Chapter 12 Developing a Business Plan
The terms strategic planning and business plan are often used interchangeably, even though they are different. The strategic planning process is essentially the upfront activity related to generating a business model. It involves using the analytical strategic planning approaches discussed in Chapter 8 "Strategic Planning and Ten–Ten Planning", such as value chain analysis, Porter’s five-force model, the resource-based view of strategy, the technology life cycle, and SWOT analysis among othersThe SWOT analysis is rarely part of the business plan and is usually not part of the business presentation. The purpose of a SWOT analysis is to assist the founders in understating what the business is all about and where it is heading. The strengths and opportunities will of course be woven into the business plan and the business plan presentation. But there is little to be gained from focusing on the threats and the weaknesses. Indeed, a significant part of the business plan and presentation involves developing strategies for dealing with weaknesses and threats.. In Chapter 9 "The Ten–Ten Planning Process: Crafting a Business Story", we introduced an abbreviated approach to planning, called the Ten–Ten planning process that can be quickly implemented and assist in bringing focus and clarity to the entrepreneur’s vision. You are encouraged to complete the FAD template, Organizational and Industry Analysis template, Business Plan Overview template and to develop an executive summary using the material in earlier chapters before you develop a full-scale business plan. There are two reasons for this. The first reason is that the material developed during the Ten–Ten planning will be very useful in developing a focused, more complete, and better plan. The other reason for using the Ten–Ten process is that business models evolve very rapidly; sometimes it is better to let the idea incubate and to present the plan to a variety of audiences before committing and finalizing the full-blown plan.
In this section, we will present a more detailed approach for constructing a full-blown business plan. The expanded business plan provides additional focus by adding details on the what, why, how, when, and for whom a product or service will be produced. The business plan is an abbreviated description of the business model (see Note 12.1 "The Business Model: Important Business Model Decisions"). The business plan is presented to the outside world through a business presentation and is accompanied by a business plan document.
The Business Model: Important Business Model Decisions
- What will the product features and product mix look like?
- How will the firm acquire market share, define market segments, and market the product mix?
- What type of pricing strategy will be used (menus, auctions, and bartering)?
- Where will the organization build core competencies and capabilities?
- With whom, when, and why will partnerships and alliances be formed?
- How and why are funding and resource decisions made?
- How will the supply chain work? This involves the when, who, and how tasks are performed.
- Should supply chain tasks be outsourced, off-shored, or in-tasked?
- How will employees be acquired and retained?
- What will the information technology look like in terms of hardware, software, and networking?
- How will product, process, and content innovation be carried out in terms of R&D?
Adapted from Afuah and Tucci (2001).