discussion question 2

12/7/2018 Strayer University Bookshelf: Successful Business Plan: Secrets & Strategies

https://strayer.vitalsource.com/#/books/9781933895475/cfi/6/78!/4/64@0:19.3 1/3

Planning isn’t just what you do to go into business; it’s what you have to do to stay in business.

If You Have an Existing Business While the entire business planning process described in this book is aimed at both new and existing businesses, companies already in operation have the ability, and need, to examine key marketing, operating, and financial activities more closely. This in-depth analysis particularly benefits those companies undertaking the business planning process for internal planning purposes rather than as a method of securing outside funding.

Ongoing internal planning is a must for any business; it enables you to stay competitive. A thorough planning process forces you to look closely at the dynamics of the current market situation rather than rely on old assumptions. Regular, ongoing planning enables a company to more quickly adapt to new market forces and incorporate new technological advances.

“Business plans are critical. You can see the original business plan for Honest Tea on our website [www.honesttea.com/mission/about/businessplan].”

Seth Goldman Cofounder, Honest Tea

Internal planning provides you with the opportunity to examine ways to keep costs down and increase your profitability. In the constant press of day-to-day business, taking time out to think about what you do and in which direction your company is headed gives you more control over your company’s future and better information on which to base crucial business decisions.

The Purpose of Internal Planning When undertaking your internal planning process, you must first assess the goals and purpose of the process for your company.

Generally, internal planning can take one of three forms:

■ Evaluating. To provide information on company performance. ■ Goal Setting. To establish annual or periodic objectives. ■ Problem Solving. To address a particular issue or concern.

These types of plans differ only in their objectives and scope; the process in each case is relatively similar. All three require that you assemble or develop sufficient information to enable you to evaluate and assess current company conditions; choose the necessary personnel to be involved in the evaluation of the data compiled; and have the ability to bring an honest and critical eye to the examination of your company’s situation.

The Evaluational Plan An evaluational plan provides management with the information needed to make decisions. Data gathering and assessment, rather than the recommendation of specific actions or the setting of specific performance objectives, are emphasized in this type of plan.

Such a plan particularly benefits a company that has not made a close examination of its operations or the market conditions for some time, or it may be used annually by a company that wants to do an in-depth analysis of these factors on a regular basis. An evaluational plan might be the most appropriate type for a company in which all decisions are made at upper levels of management only, and where the input of middle management and staff is given relatively little weight.

The Goal-Setting Plan Probably the most widely used type of corporate business plan is that with the purpose of annual or periodic goal setting.

The function of this plan is not only to evaluate current and past conditions within the company and its environment, but to establish the specific, measurable objectives that departments and/or individuals are expected to achieve.

Some of the areas in which specific objectives may be set are below.

OBJECTIVES

12/7/2018 Strayer University Bookshelf: Successful Business Plan: Secrets & Strategies

https://strayer.vitalsource.com/#/books/9781933895475/cfi/6/78!/4/64@0:19.3 2/3

Many companies set performance objectives in these and other areas annually, based on past performance and projections of future conditions.

Performance objectives should be:

■ Measurable. With specific numbers or dollar figures attached rather than merely subjective qualities or quantities. ■ Reasonable. Based on a fair assessment of current and past activity and a temperate projection of future conditions rather than

on an unreachable ideal. ■ Time Specific. Delineating a clear time frame in which the objectives are to be achieved. ■ Motivational. Neither impossible to reach nor too easily accomplished, either of which will reduce employee motivation.

Success key terms Key Ratio A simple calculation that assesses the performance of a certain aspect of a company. Key ratios include liquidity ratios, profitability ratios, and debt ratios.

Liquidity The ability to turn assets into cash quickly and easily; widely traded stocks are usually a liquid asset.

The Problem-Solving Plan Another option for internal planning is to narrow the planning process to a few key issues to be addressed. This type of problem- solving process focuses on the top priorities for operational improvement rather than on an overall evaluation of company performance. Planning for problem solving, however, should not take the place of more-comprehensive planning; you still need to look at your complete operations. But it offers you a method of focusing resources and creativity on one or two areas in order to make significant gains in performance.

A problem to be solved can be assigned to a department or division, but often it is advisable instead to assemble a task force to tackle the issue. Such a task force allows management to bring together staff across divisional or departmental lines.

“The trials and tribulations and the fun of it all comes from getting in tough places and then figuring out how to scramble out of them.”

Kay Koplovitz Chair, Kate Spade

Keep in mind that to a large extent whom you choose to participate in the task force will determine the outcome. If the task force is composed only of staff members who have been with the company for 20 or more years, it is unlikely you will come up with fresh approaches to the problem. If the members are too inexperienced, on the other hand, they will not have the necessary knowledge of the realities of the business nor will their recommendations be viewed with much authority.

12/7/2018 Strayer University Bookshelf: Successful Business Plan: Secrets & Strategies

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The problem-solving process consists of:

■ Defining the Problem. Either management or staff may delineate the areas of concern or challenges. ■ Assembling the Team. Limit the number of people involved and bring together only those whose contribution will move the

process forward; choose team members more for their intelligence, attitude, and knowledge than for job title or data access. ■ Considering Solutions. Persistent problems often require creative solutions; be willing to make changes to achieve results. ■ Recommending Specific Activities. Suggest the changes or enhancements necessary to solve the problem.

Large Corporations Many, if not most, larger corporations now develop business plans annually on a company-wide, divisional, departmental, or team level. Successful Business Plan: Secrets and Strategies serves as a guidebook for developing a plan at any of these levels, whether corporate-wide or for an individual team. For departmental or team planning, some sections may require modification to accommodate specific circumstances or may not be applicable at all.

As you work through the book, use the described process and worksheets but adapt the material to your specific situation and needs. While the term “you” is used throughout the book, particular actions might be carried out by a subordinate, research department, or other members of the planning team. Nevertheless, the person making the final decisions should be sufficiently informed about the planning process and have access to raw data