Don’t Write Another Business Plan Until You Do This First…
Written by The One Page Business Plan Company, on October 18, 2021
Business planning can consume an incredible amount of time… time spent away from managing your core business and time spending days or even a week locked away in a conference room or retreat center somewhere.
The problem is that most planners try to take on too much at one time. That’s because they’re trying to write two plans at once.
Let me explain…
There are two types of business plans, strategic and operational. However, many owners, executives, and managers use the terms “strategic planning” and “operational planning” interchangeably. They try to write both at the same time… and that can be overwhelming, to say the least. Separating the two will save you a considerable amount of time and in the end and result in far more effective business plans overall.
Here are some of the key differences between the two types of plans:
Strategic planning is a deep examination of a company’s business model… its position in the marketplace three to five years out or longer for big or capital-intensive firms. It sets aside the strengths, weaknesses, opportunities, and threats (SWOT analysis), and strives to envision how the company must adapt to that future. For example, strategic planning led IBM, which used to be a products company, to largely become a consulting firm today.
A diligent effort on a strategic plan can take untold hours of top management’s time… valuable time away from running the business. A solid strategic planning process looks at competitive positioning, shifts in customer demand and preferences, substitutes, adjacent industries, industry maturation, and more. Large consulting firms like Bain and McKinsey love to lead strategic planning exercises. But the investment is significant, and often too much for midsized firms.
Many firms do a full strategic planning process every three to five years. If it has been longer, it is without doubt time to kick off a formal strategic planning process. If not, annually revisit the assumptions (and their proof points) that support your company’s strategy. For each strategy, do enough homework every year to validate that those assumptions are still solid in today’s environment. That might mean some basic research followed by a one-day “strategy check-up” offsite with the leadership team.
Operational planning focuses only on the year ahead. It identifies priority projects for each person on the leadership team, with deadlines and the scope of work identified in writing. Operational plans include monthly or quarterly objectives for each leader and detail work to be done to achieve those objectives. Good operational planning requires that all the functions confer, so that the overall plan is synchronized, and support functions (finance, IT, HR) have the capacity and willingness to support all the planned activities of the other functions. Most firms do formal operational planning annually, although some fast-growing companies in dynamic industries find a half-year rhythm is best. A great operational plan can be completed in just a few hours and occupy a single page.
A Balancing Act
At the end of the day, if all of your key strategic assumptions are still valid, most of the leadership’s planning focus can return to operational execution. However, if the environment has changed enough to challenge those assumptions, then consider a deeper strategic planning process.
Operational plans don’t have to be complicated, and in fact, can fit on a single page. For more information on One Page plans, click on the button below.