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Business Planning in a Tough Economy

Using Smart Business Strategies to Win During the Recession

Jan 29, 2009 Jim Osborne

A challenging economy calls for extraordinary insight and foresight. Smart planning is critical to succeeding, both for businesses and for not-for-profit organizations.

Companies that plan are more likely to survive, and even thrive in recessions.

In difficult economic times, good forward thinking, and the research behind it, may well mean the difference between a company or other organization thriving or faltering. Succeeding in today’s recession-plagued economy is a bit like hitting a moving target, time after time. So plan!

Good planning observes two imperatives. First, keep the process simple. Second, plan from within -- the very best plans are created from within.

Qualified consultants will add value, but their role must only be to facilitate, not decide about content. As good as some may be, they do not have an insider’s intimate perspective, and they won’t be living with the consequences. You will.

Core Components

At the core of the business planning process are two major components: strategic planning and business planning. Each brings value, each is different and both are important. The distinction can be elusive.

The late management guru, Peter Drucker, in his book, The Future of Industrial Man, described strategic planning as determining how to “do the right thing”, and he defined business planning as how to “do the thing right.”

Strategic Plans

Strategic plans are a description of what the business wants to look like, both in the near term, and farther into the future.

Good strategic planning is hard work. It is especially difficult and more critical than ever in tough economic environments. Now, more than ever before, the focus must be on looking ahead at factors that will and that may impact the organization in the short term and the longer term. Once you’ve made an inventory of these factors, do some homework on each, and then prioritize according to the potential impact on your company.

The horizon for a strategic plan should be two or more years. It was double that a few years ago.

Business Plans

The business plan (or operating plan) defines how a company's planned goals will be achieved. This plan takes the goals, objectives and vision from the strategic plan and turns them into measurable action plans that will guide the company.

The key imperative is the business plan must serve the organization’s needs by providing day-to-day guidance. If it doesn’t, start over -- the process will have been faulty and the results useless.

A business plan develops sharply focused discussions of the company’s mission and values, and prepares a realistic analysis of its industry and a risk analysis of that industry. The plan must also outline the company's assets and its operating priorities.

Action Items

Against this context, the business plan sets out specific action items for the company's products and services, as well as an overall marketing plan.

Finally, the business plan must include a financial plan, setting out the present financial situation and expectations for the coming year, as well as how proposed goals will be achieved and how progress will be measured.

The horizon for a business plan seldom exceeds 12 months, and even less in today’s uncertain global economies.

The copyright of the article Business Planning in a Tough Economy in Business Management is owned by Jim Osborne. Permission to republish Business Planning in a Tough Economy in print or online must be granted by the author in writing.

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