Six Keys to Developing a Successful Business Plan

Written by: Mike Tafoya

“To build a successful business, you have to begin at the end.”

Creating a clear business plan is an essential task for every leader who wants to operate a successful, smooth running, self-sustaining company. While it takes time and effort, having such a strategic roadmap will enable you to view your business from a higher plane and to quickly evaluate its strengths and inefficiencies. It will also empower your employees by freeing them to accomplish your company’s goals and to fulfill its mission and vision without your constant, hands-on involvement—which also frees you up from the day-to-day work, or, as we call it, “Doing the do.”

I have identified six key elements every successful business plan should include. The first three encompass what we call the organizational “Culture,” while the second three comprise its business “Systems.” Lacking these business elements almost inevitably leads to employee confusion, conflicts and other workplace problems that undermine product quality and business performance—and makes it almost impossible to remedy them. Since most businesses do not have a clearly defined culture or defined systems, by taking these steps you will gain an immediate advantage over your competition. Below is a brief description of our Six Keys:

CULTURE

1. Vision
A one-sentence statement that defines the ultimate impact your business is going to make on the community. It should state what you want to accomplish in terms of an almost unattainable goal or dream. A good vision statement makes the connection between your business's passion and its purpose. My rule for Vision is: “People will work harder for a vision then they will for a paycheck.” Your vision statement should inspire, motivate and excite your employees, clients and the community where you do business. It should be short, concise and easy to remember.

Remember, a vision is not merely a large goal. It differs from a goal, in that you almost never quite achieve your vision—it is a virtually unattainable ideal that motivates your employees to meet and exceed your company’s practical objectives. In other words, goals are used to measure systems and processes, while vision is the fuel that ignites people to go beyond goals to excellence. A company’s top leadership has the responsibility to drive its vision. Without the support and encouragement of upper management, your vision will fail to have the impact the company needs to outperform your competition.

Example—“Estrada Strategies: “Creating an Opportunity for All Businesses to Succeed”

2. Values
Core Values are the rules of conduct in your business: a clearly defined set of standards that describes your organization’s approach to relationships. It is a written code of conduct defining how all stakeholders will treat people internally and externally, including other workers, clients, vendors and the community.

Without defined rules of conduct, people have little or no direction as to what constitutes acceptable behavior in your business. In the absence of such values, individuals will create their own rules. Experienced employees will default to values acquired outside the company in prior work environments. Some may have a positive impact, others may not. With no defined values, managers have a difficult time leading people, whether it means handing out accolades or taking disciplinary action. Your business’s core values are non-negotiable within the company environment. When they are broken, swift disciplinary action or termination is usually in order. When management fails to uphold written values, employees soon figure out that they mean little or nothing—they become token values that everyone winks at and no one takes seriously. However, if core values are upheld, the company can use them to guide every aspect of the business.

Example—“We believe in frequent, open and honest communication.”

3. Mission
A short, concise declaration of the four essentials of every business: 1) What you do; 2) How you do it; 3) Whom you do it for; and 4) Where you do it. Your company’s mission statement is truly the roadmap for your employees; it is also a management tool to communicate how your company will operate in the community.

A mission statement is not a long dissertation, like those from corporations in the 1970’s and 80’s. Those lengthy proclamations were often viewed as unrealistic, empty rhetoric aimed at impressing bankers and the like. Today, they are used to guide the company’s overall direction, as well as its daily business activities. Beyond providing essential guidance to your employees, it empowers them to make swift, effective decisions by establishing critical boundaries. Without a clear mission, a company will often become paralyzed whenever it encounters a new situation as it attempts to figure out what to do.

Example—“Our Mission is to lead our small to medium-sized clients to greater success. Our
Method is to bring about behavior modification through business training, one-on-one
coaching and business monitoring. We Advance our Vision by being the business example
for our clients.”

SYSTEMS

4. Growth
A well-thought-out plan for growing your business that clearly defines these four elements: 1) Your target market; 2) How to market your product to the target; 3) An advertising strategy; 4) Brand creation that establishes a unique visual and emotional identity.

The rule for growth is, "You are either green and growing or you are ripe and rotting." Without growth, a company will likely fail. A growth plan is the lifeblood of your organization. It includes your company's sales process, marketing, advertising and branding systems.

1) Sales—the entire process that defines the demographics of your future clients (your target
market or “suspects”), as well as the foundational activities that drive new relationships and will
lead to future opportunities, sales, customers and referrals.
2) Marketing—the activities in your company that create visibility, credibility and demonstrated
ability in the marketplace. Low cost/high impact is a critical element of this process, which
communicates to your market who your company is, what it does, where it does it and how it
does it. Marketing supports sales, but must not be confused with sales. Remember, marketing
is about visibility, credibility and demonstrated ability. These elements build trust and branding
in the marketplace.
3) Advertising—Systems in place that bring potential clients through your doors, make the phone ring and create leads. Advertising is all about making sales. It is the promotional aspect of growth, and concerns how your company attracts its customers. It also tracks where and how
your customers discovered your company. Ultimately, advertising is all about return on
investment (ROI).
4) Branding involves the processes that create product or name recognition in the marketplace. It
comprises the visual and emotional impact people connect with your name, logo and tag
lines. Think of Nike’s “check mark,” or McDonald’s golden arches. Does the market know your
logo, name and tag? That’s the test.

5. Operations
Operations encompass the “nuts and bolts” of how a company satisfies customer needs, wants
and expectations—the blueprint that defines how a company produces its products or delivers its services. The focus here is on the five components of your company’s processes or way of doing things: systems, quality control, labor standards, material management and Internet technology.

1) What your systems/processes are. These define how your company executes, produces and
provides its products and services, including procedures, materials and process manuals.
2) How your company will control the quality of its products and services.
3) Productive labor standards that define the labor-cost relationships of providing your products and services. Think in terms of a piece worker who may be expected to produce X amount of product per X hours, a day, a week or a month. Also, think in terms of labor costs vs. overall revenue or net income. Such labor standards provide the needed benchmarks for your employees and for your managers to track and measure performance.
4) Material management or the cost of goods sold. How your company physically manages and
stores its raw material before and after products are produced. It also focuses on keeping material, shipping and storage costs to a minimum. The goal here is to minimize inventory without running short on needed materials.
5) Internet technology—how your company will use the Internet to advertise and sell your
products. The focus here is how your company effectively uses its website to promote and sell its products and services. Some companies have glorified brochures on the web, and that might be all they need. Most companies today are moving into the e-commerce where prospects can purchase items over the internet.

6. Finances
The financial aspect of your business involves how you manage budget planning, cash flows, capital and debt servicing, KPI’s or Key Performance Indicators—like pipeline and sales values, total revenue, gross margins, operating expenses and net profit to name a few. In the end, KPI's serve as the monetary numbers that define the health of your company. The process, in short, means developing a budget that covers three years of monthly projections for your business in these three areas: 1) Income statements; 2) Cash flow statements; and 3) Balance sheets. An experienced leader tracks his KPI’s weekly, monthly, quarterly, and annually. He knows exactly where the company stands financially at any given time. KPI’s make up the financial information a leader needs to make strategic decisions: to buy a building, increase inventories, or purchase new equipment. Running a business without KPI’s is like driving a semi-truck on a mountain road with blinders on. You are likely to drive the truck right off the cliff.

While having a successful business plan defined in terms of these six key components won’t absolutely guarantee that your company will be successful, not having one will almost inevitably lead to failure. Estrada Strategies exists to help businesses like yours succeed, in part by providing business training, executive coaching, and business monitoring you need to create a dynamic business plan.