Business Planning Considerations: How Will the Company Grow?
Business plans serve three purposes: to lay the groundwork for new enterprises as they get up and running, to guide successful businesses as they seek to achieve new heights, and to help struggling businesses overcome challenges and get back on the track to success.
Under all three scenarios, the objective is the same: to acquire customers and to generate revenue and profit. The variables are how your business will grow — and how big you want it to get.
Companies grow in two basic ways:
By acquiring new customers: You can grow your clientele by
Heightening promotion of established products
Developing and marketing new uses for your established products
Developing and marketing new products
By generating increased sales volume from established customers: You can grow your business from within by
Making changes in your pricing or product line
Repackaging your products, or bundling products and services
Generating purchases of greater volume, greater frequency, or premium-level services
Developing and marketing new products
If you’re planning for a new business, your entire emphasis will be on acquiring new customers, while established businesses will likely plan to increase business from established customers while also attracting new customers in order to achieve desired growth.
If your growth plans rely on the development of new products or new customers, dedicate sufficient patience, assets, and capabilities to the task because product and market development often require time, which you need to account for in your business model.
Plan for growth
How do you plan to grow your company? Before you answer that question, review your goals and objectives. Chances are good that they lay the groundwork for growing your business — by reaching more customers, expanding your product line or services, or entering new markets.
Check out these questions that guide your thinking as you plan for growth. The results of a SWOT analysis may prompt your answers.
In addition to deciding how you want to grow, define how much you want to grow. Answers vary widely. One independent contractor may want to grow her business just enough to stay busy and keep the bank account healthy — but not so much that she needs to hire employees.
In contrast, another entrepreneur may want to grow big — and fast — so that he can move away from doing the work himself and concentrate on expanding his business.
Include your growth plans in the Executive Summary of your business plan and also in the Company Strategy section, the Financial Review, and in your Action Plans.
Plan for bad luck: Crisis management
Even the best-laid plans sometimes veer off course, usually as the result of unanticipated events or conditions. By gaining a clear understanding of your business environment, you open your eyes to the possibilities of threats on your business horizon. And by conducting a SWOT analysis, you gain a clearer understanding of why to bolster business strengths and overcome weaknesses to address external factors that could rock your plans.
The most successful businesses take crisis planning one step further by preparing for three crisis-management steps:
Pre-crisis planning: Most business crises result from real or rumored incidents in one of the following areas:
Lapses in social responsibility that result in harm to employees, customers, the community, or the environment
Violations of corporate standards, regulations, or laws that result in a loss of public trust
Inappropriate personal behavior by the owner or a high-profile business representative
Departure of a business owner or high-profile leader
Product failures or dangers
Natural or manmade disasters
Unanticipated business upheaval, such as loss of a large account or reliable revenue stream
Take time to consider how your business may be vulnerable in each of these areas. Where you see risk, plan pre-emptive actions, whether by instituting safety precautions, conducting internal audits, addressing high-risk behavior, announcing succession plans, planning evacuation drills, or other protections.
Also, prepare a crisis-communication checklist that include media, security, and emergency contact information as well as the person who will serve as your crisis manager and the immediate steps that person will take.
Crisis management: Should you need to implement a crisis-management plan, waste no time. Figure out what happened, who is affected, how your business can correct the problem, and how you’re protecting public safety. Communicate what happened, how your business is responding, and how you’re taking responsibility. Be visible, truthful, brief, and clear, communicating a consistent message, preferably delivered through the media channels through which the bad news is spreading.
Post-crisis remedies: The final stage of a crisis-management plan is to conduct a careful after-the-fact evaluation. Assess whether crisis signals were missed in order to strengthen the way your business monitors and fortifies against threats. Also, assess the quality and effectiveness of your crisis response, aiming to improve the way you protect public safety, control damage, and communicate crisis updates.
If your business is vulnerable to crisis situations or has recently had to deal with a crisis, include in the strategy section of your business plan a summary of pre-emptive actions you’ve planned, as well as crisis-management strategies you have in place –– just in case.