Do Business Well

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.
3. Technology/information assessment. For more and more companies, technology and information management have become central to overall success—influencing such matters as production schedules, order-turnaround times, and financial integrity. Investors, bankers, and other financial types are coming around to the view that a company’s ability to use technology and manage information is a key determinant of success in today’s fast-changing world_; therefore, a vital part of a company’s strategy and identity should include an assessment of the role of technology and information in the company’s growth.
4. Management team. Who determines and implements strategy? The people who guide the company must have credibility, based on their accomplishments with other organizations or with the current company.

This all sounds straightforward, except for one important ¹1 proviso: it all has to fit together into a coherent whole. The strategy has to be consistent and realistic.

It’s very difficult to write a business plan that sells your business effectively if the strategy, mission, technology, and management team are not compatible. Take the case of a 14year-old company that produces special types of bearings for the aerospace industry. The company is headed by its original founder, an electrical engineer in his early fifties, who was educated at the Massachusetts Institute of Technology. His “team” consists of a half-dozen junior engineers who graduated from colleges little known outside of their communities in the Northeast.

During its 14-year history, the company had recorded annual sales ranging from $350,000 to $800,000, with no consistent upward or downward trend. For the past three years, though, the company has been losing new orders to competitors because the design of its bearings had fallen behind technologically.

The founder put together a business plan seeking to raise $1.5 million of financing, based on his strategy—as described in the company section of the business plan—of upgrading the product’s technology and assembling an experienced management team with the goal of achieving 25% sales growth over each of the coming five years. That was all well and good, except for a few problems:

• How could a company that had shown inconsistent sales growth over the previous 14 years be expected to suddenly achieve consistently rising sales for the next 5 years?
• How could a founder and chief executive who had failed to assemble a real management team be expected suddenly to change and recruit executives who were at his level in their training and experience?
• How could any shareholder be sure that the chief executive who had let his company fall behind in its industry’s technology wouldn’t allow the same thing to happen again?

In other words, the strategy, technology, and team this CEO planned just didn’t mesh with what had gone on before. Moreover, he didn’t have a mission. Needless to say, he didn’t raise the money he was seeking. Had he recruited a CEO with a track record of success in assembling a management team and growing a business, the results might have been different.

The remainder of this article provides guidance for writing the company section of the business plan so that it creates a logical and consistent identity for the company.

Possibly related posts: (automatically generated)
Company Strategy: What’s Your Identity?

• The Strategy: Playing Historian and Futurist
• Ask Yourself: Would You Invest?
• Marketing planning stage: implementation through the marketing mix
• Making a Plan: how to construct a simple and workable business plan part 6
• How Your Business Situation Helps Shape Your Plan
• E-MARKETING Planning Process
• Campaign Checklist: What goes in a campaign brief?
• The Management Team
• Product/Service Issues: What Are You Selling? part 3
• A Logical Planning Agenda: The Pizza Hut Experience

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