Manager's Guide to Business Planning (Briefcase Books) (BUSINESS BOOKS) - Softcover

Capezio, Peter J.

Softcover

ISBN 10: 0071628002 ISBN 13: 9780071628006

Publisher: McGraw-Hill, 2009

Synopsis

Get the business results you wantby creating and executing a solid plan!

One simple thing usually makes the difference between business success and failure: a well-laid plan.Whether you want to enact a long-term strategic initiative or set short-term revenue targets, Manager’sGuide to Business Planning provides the tools and techniques for developing a workable plan everyonewill support. You’ll learn how to:

• Measure success
• Prioritize initiatives
• Run business reviews
• Create a budget
• Engage employees

There’s no reason to experience false starts, waste money, or dissatisfy customers in your businessendeavors. Manager’s Guide to Business Planning has tried-and-true methods that can be applied toany situation.

About this title

About the Author

Peter J. Capezio is the principal of Value Added Resources and brings over 25 years of experience in Fortune 500 companies to the consulting arena.

Excerpt. © Reprinted by permission. All rights reserved.

Manager's Guide to Business Planning

By Peter J. Capezio

The McGraw-Hill Companies, Inc.

Copyright © 2010 The McGraw-Hill Companies, Inc.
All rights reserved.

ISBN: 978-0-07-162800-6

Contents

Preface
Acknowledgments
1. Fail to Plan ... Plan to Fail
2. Creating a Focused Business Plan
3. Measuring Performance
4. Execution Is the Key
5. Mobilizing the Workforce
6. Tracking, Controlling, and Reviewing the Plans
7. Contingency Planning
8. Recycle Your Learning
9. Tips and Traps to Avoid
10. Personal Productivity
Appendix: Planning Toolkit
Index
About the Author

Excerpt

CHAPTER 1

Fail to Plan ... Plan to Fail

In the words of the great UCLA basketball coach John Wooden, "In anything,failing to plan is planning to fail." The message he conveyed many years agorings true today. Most busy managers focus more on the "what" of theirefforts—the tangible results they are measured against. The emphasislacking in many situations is on the "how" of their efforts, that being the planto get there. In a global marketplace, the view of American managers is thatthey, for the most part, are fast on the implementation but lack the detailedplanning process necessary to make their efforts successful. One Europeanmanager described it as "shooting from the hip." Irrespective of your ownperception, the impact of poor planning on a business can result in suchproblems as false starts, waste and duplication, and dissatisfied customers.

Why Plan?

A manager in one of my client companies once commented, "Why plan? It only getsin the way of getting things done." Although this is a shortsighted view ofplanning, many managers believe that the value of planning is diminished becausethey must act more quickly, especially in competitive situations, and don't wantto be held back by a list of objectives that are no longer realistic. Of course,this is a misconception that will be explored later, in that a good plan musthave flexibility and contingencies to produce successful results.

It's important to dispel some of the myths regarding business planning to createa level playing field going forward. Exhibit 1-1 lists a few to ponder:

To illustrate the point, consider the case of the man who wanted to cut back onhis personal budget to save money this year. He planned to do his own gardeningand yard work rather than hire a landscaper. One morning, he decided that hewould trim a large tree in the yard. He climbed up the tree, sawing the branchesbelow him. When he reached the top, he realized that he had cut off the onlyroute back to the ground. Fortunately he was able to alert a neighbor, who cameover with a ladder to rescue him. Just think how some basic planning could haveeliminated the problem.

The Hierarchy of Business Planning

One way to think about planning for results is to envision the hierarchy orlevels of planning that should occur in an organization, irrespective of itssize, industry, or for-profit versus nonprofit. It might be helpful to see thisplanning as a hierarchy of thinking and ideas that come together to complete apicture. This becomes the vision of the future both in the long term (strategicplan) and in the short term (business plan). The third level is the planning forinitiatives each year that will help drive both the long- and short-termpriorities. Here is the hierarchy with some examples of each level.

Strategic Planning

The strategic planning process considers the external and internal impacts onthe business, as well as looking at customers and markets to determine productand service fits. The resulting information combined with a competitive analysisleads to strategies that have the potential to grow the business and sustainprofits over a long period (sustainability). This process is top-management-driven and feeds the business planning process. The strategic plan is revisitedevery year to fine-tune assumptions and adjust to market conditions. The mostsuccessful companies use linking mechanisms to bridge from one stage of planningto the next. To link strategic and business planning, a strategy statement orsummary of the strategic planning process is used to provide input into thebusiness plan.

A medical device company in a highly competitive market used the expression fornew product development, "First is first and second is last." This meant thatthey had to deliver new products to the market ahead of their competitors.During the strategic planning process, top management developed a productpipeline strategy that would unfold over several years. This information waspassed down to key functions, such as R&D, product marketing, sales, purchasing,and manufacturing to incorporate into their business plans.

Business Planning

The business plan is completed by all department managers in profit centers andcost centers. The business plan focuses on how to achieve revenue projectionsand fixed budget targets. The linking mechanism to bridge to departmental plansand business initiatives is the business plan document. It contains specificinformation regarding annual goals for revenue, profitability, etc., that can beused to complete detailed action plans.

A large manufacturing company developed a training program for managers called"Know the Numbers" in which all departmental managers where trained on theProfit and Loss Statement, including what was measured and how they could impactbottom-line numbers for their departments and overall company performance. Oneof the objectives of the training program was to create the mindset thatmanagers were using the financial resources of the company as if they werewriting checks from their personal checking accounts.

Functional/Departmental Plans and Business Initiative Planning

This is an annual planning process of functional/departmental plans andsupporting initiatives that will directly impact the achievement of businessstrategies and may have multi-year objectives in mind.

Although these plans and initiatives are prepared annually, a monthly reportingof progress against plans and initiatives is recommended for visibility to real-time performance. This creates opportunities for adjustments and corrections.

The Value of a Mission Statement in the Planning Scheme

Whether it's a company mission statement or at the functional or personallevels, the mission statement has enormous value in planning.

Creating a mission statement should not be considered an obligatory exercise.Your mission states the reasons you exist in the business. It should reflect thereason that your business opens its doors every day. The mission shouldrepresent your commitment to the business and why you operate it.

When your mission statement represents and reflects your purpose it will attractand communicate to your customers and direct the work of employees. It can alsoprovide a backdrop for decision making, asking the question, "Is this consistentwith our mission?" With that in mind, ask yourself these questions:

* What is the purpose the entity serves for the business?

* How would you describe the output of your work process?

* Who are your target customers, both externally and internally?

* Who are your suppliers?

Recognizing the Uses of the Plan

In making the business case for using a business plan, it's important todelineate the purpose of the plan. Whether you're an executive who's responsiblefor building a business plan or a manager who's responsible for executing theplan, this principle will apply in the same way.

Purposes of the Plan

There are five purposes of business plans:

1. Determine where the company needs to go.

2. Determine the targets that will make the company successful.

3. Identify roadblocks and contingencies.

4. Keep the business on track to reach its targets.

5. Manage departmental and individual performance.

Planning to Fail—Biggest Mistakes to Avoid

It's estimated that less than half of all companies in the United States havebusiness plans. The U.S. Department of Labor says that most companies thatexperience a major disaster will be out of business within five years. Yet only25 percent of these companies have a disaster plan.

Mistakes to avoid:

1. Failure to develop solid timelines and measurements for the plan.

2. Failure to develop the supporting budget for the plan.

3. Failure to develop contingencies for roadblocks in the plan execution.

4. Failure to monitor progress at regular intervals.

5. Failure to communicate both good and bad news regarding business performanceso mid-course corrections can be made.

Vista of Business Planning

In looking at planning as an interaction top-down process, this is the way youmight view it as you watch it unfold.

Strategic View

Every company should conduct some type of strategic planning as a prelude tocompleting a business plan. This strategic view should include a vision for thefuture, a look at external impacts on the business, an assessment of targetcustomers and product and service fit, a competitive analysis, an internalassessment of strengths and weaknesses, key strategies, and business goals. Thisinformation will feed the next phase of planning, which is the annual businessplan.

Company View

The responsibility of the top managers is to establish the overall companygoals. These goals will emerge from the multi-year projections established inthe strategic planning process.

Manager's View

The responsibility of the function or departmental managers is to give inputinto the overall company goals in terms of their mission and capabilitiesavailable to them. This should help to anchor the goals in terms of what isattainable with some stretching of resources. The view here is on operationalplanning and operational excellence.

Alignment

Alignment occurs when the strategies of the company are aligned with thebusiness plan. The strategies create targets used to link executive throughdepartmental levels, down to the individual employee levels. There should alsobe a cross-functional alignment between functions and departments to identifyand clarify interdependencies and to assess the capabilities of shared services.The goals finalized in the business plan should be used to set department, team,and individual performance plans that can be monitored on a monthly andquarterly basis.

The Planning Process Model

Almost every process can be viewed as a closed system in which there are inputs,a process of action, and outputs that deliver a final product. This model lendsitself well to creating a planning tool and mental model for any manager to usein either high-level or tactical planning. In its most practical format, itwould look like Exhibit 1-2 for your own planning effort. In theapplication of this model, you will add and delete as your specific functiondictates. This list will be converted into specific measurements in Chapter3.

Planning to Plan: Collecting Data to Feed Your Plan

Gathering data from your customers and suppliers will provide an excellentperspective on how well the company, business unit, or department has performedduring the past year. This data will allow you to set more accurate goals forperformance based on the strengths and weaknesses uncovered in the feedback.This procedure involves forecasting the future by asking questions of your keyconstituencies. No manager has a crystal ball to tell exactly what will happenand when. Forecasting and listening to the voice of customers, suppliers, andyour employees will be as close to seeing the future as you can get. Use thefollowing suggestions to begin the data collection. Include any other criticalinterfaces that will have an impact on your plan. Here is a survey you can useto forecast customer needs and buying patterns.

Own the Customer's Total Experience

The goal of collecting this information is to determine how you can create atotal customer experience. This involves creating a satisfying experience forthe customer at every touch point and in every interaction the customer may havewith a company representative. This information will help to shore up thosetouch points and interactions.

Forecasting Supplier Capabilities and Costs

The information gained in conversations with suppliers is especially valuable tosupport functions that are often referred to as cost centers. The questions youwill want to ask focus on three key metrics: (1) cost of materials (raw,subassembly, or finished) and services, (2) quality of materials and services,and (3) speed at which the materials and services are delivered to the company.

Benchmarking

Use benchmarking for identification of "best practices" to establish attainablegoals and targets for improvement, especially important in competitivesituations.

Using This Data

As Peter Drucker once stated, "Information by itself is useless unless you dosomething with it." Acting on this advice, the next steps will provide a guidefor creating action with your information.

Analyzing the Information

Increasing your ability to analyze large amounts of information and makeaccurate assumptions and decisions with this information will be critical to theplanning process. One of the biggest gaps in the planning process for busymanagers is the need to create shortcuts to getting at and analyzing informationfor the business plan. The old saying in the information management world,"Garbage in, garbage out" definitely applies in this situation. Without anaccurate foundation and potentially faulty assumptions, the profitability of thebusiness is at risk.

Evaluate Your Analytic Skills

Exhibit 1-3 is a worksheet designed to assist in identifying strengths anddevelopment needs.

Bringing the Data Together

After you've collected the data, the next step is to summarize and synthesize itso that it can be used to complete both a business plan and afunctional/departmental plan. You'll be able to use the planning tools presentedin Chapters 4 and 5 to arrange the data in formats and templatesthat will provide a clearer picture of what the data points represent. To besuccessful, you'll need to identify and test your assumptions. When you'vereached a preliminary conclusion about a particular issue, test your assumptionsand conclusions with others, including your staff, peers, and immediate manager.You'll need to be open to new or opposing points of view to determine the bestcourse of action. You may want to capture the various viewpoints in writing sothat you can reflect on the information.

Planning meetings are effective in synthesizing data but require preplanning andpreparation prior to a decision-making meeting. Specify the type of meeting youwant others to participate in and define the specific topic, objectives, andmeeting outline prior to bringing people together. For example, an information-sharing meeting would be facilitated differently than an input meeting ordecision-making meeting. Be sure to share information in advance of the meetingwhenever possible to eliminate time needed during the meeting for a first-timereview of any data points. There is more information to help improve meetingmanagement in Chapter 10 on personal productivity techniques.

Apply Your Financial Knowledge

The need for managers to apply financial thinking to their plans is becomingincreasingly important. This knowledge needs to go beyond the traditionalmentality of controlling expenses into identifying ways to increase productivitythat impact the bottom line of the business. Think about this in terms ofincreasing profits versus cutting costs. One of the risks of cost cutting isreduced service to the customer and potential loss of customers and revenues.Here are a few suggestions to explore during the planning process.

1. Look at both variable and fixed costs for opportunities to reduce costswithout downgrading service levels.

2. What are the top four to five costly items in your profit and loss statement?How can you work on them for the coming year?

3. In reviewing your top four to five suppliers, is it possible to consolidateto half that number and still maintain service levels? The idea is to go deeperwith a few suppliers and build partnerships for the long term.

The Planning Window

The business planning cycle or planning window may vary from business tobusiness, especially when the planning year starts and finishes at differenttimes during the calendar year. For example, the U.S. federal governmentplanning cycle runs from October 1 through September 30. In a calendar yearplanning cycle, the strategic plan is in the June time-frame so that it candrive the annual business plan later in August. This information, in turn, canfeed the budgeting process in November so that everything can be completed forthe new business year beginning in January. Performance reviews and objectivesfor the new business are completed in December and January, which may includebonus or other incentive compensation based on business results. In addition,quarterly business reviews are conducted to track progress against the plans.

Exhibit 1-4 shows a typical planning cycle. It tracks with a calendaryear but is easily scalable to any annual planning cycle.

Hitting the Sweet Spot Between Planning and Execution

The "sweet spot" on a baseball bat is the unique position on the bat that makesthe ball fly the farthest. A similar spot exists on a tennis racket or golfclub.

The same is true of the planning and execution challenge. The failure to executea plan fully or well results in limited success. This may mean missed targets oropportunities that will give a company the momentum it needs to sustain itselfover the next planning period or beyond.

The application to this example becomes clearer when we look at what actuallyoccurs after a business plan is completed. The plan should become a workingdocument for both the overall company reporting and departmental action. Themissing piece, or the sweet spot, is the linchpin to couple the plan and theactions required to achieve it. In order to make this seamless, a formal bridgemust be built to move into the execution or implementation phase.

We will explore this in detail in Chapters 4 and 6 so that thiswill become failsafe each business year.

Creating the Right Mindset Going Forward

Successful planning requires both the commitment and the skills to be effective.This means that you must have the right mindset regarding your understanding ofthe business and combine this with a mix of function/technical excellence,planning, and action. Here are some suggestions on how to build the rightmindset going forward.

(Continues...)

(Continues...)

Excerpted from Manager's Guide to Business Planning by Peter J. Capezio. Copyright © 2010 by The McGraw-Hill Companies, Inc.. Excerpted by permission of The McGraw-Hill Companies, Inc..
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Edition details

• Publisher: McGraw-Hill
• Publication date: 2009
• Language: English
• ISBN 10: 0071628002
• ISBN 13: 9780071628006
• Binding: Paperback
• Number of pages: 208