Do Business Well

Not only does the process of writing a business plan differ from situation to situation, but so does the plan’s final form. The rules of thumb described here may seem obvious, but I know from experience that they aren’t obvious to the uninitiated.

1. The earlier in the company’s history the plan is written, the simpler the process. This isn’t to say that it’s easy to write a plan for a start-up or early-stage company, only that it’s simpler than doing so for an established growing business. As Fred Gibbons points out, he was able to write the business plan, get his partners to agree, and everything was done. Mo Siegel, on the other hand, waited until Celestial Seasonings was six years old and had about $30 million in sales before he wrote the first business plan. He suddenly had many people involved in a lengthy and frustrating process that caused one of his partners to leave the company. Continue Reading »

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Every Company is driven by an underlying philosophy and logic. These may never have been articulated by the founders, either verbally or in writing. But they are there, whether the owners and employees realize it. The philosophy and logic may be expressed in your efforts to decentralize decision making in the company. They may be expressed in your decision to finance the company entirely from earnings rather than seek outside money. The section on the company is where you spell out your company’s philosophy and logic—its reason for being, its identity. This section of the business plan should cover four principal issues:

1. Company strategy. “Strategy” is a fancy term for your company’s overall approach to producing and selling its products and/or services—and its goals for maximizing success. You should have some guiding principles to the way you operate that allow you to succeed and that distinguish you from the competition.
2. Mission statement. Increasing numbers of executives are concluding that, in addition to an overall strategy, they should develop some kind of statement that encapsulates their companies’ values and overall purpose in life. The mission statement, when articulated and used effectively, can unify a company’s employees.

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As you begin to write your executive summary, consider not so much what you want to say, but what a prospective investor (or acquirer or key employee) wants to read. That person wants to be convinced that your business is going to be a winner. When you read your executive summary, you must constantly ask yourself: If someone handed me this executive summary, would I seriously consider investing in this company?

The best way to write your executive summary draft is to draw on the building blocks and to study well-done executive summaries.

• The building blocks. Each stage in the planning/writing process, if done right, makes the next stage easier. You should already have some written material on which to base the first draft of the executive summary. Continue Reading »

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For the 12 years after Pizza Hut was founded in 1958, itsonly formal planning consisted of putting together yearly budgets. In 1969, recalls Carney, “We got in trouble.”

In an effort to broaden its base of operations in order toposition itself to go public, the company acquired 40% of its franchise operations, or 120 stores, to go with the 6 company- owned outlets it already had. Recalls Carney, “We acquired 33 different accounting systems. It took us eight months to get to one.”

In the meantime, revenues flattened and profits tumbled. A hastily developed weekly profit reporting system solved the immediate problem, but Carney decided the time had come for additional action, so he took an American Management Association course, “The Management Course for Presidents.” In early 1970, Carney began the Pizza Hut planning process by assembling the top officials who reported to him as CEO. Continue Reading »

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