To many managers, the term "business planning" is a buzzword to relate what 30 years ago was conceived as the financial budget, and therefore the restricted realm of the accountant. To others it may record a document required to derive an overdraft or a loan from their bankers. A enterprise plan may prove to be the most foremost document that may be compiled in any business. This paper aims to eliminate such taboos and simplify what the strategic enterprise planning process is all about, and how its benefits could be maximised by the administration of a business.
The Term "Strategic enterprise Planning"
When we speak about a strategic enterprise plan, the message to be conveyed is about the strategies and tactics to be adopted by an organisation to reach its missions and goals. An integral part of the plan is financial in nature, but the strategic enterprise plan is no plan at all if it does not address marketing, human resources, Ict and all other resources needed to incorporate and fuse the organisational efforts to achieve targets, in terms of maximisation of profits. Thus, an productive enterprise plan should serve Four basic purposes:
oIt is a tool for administration to convey both within and exterior the organisation the goals for the enterprise plan period;
oIt provides the strategic framework for holistically managing the business;
oIt allows the identification of objectives and how the attainment of these objectives could be achieved and, most importantly, closely monitored
oBy demonstrating that proper controls and achievement of objectives are happening, it provides an productive means of attracting new capital to finance the enterprise objectives.
What Is Required?
Many have compared the marketing of a strategic enterprise plan to a candidate's Cv, when applying for a job. What must be ensured is that the plan is not just figures and numbers, but also shows a good understanding of all those considerable determinants in reaching the stated targets. Thus, we should first and foremost ask ourselves questions such as:
Who are we?
What do we do?
Who are our customers and what are their expectations?
What and where will our enterprise be in one, two, three, five years?
What are we doing Now to get where we want to be?
How should we get there?
Do we have the resources in terms of machines, people, finances, technology and so on?
Do we need to derive external financing and what type/extent is suitable to us?
We could keep going on request questions as much as we would like our plan to be detailed. Probably the answers to some would need more effort in terms of time and resources than others. The most foremost factors which determine this initial stage of planning is to ensure that we are request ourselves the right questions, that they are foremost our enterprise in the direction we want it to go. On the other hand, a owner must be aware of request too many questions that lead nowhere. The objective of this process is to enable the owner to grasp what the target is and then plan on how to achieve that target.
Effectiveness And Flexibility
What are the nuts and bolts of an productive and sound strategic enterprise plan that truly delivers the enterprise targets? The mission, objectives and broad strategy must be determined. Single concentration must be focused on the implementation and evaluation stages that ensue the setting of objectives and strategies. It is here that a enterprise will ensue or fail. Caress has shown that at times, a enterprise plan needs to be radically changed after one year, to conform with the ever-changing and volatile enterprise environment. Do not be surprised! This is a healthy experience. As every owner knows, rigidly sticking to a Single plan, where the enterprise encloses itself in a cocoon, can bring about those looming black clouds of ensuing enterprise failure. Exhibit A presents the considerable Success Factors (Csfs) of good strategic enterprise planning, whilst Exhibit B illustrates the benefits accruing from a properly organised plan that distinguishes one enterprise from another. These benefits ensure that the organisation is homogeneously geared and glued towards the greatest objective of maximising profits.
The Essentials
We must remember that even the best of enterprise plans, which takes many hours to compile, will only take a few minutes of the reader's time. Perhaps, a cursory glance at the executive overview and the end will be the main determinants for the success or otherwise of the plan. It is true that great enterprise ideas backed by excellent administration techniques will probably ensue without any written presentation. But, that puny possibility of failure necessitates extra effort for that puny edge over the chances of success. In plain words, this means that a strategic enterprise plan Must itself be planned! Exhibit C provides a practical guide, showing the considerable requirements for the success of a strategic enterprise plan. Managers must put themselves in the shoes of those who will read the strategic enterprise plan and who will then subsequently take the decision, be it the board of directors, the bank owner or a creditor. Thus, what the reader wants or does not want to know, determines the buildings and flow of the plan.
The Planning Team
Before embarking on writing the plan, the enterprise must ensure that it is written by person or a team to whom it literally matters, because of the enthusiasm and commitment that they put into it. Besides, such a team would in all probability be in proprietary of a stupendous number of facts to determine the goals, targets and resources needed by the organisation. Of notable point is possibly the message to be conveyed to the compilers of the plan. The team has to clearly and effectively show that it satisfies the following criteria:
oIt has the considerable Caress in compiling good plans. The varied disciplines in the organisation have to come together, thus ensuring a holistic approach.
. It can realise successfully the targets set, meaning that the compilers of the plan should also possibly be or consist of those same managers who will literally implement and monitor the plan's performance;
oIt has already done what is being proposed - this means there is enough competence and Caress to link to past plans, in terms of objectives and achievements; . It fully understands all the risks and pitfalls. Contingency planning is an integral part of a strategic enterprise plan, where realistic risks are thought about planned for;
o It can relate the enterprise plan to current and startling resource levels. Generally, each organisation has an element, large or small, of un utilised resources. The strategic enterprise plan is the tool that identifies and effectively uses such dormant resources.
Business Planning Tools
Once the team has been identified and given the considerable powers and responsibilities, what remains is the identification and provision of the considerable tools to produce the strategic enterprise plan. Each and every organisation should choose its tools for good planning, considering such issues as structures, staff competencies, organisational cultures, current resources, etc. However, the following list of commonly-used tools is neither exhaustive nor binding, but is an extremely productive checklist, which is a considerable form of reference:
oClear and brief planning forms and guidelines
oA set of planning definitions
.Internal and external surveys
.Financial modelling packages 'Organisation-wide availability and sharing of information
.Identification of standards to assess whether the targets are achieved
.Training programmes for planning staff
.Task force/Focus groups
Of course, the adoption of such tools depends on the size of the business. For example, in the case of Task Force/Focus Group, these approaches are used where the organisation tends to be rather large in size. This also applies for Internal/External Surveys, where the cost and time of collecting such facts has to be viewed in terms of the accruing benefits to the ability of the plan itself.
An productive Plan
What remains is therefore the organisation of all the data collected and the blend of the strategic enterprise plan itself. The executive overview itself is built up after the just rehearsal of establishing the comments, figures and messages contained in the plan. The overview must be seen as conveying to its readers, in a short but productive message, where the enterprise is to-day, and what hereafter scenarios the plan is proposing.
It is the norm for executive Summaries to be puny to one page of prose, but the most foremost element, be it one or two pages long, or even three, is that the summary, when read must immediately provide the reader with what to expect in the plan itself and what the plan's conclusions are, the targets to be achieved, how they will be attained and what monitoring systems will assure their delivery. Exhibit D is a good example of an productive executive summary.
Another foremost issue for a victorious strategic enterprise plan is the way that data is applied and the manner in which it is communicated through the plan. Top administration is concerned in the definite targets to be achieved and will not tolerate statements with inadequate information, or which give rise to ambiguities or worse still are very generic in approach. Exhibit E compares and contrasts two distinct statements, illustrating what ability of data conveys in an productive manner, the message of the plan. Consideration how the first statement is full of generic fluff, which does not mean a thing, and worse still, leaves the reader wholly more perplexed than when he/she started.
But perhaps, the focus of the enterprise plan user should be directed on the financial prognosis and projections that preserve the scenarios being proposed by the plan. The financial prognosis provides the effects of the strategic enterprise plan into numbers that could be crunched. What should form part of this integral and foremost financial section of the plan?
-Only a Summary
-Historical execution and how it relates to the proposed scenarios
-Comments on the accuracy of old plans, profit/loss trends, fixed costs patterns, cash flows
-An rehearsal in sensitivity prognosis of potential scenarios
-Justification of assumptions
-Risk guarantees to investors
Other data demonstrating that the proposed plan is financially sound, cost productive and a behalf motivator.
Besides the above elements, we must not over assess the other parts of the plan, especially the marketing, administration and operational aspects. The team must ensure that they are able to produce a cohesive, well structured plan that will undoubtedly deliver the message. The need for good enterprise planning is therefore evidenced by the need for the organisation to say a truly productive thrust in the treacherous enterprise environment it operates in. enterprise planning is a extremely specialised and skilled form of determining the strategic direction, which demands and deserves some good ability effort. Without a enterprise plan, the organisation, like an armoured tank without any ammunition, will flounder in the face of any weak opposition. Adherence to strategic enterprise planning disciplines is not a bad indicator of those businesses likely to survive and those destined for the scrap heap.
Exhibit A
The considerable Success Factors
Senior Support
The top habitancy should "walk the talk". The board of directors and the senior managers should present the plan of enterprise planning to all levels, in all programmes, to all functional preserve units, to financial officers, personnel officers and operational managers
Accountability
Ultimate accountability for the strategic enterprise plan being developed, carried out and evaluated lies with top management. The maxim is to ensure that each person is responsible for achieving each goal stated by the business
Ownership
In simple language this means that the managers should be responsible and accountable for the content, time frames and deliverables for the definite area they supervise
Mechanisms
It is foremost that the strategic planning process is seen as a "hierarchical" process that links the higher to the lower levels of the enterprise structure. It begins with the long-term enterprise objectives and moves down into private execution objectives and targets
Feedback
Strategic enterprise planning must be Interactive - it can only improve through trial, evaluation and feedback. foremost milestones are periodic meetings at top administration levels to assess and, if considerable spoton the plan
Reward/Recognition Programme
Employees need to be motivated and encouraged to ensure an productive cost/benefit approach. Recipients of rewards/recognition will signify to their colleagues that this kind of behaviour is what the organisation wants
Exhibit B
The Benefits Of enterprise Planning
Provides advice and direction to the enterprise itself
Promotes cross fertilisation opportunities, for example sharing of resources/knowledge and cost ascertainment initiatives
Enhances managerial alertness to turn and opportunities
Creates, fosters and energises a results-oriented climate
Provides managers with a rationale for evaluating competitive interests regarding funds requests, staffing allocations, considerable proposals
Steers resources where they are most needed
Helps to unify the myriad of decisions made throughout the business, by providing horizontal and vertical links
Co-ordinates disparate and diverse activities
Encourages pro-active reasoning and responsive programme delivery
Provides a enterprise culture throughout the organisation which facilitates the flow of facts up and down its hierarchy
Exhibit C
The 8 Rules of enterprise Planning
Open with a summary
Should be no longer than a page and ensure reader's attention. It enumerates the key points; gives some facts for the broad case.
Focus on the audience and the final result
It must arouse the reader's interest, leaving out details which may be relevant only to yourself.
Avoid ambiguity
Use plain language. Organise your message through references, clear figures and illustrations and make good use of graphs and tables.
Project your achievements
A enterprise plan backed by good, solid administration is what the reader looks for. Feature foremost achievements of management.
Use clear record and figures
The reading must be interesting, logical and provide clear flow through to the end.
Do not forget the basic evidence
The data (both external and internal) should be of high quality, relevant and literally communicated to the reader.
Provide for feedback
Involve the active participation of the reader through his/her comments, enquires and explanations.
Ensure senior support
Most enterprise plans originate at the lowest echelons of the administration structure. The champion of the plan must be supported by a mentor on the board of directors.
Exhibit D
An productive executive Summary
o Booboo Ltd is a family-owned sweet enterprise established 50 years ago by the father of the present owner. Turnover has grown rapidly over the past five years to 0,000 and pre-tax profits to 0,000. A new outlet has been opened this year, to make up for the increased demand. This has also reduced operating costs by 10%.
o present store prognosis indicates that there is query to increase the number of outlets by other two. These will be serviced and controlled by the Main Area Outlet. administration believes that they could win enterprise from local competitors who cannot compete on neither price nor quality.
o The venture cost complex in setting up the two units is 0,000, whilst midpoint running costs at to-day's prices will number to nearby ,000 annually. The funds required will be financed as to 30% from the further funds invested by the owner and the rest by means of an assets-secured 10-year bank loan.
o This venture together with a projected increase of 8% on present day turnover would boost up the pre-tax return from the present 19.6% to 25% of turnover.
Exidbit E
Good ability Data
Not...This rapidly growing immense store will soon come to be literally vast and once we have conquered it in a few years time we will also start on the even stupendous international market, where there is even more potential and no competition. And in any case, nobody can copy our unique product.
But...The local store is estimated to be worth nearby .5 million per annum and to be growing at about 12% per annum. If amelioration follows the policy for neighbouring states, the potential store size is nearby .6 million, which provides considerable room for growth. Trade sources suggest that current store players are looking mystery meeting demand, with the current demand/supply ratio running at 1.15. This supports our sales forecasts.
We believe there are further opportunities for expansion in the international arena, where the store is approximately at a similar stage of amelioration as it was two years ago. Our plans show a modest entry into other international markets within 18 months...
Our products have minor improvements compared with competitors, which are protected by both local and international registrations.
Strategic company Planning