BUSINESS-LIKE PERSONAL PLAN
What is Business Plan and Planning?
This write-up is about personal strategic planning and a personal life plan is the outcome of this process. To understand a personal life plan, it is necessary to appreciate the concept of a business plan. In a business context, a business plan is a document defining what needs doing, by when, by whom, the resources to fund the goals and planning concerns prior thinking of these things. Business planning is about thinking in advance, what needs doing, when to do, how to do, who is to do it including the resources required for achieving aims. When starting a new business or seeking to expand or refinance an ongoing business, a formal business plan is necessary. This process of planning writes and documents exactly, how to accomplish a specific goal, which could be to start and operate a business or improve an ongoing business. To reach the goals, business plans are developed that will not only ensure that targets are attained but also to ensure that the business as a whole is strengthened and improved in every way. Business planning entails analysis, digesting the material generated out of strategic planning, and using this material to write a business plan. The final written document is a business plan.
A business plan is therefore the document that defines what needs doing, by when, by whom, and the resources needed to fund the goals. Business planning and production of a business plan can happen simultaneously. Strategic planning and business planning, therefore, go together in the sense that one feeds the other.
When starting a new business or seeking to expand or refinance an ongoing business, a formal business plan is necessary. Business plans can be for a holistic business-wide (corporate) plan that guides and models all other types of plans in the business or partial plans that a business may make, such as production, product, marketing, technology, and workforce plans. It is also not forecasting or budgeting.
Purposes of a Business Plan
A business plan serves five main purposes:
- It is a road map for managing the business and as a road map, it must put together in writing all the plans, activities, materials and finances required to commence and run the business or to upgrade or expand the business. Like a roadmap, it is a communication tool that articulates and communicates the following:
- Mission, vision and values.
- Justification: This explains the business prospect being targeted and how this will work to make money (i.e. why does the idea make business sense).
- Goals or objectives, strategies and actions.
- Financial plan: This is projections of expected revenues and the resources required in money terms (expenses) to implement and achieve the vision. This where the budget comes in. Projected financial statements and other financial data are captured here.
- It serves as a tool that can be used to solicit financing for the business. Few if any financiers will lend their money without looking at the business’s business plan. A financier has to see exactly how your business will run and make money and whether it has the potential to repay the loan that is being sought. The business plan must show exactly this in words and cash flow numbers to the financier.
- When done properly, the business plan can also serve as a motivation tool that can be used to motivate staff because it conveys the aims and aspirations of the business.
- Because it has targets, the business plan can also be used as a control tool to monitor progress and get the business back on track fairly quickly if anything is seen to be going out of plan along the way.
A business can of course be started and carried out without a business plan. However, having it in whatever form enhances chances of smooth and successful take off into the charted path.
To prepare a good business plan, carrying out research around the business and performing strategic thinking or planning is necessary. Research involves collecting, analyzing, and recording the information needed to start and operate or upgrade a business. This must cover the information needed to describe in detail the business covering the mission, vision, values, the product or services and their rationale, goals, product delivery; sales goals and marketing, customers; competition, service providers; suppliers; the resources needed and above all, the strategies to be applied to implement all these activities. Most of this information is covered when carrying out strategic planning as business planning and strategic planning go together.
Once all the information needed is collected, the information should be used to draw up a business plan. Decisions should be made based on facts and not opinions, hearsay or gut feelings. For this reason, research should be factual and as objective as possible. Assumptions inevitably have to be made when making a business plan. Such assumptions should be realistic and be as much as possible based on hard facts and data. Where possible, it is advisable to enlist the services of experts in research and business plans.
Contents of a Business Plan
The main elements of a business plan that are usually contained in 20 to 30 concisely written pages are summarized in the table below:
Table 1: Elements of a business plan
|This captures the essentials of the proposed business and should tell the overall game plan concisely and precisely in two to three pages. This summary section is written last after the sections below.|
|Strategic Plan||This is a description of your contemplated business in strategic terms. Ideally, it should cover mission, vision, values and main objectives (goals) and strategies. Duration of the plan such as three to five years is stated here.|
|Critical Success Factors||These factors are essential in your business and would make or break your business.|
|This describes the legal format of the business (sole proprietorship, partnership or corporation), name, location(s) and ownership structure including details of the directors.|
|Operations||This explains how the business will operate on a day to day basis in terms of location, facilities and systems. This section should capture the resources necessary to start and operate the business.|
|Marketing, sales and distribution/delivery Summary|
|This is about plans and strategies for creating awareness and demand, converting potential customers into buyers, placing products in customers’ hands or locations near them, and offering customer care. Market and competition can also be analyzed in this section.|
|This section features governance and management of the business and will include management team; organization structure and establishment; employee numbers, their roles or positions, qualifications, skills, experience and salaries. Suppliers and all other service providers the business needs or has to work with are captured here as well.|
|This section reduces everything above into numbers and covers funding requirements, sources of funds, forecasted accounts and financial statements (i.e. statement of comprehensive income, statement of financial position and cash flow projection), budget, inventory list, gross margins, forecasted profit potential and break-even analysis. The financial statements are projections of how the business will look like financially on day one of business and at each year-end over the next five years.|
|Implementation Summary||This contains an overall detailed implementation plan (action plan) and actual operational activities that have to be carried out to get the business up and running.|
|Appendix||This could contain references, assumptions and other detailed write-ups, financial tables, figures, charts and details of service providers like bankers, lawyers and accountants and insurance covers.|
Business-Like Personal Plan
The above narrations present the process for developing and writing a business plan for a business entity. However, the same process can be followed to develop a business plan for an individual. Personal life planning is the exercise of thinking and assembling information for creating a road map to improve a personal life which not very different from the preparation of a business plan. Personal Plan is an analytically created roadmap for improving personal life and personal life planning is the method of creating this life development roadmap. The product of a business strategic planning process is the development of a business plan document or a strategic plan document, which is another name for a business plan. The product of personal strategic planning is a life improvement plan. The only difference between business entity’s business plan and that of an individual might be that the business plan of an individual may contain a simplified vision, mission, values, SWOT analysis, objectives (goals), action plans and implementation plan.