I received the following advice the other day.
“I need to write a business plan for my job. I can find many templates on the internet, but I don’t really know what points to write in order to write a business plan that is easy to get approval. Mr. Nakao, please teach me how to write a cool business plan.”
Have you ever created a business plan? Perhaps many of the readers of this series have made one. And perhaps, just like the person who consulted me at the beginning, I may be confused because I can’t grasp the key points when writing a business plan.
So far, I have touched on business plans from various perspectives. Sometimes from the standpoint of creating it, and sometimes from the standpoint of approving it.
From that experience, I can say thatHow many business plans are there in the world that says “the format is beautiful but the content is not cool”?,about it.
So this time, I would like to talk about how to make a cool ‘business plan’.
Delicate relationship between three stakeholders
What exactly is a “business plan”? I searched online and found this explanation.
“A business plan is a plan that shows the specific actions to be taken by the founder to realize his or her dream. Through this, the purpose of the company’s existence can be clarified, and the environment surrounding the company and the direction it should take. This business plan is also very important when it comes to getting loans from banks and investors.”
If you read this explanation, it seems that a business plan is written by an entrepreneur, but in reality, not only entrepreneurs but also many business people write business plans.
Among them, many are people who belong to companies and are in a position to propose new businesses. A new business planner prepares a business plan and obtains approval from headquarters. This approval is the same position as “approval of loans and investments by banks and investors” in entrepreneurs.
A business plan is not just for starting a new business. Not only for new businesses, but also for existing businesses, we prepare a “business plan” every year, report it to the headquarters, head office, shareholders, and financial institutions, and obtain approval as necessary. Only after receiving approval can we obtain the endorsement of business execution.
In addition to the annual plan, it is not uncommon to create a “mid-term business plan” for 3 to 10 years. In fact, there are probably far more opportunities to write this type of business plan than to create a new business plan.
The ‘business plan’ is not the purpose of creating it (obviously). Creating a plan and getting approval is just the start.It is much more important to put into action what is written in the plan.That’s it.
If you think so, the definition of the business plan that I introduced earlier feels uncomfortable. Let’s rewrite the definition according to the actual situation while making use of the original sentence. This is how it is.
“A business plan is a plan that shows specific actions for a business manager (company manager, entrepreneur, business manager, etc.) to realize a dream.
Through this business plan, you can clarify the raison d’etre of your business and show the environment surrounding your business and the direction it should take. It is also a blueprint for business execution while obtaining approval from various parties involved in the business (investors, financial institutions, headquarters, headquarters, customers, employees, business partners, etc.).”
From this definition, we can see that there are three stakeholders in a business plan:
The skillfulness of the business plan determines whether or not it can gather the sympathy of these stakeholders, and it is very important because it determines whether or not a new business can be started, and whether or not people, goods, and money can be approved for an existing business.
Create a good cycle between the three parties
I have experienced all three of these stakeholder positions in various capacities. From my experience, unfortunately, in many cases,There is often no trust between the three parties.
Let’s explain the reason from the relationship between the three parties (figure below).
It’s a little deformed, but you shouldn’t be wrong. Do you have any similarities in your organization?
In short, there is no trust between the three parties, and they distrust each other. Without trust, you will not get good results. And if you don’t get results, the relationship will only get worse.
If we apply this to MIT professor Daniel Kim’s “quality of relationships,” it’s something like this:
If this bad cycle can be improved into a good cycle, the ‘quality of thought’ will improve, the ‘quality of action’ will improve, and finally the ‘quality of results’ will improve.
The three stakeholders involved in the business plan should originally be allies.Whether the three parties can recognize each other as friends who can create a good cycle——This is the major premise for creating a cool business plan.
Deciding on a format when creating a business plan is one way to improve this relationship quality. Since each of the three has a different standpoint, the words and manners they use also differ. Therefore, by arranging this “tonmana” through the business plan, the conversation will be established smoothly. Good use of the business plan will improve the quality of the relationship.
What are the most important elements in a business plan?
Up to this point, we’ve covered the “mental preparation” section. Let’s talk about the key points when writing a cool business plan.
There are many formats for a business plan, but if you narrow it down, you can summarize it into the following three:
- Business purpose: The part of the “dream” that the business manager wants to realize
- business plan: The “plan” part of how to materialize it
- issue: “Issues and solutions” to proceed with the business objectives according to the business plan
Which of these three do you think is the most important in your business plan?
Perhaps many people thought that ‘1. business purpose’ was the most important.Actually it’s not.
As I mentioned earlier, I have been involved in business planning in various positions. I have learned from that experience. that is,The most important thing in a business plan is “point setting”. In other words, it would not be an exaggeration to say that a cool business plan is all about setting up points.
Of course, “1. business purpose” and “2. business plan” are also important. In the first place, if the “business purpose” does not make stakeholders feel “I want to be a partner to realize that dream”, it will not be a story. If you can’t convince your “business plan” that it’s a good business plan, you’re unlikely to get approval.
If the business purpose and business plan do not reach a passing grade, you cannot even stand at the starting point in the first place, so it is a major premise that these are important.
But think about it. In fact, in many cases, someone at another company also came up with the idea at the same time. The iPod is one of Apple’s groundbreaking innovations, but Sony had the concept of “a device that allows you to carry your music with you.”
However, the future of existing businesses, let alone new ones, cannot be fully predicted.
That’s whyI want to check how “probable” this business plan is.It is.
In order to ultimately increase profits, what kind of hypotheses that are currently unknown should be formulated and what challenges should be taken? What are the uncertainties that might hinder the process of tackling the challenge?
Of course, you need money to challenge yourself. Is this dreamy business plan worth the investment? Is it worth sharing wisdom and sweating together to realize it? Stakeholders want to confirm it through the business plan.
That’s where the “point of contention” comes in.An issue is a problem that the person in charge of the project (drafter) is trying to solve.. No stakeholder will ever give OK to a business manager who cannot set issues.
For example, there are four general points of contention in new businesses:
- client: Will we have as many customers as we expect?
- customer value: Can our services and products provide the value that customers expect?
- Compensation: Will the customer pay the price we expect?
- operation: Is it possible to realize operations that generate the profits we expect?
If these 1 to 4 can be realized, we can step on the accelerator for new businesses. Which of these is most likely, and which is still unknown? That “what we don’t know yet” is the point of contention.
An issue is, in other words, a problem that needs to be solved in order to realize the business purpose.. How do you solve the low-probability parts of your business plan? The hypothesis is presented in the business plan.
Issues can be seen by “decomposing”
The trick to setting a good issue is to “decompose” the issue. As you break down the points, you can see the hypotheses.
For example, let’s say there is a company A that wants to increase its revenue. Although customer satisfaction with Company A’s products is relatively high, we are concerned that we will not be able to make sufficient investment in product development in the future unless we further improve profitability.
In this case, what issues should be set to increase revenue?
Here is “decomposition”. As an example, let’s break down the issue as shown below.
First, let’s break down the big point: “Company A wants to increase its profits.”
Since the resolution is low with a large grouping of “Company A”, we have broken down the organization into three parts: “business departments”, “headquarters departments”, and “indirect departments”.
Let’s say we belong to a business department. What can be done to increase the revenue of the business division? Here again, we will further factorize the issues such as “sales,” “marketing,” “incentives as personnel measures,” and “organization,” so that we can grasp the points at issue with higher resolution.
If you belong to the ‘sales’ section of a business division, you can further break this down into ‘direct sales’ and ‘agency’. If “direct sales” has more room for sales expansion, it seems that you can identify important points by utilizing quantitative (data) and qualitative (interviews, etc.).
Let’s say that, after breaking it down, you realize that different sales teams have very different sales growth rates. If the best performance is the sales department B, it will be possible to increase the overall sales by raising the results of the other departments to the same level as the B department.
What do you think. We were able to break down the major issue of “Company A wants to increase profits” into the medium issue of “I want to improve the performance of other departments to the same level as the successful sales department B.”
In this way, even if you don’t know what action to take just by saying “I want to increase profits,” by breaking it down and increasing the resolution, you can get a sense of it and even imagine specific actions. It should be like this.
draw the next point from the hypothesis
Let’s break it down even further.
Let’s say you’ve compared sales steps across your sales team and found that there’s a big difference between “presentation rate” and “closing rate.”
This is the “hypothesis” that may be the reason for the difference in grades between the B division and the other divisions.Hypotheses are the most probable facts at a given point in time.
This “hypothesis” becomes the next “issue.”
Why is there a difference between these two steps? How can other divisions achieve the same level of performance as division B (next point)? The hypothesis that can solve this issue is … Repeat the work until it can be broken down into concrete actions of the executor (here, the on-site employee). I will make
The completed story becomes the “liver” of the business plan.
If you are a business manager who can create a story like this, the decision-maker will feel at ease. And by telling the executor with minor changes to this story, you should be able to think, “This seems to be possible.”
Set the issue with “good seasoning”
Here are a few points to keep in mind when setting your goals.
When I talk about the importance of setting the point, I sometimes run into two bad patterns:
- “Gun of the Dark Night” type: The guesswork type, like shooting a gun in the dark. In rare cases, there are cases of genius skin types that happen to be successful, but the reproducibility is not high. As soon as the genius is gone, the organization will fall into a predicament.
- “CT scan” type: The type that creates all the issue trees in detail. People who know the term MECE (Mutually Exclusive Collectively Exhaustive) tend to want to make every detail fine (see the figure below).
The point of setting the point of discussion is “good seasoning”. In other words, only the parts that need to be broken down in detail are broken down to the point where they can be put into action on site. In the previous example, we divided the major issues into three categories: “business division,” “headquarters,” and “indirect departments.”
In this way, focusing on and breaking down only the essential parts is not only time efficient when creating a business plan, but it is also easier for the approval company and the executor who see the plan to understand it. easier.
So far, I was able to understand up to the “point setting”, which is the biggest point of creating a cool business plan. Next time, let’s think about how to connect the issues clarified here to numerical targets.
*This article first appeared on July 2, 2021.
Ryuichiro Nakao: President of Nakao Management Institute. Completed Graduate School of Engineering, Osaka University in 1989. Joined Recruit. After serving as executive officer (in charge of business development) of Recruit Sumai Company, president of Recruit Technologies, and deputy director of Recruit Works Research Institute, he assumed his current position in 2019. He is an outside director of Tabikobo Co., Ltd., an outside director of LIFULL Co., Ltd., a part-time auditor of LiNKX Co., Ltd., and a fellow of Hakuhodo DY Holdings Co., Ltd. His new book is “OJT management that nurtures employees who think and act on their own”.
(Serialized logo design by Mio Hoshino, editing by Ayuko Tokiwa)
Source: BusinessInsider
Emma Warren is a well-known author and market analyst who writes for 24 news breaker. She is an expert in her field and her articles provide readers with insightful and informative analysis on the latest market trends and developments. With a keen understanding of the economy and a talent for explaining complex issues in an easy-to-understand manner, Emma’s writing is a must-read for anyone interested in staying up-to-date on the latest market news.