, who is and who is not buying, what they are buying, and how much they are willing to spend.

4. Creating a Comprehensive Financial Plan

An effective method for mapping potential customer actions is to create a decision-based simulation showing how customers are influenced by different marketing actions and change their behaviors. This can be a complex exercise, and a number of tools are available for simulating intelligent agent behaviors on a computer, but at a minimum, you should identify key customer segments and types, and for each define the key changes in behavior that you are trying to achieve. A simple spreadsheet model can be quite effective for this. In each case, the customer behavior changes should be quantified so that they can be rolled up into an aggregate measure of success for each marketing action on the financial model.

To create a comprehensive financial model, your marketing team will need to take a broad look at the many potential ways you can connect with your customers and identify the key paths of influence that will actually cause customers to change their behaviors. While a detailed analysis can be performed for individual tactics, it is useful to have a simplified framework for comparing the value of different tactics in a common currency: interactive programs often rate impact in terms of changing customer behavior compared to their current practices, while traditional advertising may be evaluated by its impact in changing perceptions of the brand.

In the process of formulating your tactical marketing plan, consider first building a detailed financial model that will become the foundation for your marketing spending plans. A comprehensive financial model provides the basis for building a detailed marketing spending plan covering all the ways you can market to your customers. This will help you identify key value trade-offs in your plan: how changes in your spending mix can provide significantly better results at the same total spending cost, or how you might cut spending in some areas without sacrificing potential results. Finally, after your budget spending plan is in place, the financial model will help you assess the potential impact of any changes in marketing spending on your expected results. Remember, your goal is to find the best ways to connect with your customers, and a sound financial model forms the foundation for making well-informed decisions.

5. Implementing and Evaluating the Business Plan

One simple yet effective approach involves following up on the plan regularly. This can be accomplished with the use of a monthly plan review meeting. With the business plan in hand, the manager asks if the activities are moving the company towards the defined objectives. If not, then the actions can be modified to get the company back on track. In the best formulated plans, actions can be developed to facilitate achievement if the plan is not moving the company toward the goal. Next, the company must take a systematic approach to measuring success on the intended goals. Each goal should have a target result (numbers, financial growth, etc.) and an expected date of achievement. A monthly tracking can then be developed from this information. If the company is significantly under or over the target, it’s time to re-evaluate the action plan. This systematic approach works best with specific management assignments associated with each objective. Failure or success, in terms of achieving the specific results should be tied to the responsible manager’s compensation. An incentive program of this nature can be a very powerful tool in moving the company to goal-directed behavior. This is using a plan to manage a plan and is definitely the most effective way to change course or move a new company in a particular direction. A more advanced systematic management process involves taking the plan and partitioning it into components. Each component is deemed a short-term tactical plan (STP) and should represent one month’s plan activity. This method, with the STPs very close to the specific actions detailed in the business plan, effectively connects planning and management. Like the monthly meeting and tracking method, each component should be evaluated with the same success measures and the company should only move on to the next component if the prior has been successful. This will serve a new company very well, as often times detailed planning and definition of actions are foreign tasks to a scientist or engineer starting a company. Action plan management takes discipline, and over time the discipline will be transferred to the culture of the company. Evolution of this process will very likely result in development of a standardized company planning process. This is an indication that the company has learned to plan.