Business Planning

ENTERPRISE
Business
02.09
Planning
Patrick Forsyth
■ Fast track route to writing and implementing rock-solid

business plans
■ Covers key areas of business planning, from understanding why a

plan is necessary and what issues it should address to compiling
the plan and using it to direct the business and ensure goals are met
■ Includes the low-down on key planning aids such as swot

analysis, the Boston and Ansoff matrices, and practical examples
and advice drawn from banks and accounting firms as well as
business practitioners and gurus such as Philip Kotler
■ Includes a glossary of key concepts and a comprehensive

resources guide
Copyright  Capstone Publishing 2002
The right of Patrick Forsyth to be identified as the author of this work has been
asserted in accordance with the Copyright, Designs and Patents Act 1988
First published 2002 by

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Contents
Introduction to ExpressExec v
02.09.01 Introduction 1
02.09.02 What is Business Planning? 5
02.09.03 The Evolution of Business Planning 13
02.09.04 The E-Dimension 21
02.09.05 The Global Dimension 31
02.09.06 The State of the Art 41
02.09.07 In Practice 67
02.09.08 Key Concepts and Thinkers 81
02.09.09 Resources 97
02.09.10 Ten Steps to Successful Business Planning 105
Frequently Asked Questions (FAQs) 115

Acknowledgments 117
02.09.01
Introduction
» A dose of reality
» The causes of failure
2 BUSINESS PLANNING
‘‘If you’re not planning where you want to be, what excuse do
you have for worrying about being nowhere?’’
Tom Hopkins, American sales trainer
The information presented here is directed at those managing, or

involved in managing, small/medium sized business. Many people
regard such a manager as being in an enviable position. Often they
are their own boss, they are independent, able to be flexible, to
concentrate on the things that interest them, to organize matters
their way and generally get on with the job in hand. By contrast,
larger enterprises may seem slow, bureaucratic, committee driven and
steeped in rhetoric.
The reality is often all too different.
A DOSE OF REALITY
Under pressure, the manager of the small business often seems besieged
by a plethora of difficulties that conspire to make running the business
unnecessarily complicated. Paperwork, administration, taxation, legis-
lation, the bank and more paperwork, administration, form filling. . . ;
the problems can be numerous, and may be all too familiar. Further-
more, a business – any business – ultimately stands or falls by its success
in the marketplace. It needs sufficient customers buying its products
and services often enough to produce both the necessary financial
return and the wherewithal to invest and secure future growth.
Now the manager doubtless recognizes this, but the process of
ensuring it happens can still prove problematic for a variety of reasons.
Senior managers may be specialists. Perhaps the business was founded
on engineering or design skill, and it is these things at which they
are best, but the business-generating and management process is less
their real forte; and as that process may seem complex and is certainly
time-consuming, this too may contribute to it being neglected. Besides,
business-generating activities cost money, real money, paid out in
advance with no guarantee that it will bring in results which will repay
and exceed it.
However, somehow any business must be made to work as a
complete entity; finance, marketing, production, and more must all
contribute and contribute effectively. There is one thing that can act as
INTRODUCTION 3
a foundation to all aspects of operating success – and that is planning.

This is not an overstatement, planning really is vital. Starting with a
blank sheet of paper as it were, it takes a little time to do; but not a
disproportionate amount of time given the advantages it bestows on
the planner. It needs to be done, done effectively, and then kept up to
date (this latter process is easier and less time consuming).
However, the problem is that planning can tend to seem somewhat
academic, fine if you have the time, but something a little cosmetic and
not really a part of actually running the business. With this attitude it
is easy to ignore it, do only lip service to it or just bypass or ignore it.
This is a mistake. As this work aims to show, planning is important for
practical reasons. A plan is not a good one if it does not help – really
help – direct and manage the business and make success, however that
is defined, more likely and more certain.
THE CAUSES OF FAILURE

If we look at things from a negative viewpoint for a moment, we can
focus on what makes a business fail. For new small business the causes
are well documented, the top ten are often quoted as:
» lack of experience and skill in the founder

» lack of capital
» uncontrolled expansion
» weak management
» credit and cash flow problems
» wrong location
» too high levels of capital expenditure
» taking too much money out (as salary for the proprietor)
» staff problems
» over-complicated systems.
Each of these headings could be developed into a list, and perhaps into
a tale of woe. But one thing is clear: every single one of these areas
can be made into less of a problem area through some judicious
planning.
Planning has positive merits and, make no mistake, it is also in the
nature of insurance – it can prevent you running into trouble.
4 BUSINESS PLANNING
So, let us end this short introduction by quoting some well-known

words explaining the need for planning and why it is worthwhile to do
it. Lewis Carroll wrote, in Alice’s Adventures in Wonderland:
‘‘Would you tell me, please, which way I ought to go from here?’’
‘‘That depends a good deal on where you want to get to,’’ said the
Cat.
‘‘I don’t much care where – ’’ said Alice.
‘‘Then it doesn’t matter which way you go,’’ said the Cat.
‘‘ – so long as I get somewhere,’’ Alice added as an explanation.
‘‘Oh, you’re sure to do that,’’ said the Cat, ‘‘if only you walk long
enough.’’
Elegantly and memorably put, and the Cheshire Cat’s logic is surely very
clear. Planning is essential as a basis for a well-run business; you need
to plan and do so effectively – it enhances the likelihood of achieving
what you want.
02.09.02
What is Business
Planning?
» A business plan defined
» The dynamic business environment
» What is competition?
» Limited resources
» Driving the business
» Operations must be controlled
» Summary
6 BUSINESS PLANNING
‘‘If you reach for the stars, you might not quite get one, but you
won’t end up with a handful of mud, either.’’
Leo Burnett, founder of Leo Burnett Advertising Agency
The process of running a small/medium sized business was never

easy; and the competitive pressures of recent years, and many market
recessions also, have combined to make it downright difficult. If the
business you manage is your own, you know also that it is vulnerable,
as good as its last month’s sales – and there is a great deal hanging on
its success. Such a feeling is only marginally reduced if you manage the
business for someone else or share the risk.
So, how do you make sure of your success? There is, regrettably,
no magic formula and, as such, it is not the intention here to suggest
otherwise. Success depends on a number of things: such as what you
sell; where it is sold; how you sell it; and the quality of every kind
of service which is involved before, during or after the sale. All are
important. So too are the processes of ‘‘bringing in the business,’’ many
of which are usually encompassed by the word ‘‘marketing’’. People are
important too, from their recruitment to their effective management,
plus a whole raft of other things from design and innovation to
administration.
We begin to paint a complex picture here. So, what of planning?
Planning is the foundation to success. It underpins the complexity of
business. It makes sure that it is well organized and well directed,
and thus running it is easier and more certain to be successful – and
thus will meet its goals. A clear definition quoted from the Oxford
Dictionary of Business appears below.
A BUSINESS PLAN – DEFINED:

‘‘A detailed plan setting out objectives of a business over a
stated period, often three, five, or ten years. A business plan is
drawn up by many businesses, especially if the business has
passed through a bad period or if it has had a major change of
policy. For new businesses it is an essential document for raising
capital or loans. The plan should quantify as many of the objec-
tives as possible, providing monthly cash flows and production
WHAT IS BUSINESS PLANNING? 7
figures for at least the first two years, with diminishing detail
in subsequent years; it must also outline its strategy and the
tactics it intends to use in achieving its objectives. Anticipated
profit and loss accounts should form part of the business plan
on a quarterly basis for at least two years, and an annual basis
thereafter. For a group of companies the business plan is often
called a corporate plan.’’
Business planning is, or should be, a response to four specific factors,

examined here briefly in turn.
THE DYNAMIC BUSINESS ENVIRONMENT

No business operates in a vacuum, cut off from outside influences,
and any business must therefore be managed in a way that recognizes
the many influences – some positive, others less so, or downright
negative – that surround and affect it. A whole range of different
influences are involved, listed, and commented on here under six
headings.
» Economic climate: Financial factors may frequently seem restrictive

and they often are. Think of borrowing-rates, taxes, operating costs,
etc.; whereas positive economic situations prompt higher spending
and help business.
» Technological developments: These may be positive or negative, for
example technological development may assist (as word processors
have assisted the quality of presentation), but keeping up often
necessitates investment and training. There is also a high degree of
uncertainty; who can accurately predict the future development of
the Internet or dot-com companies?
» Social changes: Changes here again may have a variety of effects,
as with the demographics of the ageing population in the UK
and elsewhere, which may provide opportunities (retirement
homes/holidays) or reduce the potential in other sectors.
» Political dictates: Government may affect company operation and
markets also, with legislation on anything from the compulsory
testing of pharmaceutical products to safety measures governing car
8 BUSINESS PLANNING
tires, and other areas, for instance the prevailing or future level of
spending on schools or oads.
In recent years another influence has been added to this list.
» Environmental considerations: The green movement has affected

many product areas, with advertising featuring recycled paper (toilet
tissue/stationery) or the omission of harmful chemicals or additives
(CFCs have now largely disappeared from aerosol products).
Amongst all the factors that can logically go under these headings
opportunities abound. It is an area that repays regular consideration.
Another factor affecting all businesses is:
» Competitive pressures: a broad view needs to be taken of what

constitutes competition (see box); action from any quarter can affect
your business unexpectedly, directly, and rapidly. Further, it may
be sensible to link customers to this heading. The market – the
world of customers and potential customers – is essentially dynamic.
Customers are fickle, their loyalty hard won and easily lost. Change is
the norm. Responding to it is essential, or even long-term customers
will go elsewhere.
WHAT IS COMPETITION?
It may seem obvious, but it is worth asking – what exactly is your
competition? Consider an example: for someone who makes pens
or undertakes printing, then the competitors are surely other pen
manufacturers and printers. Yes; but competition is broader than
this. Consider the pen manufacturer, who makes, let us suppose,
medium-priced ballpoint pens. His competitors – and there are
probably 10 or 20 of them – make similar pens. But what about
fountain pens, roller balls and fiber tips? And pencils? These are
competitors too, as are dictating machines and word processors,
and, of course, other writing instruments throughout the range of
all prices, from throwaway ballpoints to solid gold fountain pens.
These days a stylus on a palm size computer may substitute for
the use of other writing instruments (in the UK a recent survey

reported that more than 50% of people less than 25 years old had
never written a letter by hand).
Still further factors must be included to define competition
completely. Many pens are given as presents, so competition
includes alternative present choices, a book, a music CD, a necktie
and so on. Many more are given as business gifts, so competition
here ranges from pen pots to calendars. No doubt this picture
could be extended. Certainly you can consider in a similar way
any product or service your organization may provide; it may be
a sobering thought and produce a longer list than might first be
imagined.
Planning has to accommodate all these kinds of things, and more; and
still work effectively for you.
LIMITED RESOURCES
In any organization, even a small one, there are different resources,
especially people, time, and money, competing for attention. All sorts
of options exist. Do we spend more on research and development or on
new computer equipment? Do we extend our business geographically
or concentrate on better exploiting the areas we are in now? Such
questions and relationships are almost endless and often more than a
limited choice between two decisions is in question.
Often only one course of action can be taken. Resources are not
interchangeable. If George is to set up a new office, then he cannot – at
least at the same time – be doing something else that demands the same
time. Planning must address this situation. It is planning that produces
a basis for such decisions, and leads to the allocation of resources and
the focus on whatever are decided to be key activities.
DRIVING THE BUSINESS

Any business has a certain momentum. But its operation should not
be either a case of an automatic perpetuation of the status quo – more
of the same – or of constant reaction to circumstances. This latter
is particularly to be avoided if it constitutes unthinking reaction to
10 BUSINESS PLANNING
difficulties – a process that can sometimes best be described as panic.

Similarly, even if thought is involved, constant ‘‘firefighting’’ prevents
time being spent on what really matters.
Planning, and the existence of a sound plan, gives the business
direction and helps ensure that the expertise and the right action are
lined up behind what matters, so that those things that support the
core of the business are given full attention.
OPERATIONS MUST BE CONTROLLED

A fourth point addresses the question of management control. Any
business must know how it is doing. This is not just for the satisfaction
of ‘‘keeping the score,’’ as it were. Control is designed as a final part
of the process of hitting objectives. If the signs are that all is not going
well, this is flagged by the control system. This should give sufficiently
early warning for corrective action to be taken to ensure that progress
towards goals set can be put back on track. There is a positive side
here too. It is just as important to react diagnostically when things are
proceeding better than expected; more of this in Chapter 6 ‘‘The State
of the Art.’’
SUMMARY
Thus planning is undertaken to provide a solid base from which the
business can operate. It is, or should be, essentially practical; that
is, doing the planning, and having the plan, should make it easier to
run the business. Certainly it is sufficiently important that no new
business, or new business development, is likely to be supported by
an organization’s bank without a sensible and well-documented plan
being on the table. That alone is enough to make many who doubt the
value of business planning to think again.
The plan for the year – the annual plan – may well be an integral
part of longer term planning (say for three years ahead) with the
operational plan for the immediate future linking to outline plans,
and lines of thought, for the longer term. However it is defined in a
particular organization, a good plan will:
» identify opportunities for future profit improvement;

» have the ability to anticipate dynamic external changes;
» provide better protection for the future of the business;

» prompt the collection of relevant data;
» allocate the company’s resources towards specific ends;
» underpin the process of control;
» assist with clear communications around the company;
» focus individual efforts and assist personal motivation;
» provide a proper commercial reference for all activities; and
» justify development (and development funds).
Further, if it is to be a practical process, it will help if:
» the approach is an integration of ‘‘bottom up/top down’’ (i.e. it

involves people throughout the company);
» the system and purpose is clear to all;
» standard (tailored) planning formats are used;
» a planning cycle, specifying all timings, is agreed;
» the planning includes a facility to ‘‘fine-tune’’ (particularly to take
advantage of opportunities); and
» an eye is kept on the external reactions to everything done to
facilitate ‘‘fine-tuning’’.
Someone must take responsibility for the planning process (and give
some time to it), while others must agree to be involved as neces-
sary. Some discipline may be required here as other pressures so easily
intrude. In the context of this work and with smaller businesses in
mind, while all aspects of business planning are important, the promo-
tional aspects – the things that will bring in the business – are key. So
often organizations refer to their business plan, and also to a marketing
plan; the latter is simply a core element of the whole. That said, every
aspect of the business needs planning. Whether an activity is significant
or not, in the sense that there is an HR department for instance, it needs
a plan. But in a small business so too may the proportion of the general
manager’s time that goes on HR issues be significant in the absence of
any sort of department.
Essentially you must ensure that you get planning to address issues
that are important to you and your business, whatever they are and
whatever their scale.
02.09.03
The Evolution of
Business Planning
» An increasing need
» Small business assistance
» Towards excellence
» Summary
‘‘There are three kinds of companies: those who make things

happen; those who watch things happen; and those who wonder
what’s happening.’’
Anon. (quoted by American marketing guru, Philip Kotler, in
his book Kotler on Marketing)
Business planning is a perennial skill. When the early cave men were
setting up a first co-operative to make and sell fish hooks they would
have quickly learnt to plan. The need to kill sufficient animals to source
the bones they needed had to be matched against the number to be
traded. Every aspect of business would have had to be addressed in a
practical manner. If they were to swap fish hooks for food, and their
planning was misjudged, they risked starvation.
That said, useful background about business planning comes only
from the last 50 years or so; the period during which there has been a
progressively increasing formality and focus on all matters to do with
the skills of managing a business enterprise.
AN INCREASING NEED
The background is best commented on in terms of large and small
companies.
Large companies
Though planning was doubtless always necessary, the spur towards
more sophisticated planning methods came as a result of the drive
for organizations to grow to large size; a trend that started in the
1970s continuing through the 1980s and beyond. Cash made from
core businesses went into growth and acquisition and the resultant
entities were such that more formal planning processes were needed
than in the past, to initiate and control action. What proved an unwise
and complex combining of disparate business interests created in turn
more complex management structures and increased administrative
processes – all of which needed to be tamed, if possible, by better
planning.
Then in the mid-1980s these broad growth policies, some of which
had proved less than successful, became less attractive and the emphasis
THE EVOLUTION OF BUSINESS PLANNING 15
switched to a focus on core business areas (the ‘‘stick with the knitting’’
of the best-seller In Search of Excellence). This trend too required a
tight planning focus. By now planning had become an accepted core
element of most large companies’ operations.
A further spur to this was the development of and fashion for
using planning devices of one sort or another (such as the Boston
Grid – see Chapter 8 for details of this and others). Strategic planning
was now firmly on many an office door and large organizations retain a
commitment to it and continue to have specialist staff and departments
to assist in completing the process. At the same time (since the 1970s
onwards) the management consultants have seen this as a major area
of work – with numbers of firms providing assistance with planning,
or training in how to go about it.
All this tends to suggest that planning works; or at least that it is
useful. The large firms with a major commitment to this would not
continue to invest in the planning process if it had been seen to be
even of doubtful value. Smaller firms may take some note of this.
Small companies
The smaller firm has not been untouched by what larger ones have been
doing. Because of the trends reported above, management literature
has reflected the need – and the detailed methods – of planning, and
few can be unaware of its prevalence.
However, small business has always been schizophrenic about plan-
ning. Those running a small business rarely voice a logical argument
against it or believe it to be a ‘‘bad thing.’’ They just relegate it down the
priorities so that it is either not done or done inadequately. A negative
circle develops from poor planning – it does little to help manage the
business, and so it is again regarded as unessential.
However, while this situation prevails, small business has – certainly
since the seventies and more so since the eighties – been the recipient
of many factors seemingly designed to make life more difficult. These
include:
» financial pressures: taxation, interest rates, more pressure on
cash flow;
» administrative burdens: largely, so the conventional wisdom has it,
government-inspired. Whatever the truth of that, paperwork – from
matters linked to employment law to the provision of information to

compliance with edicts of all sorts – does take up significant time;
» competition: market conditions seem to get more and more
competitive; and international competition is a major factor in this
picture; and
» technology: of all sorts, and information technology in particular, is
a wonder of the age. There is no doubt that it brings major efficiency
and convenience; but it also brings cost, a steep learning curve and
an apparently built in obsolescence that means many people feel they
are on a technological rollercoaster and there is always something
new to get to grips with.
All this, plus recessions and a general pressure on margins, makes the
job to be done in small business a challenging one to say the least. They
add up to the fact that running a small business is a risky business; and
sometimes the risk is considerable and the penalties for failure very
personal (especially for the owner/manager).
One other factor, itself a reflection of the other difficulties that have
become inherent in running a small business, is the agencies set up to
help small businesses.
SMALL BUSINESS ASSISTANCE

There are a number of agencies set up specifically to assist small
business. In the UK at least, and similar situations exist elsewhere, they
are subsidized in one way or another by government. Here in the UK
they have had a turbulent past. Because government can seemingly not
resist the urge to tinker, and often to tear up and replant, there have
been a series of business agencies in the past. As each has come along
it offers slightly different facilities on a different basis; as I write this
the Business Link network is being replaced by another set up, as yet
incompletely defined. But business planning has always been one of
their priorities.
That said, they are useful; if you have anything of this nature near
you it may pay to check it out. They may do just what you want, and
you may be allocated an advisor whom you like, and who knows their
stuff. See Chapter 9 for more information.
The conclusion of even momentary thought about this is that plan-

ning has become more necessary than ever before. It is not just the
bank that demands your business has a sound plan, it is the overall
circumstances in which you operate. A good plan, well considered and
worked out, will help cope with all the problem areas listed above.
True, it may not negate them all, but let us be realistic; there is no
magic formula to which many will yield. But they are reduced by
a systematic approach, by attention to detail and by using planning
to minimize every disadvantage – and, equally important, to maximize
every opportunity.
From being a routine or a ‘‘good’’ option if there is time, planning has
gone to being a must. The unplanned business leaves itself wide open
to external disruption to its operations; worse, it allows opportunities
to go stillborn because they are either not recognized or not addressed
in the right way.
As the twenty-first century gets under way we are in the age of
business planning for good reason: it is necessary, and it offers practical
help in achieving business goals.
TOWARDS EXCELLENCE
Finally, let us look at what creates excellence. Since 1982 saw the
publication of Tom Peters, and Robert Waterman’s seminal book In
Search of Excellence, the term has been applied to those organizations
whose success is most pronounced. The main prerequisites to success
listed by Peters and Waterman said that excellent companies:
» had a bias for action;

» were close to their customers;
» had autonomy and entrepreneurship;
» believed in productivity through people;
» were hands-on and value driven;
» stuck to the knitting (i.e. focused, without distraction, on core
activities they knew); and
» had a simple form and lean staffing.
Commentators have not significantly altered these since and they

remain valid today. A moment’s thought shows that these are all
philosophies that are dependant on planning. Planning, or certainly

the thinking that planning implies, makes adopting the characteristics
and approaches of an excellent company easier. This is nothing to do
with the size of an organization. It is, to take one example, just as
important for the small company to be close to their customers as the
large. Understanding customers and organizing business approaches to
maximize meeting their needs and delivering the quality and service
they want surely makes sense for anyone intent on being successful.
To do so it is necessary to spend some time thinking about customers
and what they do want, talking to them, researching them and looking
at how they are dealt with by other organizations. The information
gleaned from this sort of examination needs transforming into an
inherent element of the company’s philosophy and operating approach;
what is that if not planning?
All the facts about what makes companies successful, and all the
trends about how this will change in future, demand a planned
approach. They illustrate that planning is only a practical response
to the circumstances in which modern business operates. Recognizing
this is important. So too is acting on it. For the smaller business it must
not be allowed to take over and waste time, a manageable planning
approach must be found. Finding it can make the difference between
success and failure.
SUMMARY
The brief history here has certain common sense morals. Certainly a
recognition of the dynamic nature of the business environment is one.
If nothing really changed year on year, then you could operate knowing
what would happen. But, of course, things do change. The implications
for planning are clear.
» One of the prime reasons for planning is as a response to dynamic

circumstance. You can never know what circumstances will prevail
in the future, but planning bridges the gap between total ignorance
and certainty – at least to some extent.
» Changing circumstances also affect the form planning must take. For
example, if you find you have more, or more active, competitors than
in the past, then time spent assessing their activity and anticipating
their next moves may need to become part of your planning process.
» Changing demands from others for whom your plan is significant
may also dictate how it should be done. You may need to provide
more detail for the bank, or it may be prudent to be more open with
staff about certain plans, in an environment where staff increasingly
expect a higher level of consultation by management.
Looking ahead as you contemplate the next planning process and taking
an informed and open-minded attitude to change will help ensure that
the planning you undertake remains relevant and that each plan you
produce will be genuinely useful.
02.09.04
The E-Dimension
» The power of technology
» Forecasting
» Technical assistance
» Best practice: analyzing customer profitability
» Summary
‘‘Rushing gleefully into the information-laden future – a future in

which we will be increasingly willing to replace direct experience
of the world with mediated data about the world – we may find
that an obsessive fascination with information has some unpleasant
consequences.’’
Hugh Mackay, Australian market researcher
PLANNING THAT REFLECTS FAST CHANGING

TECHNOLOGY
The pace of change is a fact of life and nowhere is this truer than in
the area of technology. If your organization is involved in markets and
products directly affected by this, then planning must reflect the need
to act quickly. A couple of examples make the point.
Example 1: Competitive intelligence

A basic element of most company plans is to cast a glance, indeed
to study in some detail, the state of play with the organization’s main
competitors. As one obvious example of how much quicker and easier
technology has made some things, just consider Websites. In many
cases a few minutes logged on to appropriate sites can give you a lot
of information about competitors – from their own sites, and also from
banks or industry information sites.
Example 2: Planning for product development

Sony is one organization that currently seems to deal well with this
situation. One tactic developed by Akito Morita, when he was chairman
of Sony, was to follow the launch of a new product by establishing
three teams. These had different roles, which were:
» team one: had the task of developing short-term improvements so

that the next, revised, version of the product was better (and kept
up with or ahead of competition);
» team two: looked further ahead and were responsible for medium-
term improvements; they had more time and could aim for more
radical development; and
THE E-DIMENSION 23
» team three: had the task quite simply to make the new product
obsolete by coming up with its replacement.
This kind of approach is clearly designed with an acceptance of the

fast changing world in which Sony operated; it is very different from
the ‘‘watch-and-see,’’ or ‘‘do-we-need-to-change-yet’’ methods of more
traditional companies.
Of course planning must look ahead, and it must be organized in
such a way as to prompt creativity, as is doubtless the motivation for
Sony. But it is also concerned with the fundamentals, with providing
a secure basis for the business, and it is in this area that information
technology has perhaps the most to offer.
THE POWER OF TECHNOLOGY

There are still small businesses where the accounting system is manual
and the planning involves the back of one or more envelopes. Such
may be successful too; planning is primarily a thinking process and this
can be done with no great formality. As such it can benefit any business
and should not be ignored or avoided just because it can seem complex
or time-consuming.
Any degree of complexity risks the simple approach missing things
and, when a more formal approach becomes necessary, technology
can usually help.
Consider first the way in which the major areas of information
technology can help.
» Word-processing: just about the simplest form of IT, this is invaluable

in developing written plans – ideas can be documented, discussed,
challenged, revised, and refined with the process of amendment
being done promptly and the whole process moving along apace.
If planning falters, the problem is likely to be with the people, not
with getting plans into print.
» Data processing: the ability to manipulate data, quickly and precisely,
has never been greater. Whether the necessary detail relates to sales
revenue or profitability, product mix, stock control, accounting
information – whatever, it can be calculated at the touch of a button.
Additional facilities assist other aspects of planning. For example, the
ability to turn a plethora of figures into a neat graph can transform

the ability to communicate effectively around the organization.
» Information storage and retrieval: there is no excuse for not having
the best data to work from. Integrated systems can these days juggle
the information into whatever form is required, store it conveniently
ready for use, and make updating it straightforward (and thus more
likely to occur).
» Integrated systems: crossovers between such things as ordering and
accounting systems are now routine and much duplication has been
removed.
» Interactive systems: more sophisticated perhaps, but diagnostic
systems can increasingly link what has happened to what should
happen – for example by extrapolating results or producing models
of the future.
There are several results that flow from all this change.
» Though initial investment in (computer) equipment is necessary,

running costs are lower – certainly planning tasks are possible where
previously the amount of detailed work ruled out getting to the same
level of precision.
» Information used for planning should not be in doubt; it should be
accurate and up to date.
» Equipment, and staff skills need to be kept up to date if abilities here
are to be maintained.
» Some action is necessary to protect systems; if the computer goes
down in the middle of the planning cycle, it may make real problems.
» The ability to record, source, analyze, and manipulate information
and particularly numbers and statistics is easier and quicker to do
than ever before.
As business methods themselves adopt an increasingly electronic
element, there is a direct link between some new methods, the collec-
tion of data, and thus planning. Take Websites as an example. With, say,
telephone contact, collecting information about how many potential
customers contact you and how they heard of you demands that a
number of things is done. A count needs to be kept, the right questions
asked, and a record kept of the answers. The information collected
needs to be transformed into a form useable and useful for analysis and
THE E-DIMENSION 25
so on. All this can be programmed into the Website. Contact informa-
tion is stored automatically, with people completing information about
themselves as they interact with the site. Later the totality of this sort
of information can simply be printed off.
Overall, modern technology should assist planning. This is what is
said in Online Planning – how to create a better business plan using
the Internet (G.N. Cohen, Career Press):
‘‘The widespread availability of the Internet and World Wide

Web gives you the opportunity to improve your business plan
by accessing current marketing, managerial and financial infor-
mation. Previously, most of this information was available only
through back issues of magazines, public libraries, and govern-
ment archives. Now it can be obtained on personal computers at
home or in the office.’’
Amongst the areas of information this book suggests are available in

this way are:
» statistical, financial, and economic data;

» business plan outlines;
» market research;
» target marketing;
» choosing a franchise;
» selecting a location;
» advertising strategies;
» obtaining bank loans; and
» raising venture capital.
More becomes accessible every day.
FORECASTING
An attempt to predict what the future might hold for the business is
an inherent part of the planning process. This must be thought about
in the right way. On the one hand remember what the physicist Niels
Bohr said:
‘‘ Prediction is always difficult, especially of the future.’’

And of course this is right; forecasts are never one hundred percent
accurate (or if they are, bless your luck and be sure to take the credit
for it!). On the other hand forecasts are useful; and the more accurate
they are the better. Their accuracy depends on:
» the accuracy of the data on which they are based; extrapolating a

figure which is only an estimate anyway is unlikely to give a good
prediction;
» the assumptions that are made which, in turn, reflect the quality of
the thinking and analysis that underpins the planning process; and
» the methods used, especially the statistical methods used.
In terms of technology therefore, if you do not understand, say,

regression analysis (or indeed do not want to do so), then there is
software that does. Somebody inside, or close to, the organization may
need some skills in order to select and deploy the right technology
here, but it can be done – and forecasts can benefit from it. That
said, and without diminishing anything said about forecasting methods,
judgment remains important. It is always a major factor in planning
ahead. Some things have major significance, a company’s whole future
may depend on them – like the vexed questions facing mobile phone
companies (how much of the coming new technology will their
customers actually want?). A decision has to be made about the likely
outcome. Technology changes so fast currently (and there is no sign
of it slowing) that there is always something to be considered; and
however much things are researched personal judgment will always be
part of the process. The box below gives a current example.
YOUR CALL IS IMPORTANT TO US, YOUR CALL

IS . . .
We are all familiar with the automated telephone system, and espe-
cially with the labyrinth of options and queuing that is necessary
to get you through to a real person in so many organizations. Tech-
nology has improved this over time, for example by producing
systems that tell the caller the length of time they will have to wait.
Now the next generation of systems can incorporate a facility to
THE E-DIMENSION 27
respond to people in the queue, record their number, and initiate

a call back to them when they reach the front of the queue; and
tell people what is happening. As a customer this sounds good – I
can think of a few organizations which I would love to see buy
this tomorrow.
But there is a cost. So when does a company plan to adopt such
a system? Act too soon and it may cost more, though customers
will be impressed. Act too late and your customers will go through
a period of feeling you are old-fashioned and uncaring compared
with others. A decision needs to take account of cost, likely take-
up of the system and competitor action . . . and much more. You
can never be sure what the right action is, it will always involve
judgment; and just when you have decided on your reaction to the
latest technological innovation, technology will produce another
change that demands your attention.
TECHNICAL ASSISTANCE
For the smaller business, which may not have specialist staff able to
utilize computer technology that goes beyond whatever others in the
organization regard as the basics, there is help available.
Two sources make the point.
» Banks: many people have a love/hate relationship with the

banks – and with their own. You pay for their services (much too
much you may say!) so you may as well get the best from them. The
most help here is relevant to small and start-up businesses. You may
want to take on board the bank’s experience of business planning
or, more important, you may want to do it their way because their
funding is dependent on their liking your plan – both what it says and
the way it is done. Not only do the major banks provide guidance
here (see Chapter 7 for more about this), they provide specific
planning formats – and do so on disk. You can simply take a disk out
of their pack, slot it into your computer and fill your plan in under
their headings (though of course you can also use it as a starting
point and tailor it to your precise circumstances). For a simple plan

this may be all you need.
» Accountants: an element of the plan links to your accounting system
and similar things apply here. Use the computer system that your
chosen accountant recommends and uses, and you will certainly save
time and money. They can train someone to use it, they can adapt the
standard version just for you and they can help link it to any other
allied systems that you want. Again, technology has changed the way
this can be done. They might well have experience of the slightly
more specialist systems needed and used in our next example.
BEST PRACTICE
An example is always useful to demonstrate the practical potential
of an area that may sound, to some people, like over-engineering. So
here is comment about an element of planning which is towards the
middle of the complexities involved. It is a common situation that
organizations find their business reflects Pareto’s Law (the so-called
80/20 rule) in terms of customers, with something like 80% of revenue,
or profit, coming from maybe 20% or so of the customer list. So far, so
normal; but given the importance of this, planning must reflect it. And
computer processes can make the necessary analysis straightforward.
One aspect of this is the analysis of customer profitability.
Analysis of customer profitability

This has come to be more important as customers have polarized and
the big have got bigger. As customer demands or services offered (or
both) extend, more and more margin is vulnerable to being eaten up
in just getting the business.
Any company that analyzes the costs of obtaining business may
be shocked at just how many things seemingly conspire to reduce
margin. Using an unspecific example that uses headings applicable to
a consumer goods product, these costs might include:
» all the costs of the field sales force (from recruitment to commission);
» account development (which with a large customer may go beyond
the simple sales relationship);
THE E-DIMENSION 29
» discounts (and there may be many different bases for them, e.g. quan-
tity bought or when purchase is made; and some are retrospective);
» any special packaging and packing;
» delivery (maybe to multiple locations, labeling; credit terms (and
beyond));
» returns and damage;
» advertising and promotional support;
» merchandising assistance;
» training of customers’ staff; and
» financing (including special credit terms).
These sorts of cost are all in addition to normal production and

distribution costs. A format can be worked out listing all these costs.
In addition, a further dimension can be added if necessary in terms of
the relative profitability of the sales of different products in a product
range. That done, planning can take into account the true picture,
rather than being misled by the simple large revenue figure against
large customers.
There may still be questions to be asked, about, for example:
» sales approaches and account management; and

» negotiation involved in major business.
And about the individual items of cost.

» Are discounts consistently handled or does clear policy need devising
or modifying?
» Can training continue to be provided for customers’ staff at no cost?
» Do credit terms need review or change? Etc.
If this is beginning to look a little complicated in terms of the amount

of work necessary to come up with all the information, remember
that this is fielded as an example of technology assisting planning.
Although personal input and judgment is necessary in setting things
up – everything here can be computerized. With such a system in
place, once the information is input, the true profitability picture is
available at the touch of a button. This in turn highlights the areas to
question and consideration of areas so flagged can lead to action of
immediate and significant benefit to the business.
Linking back to the last example: once the real costs of various
discounts are realized and totaled, then action can be taken – perhaps
on policy and in negotiating skills – to reduce costs if necessary.
The point here is that the rise of electronic methodology has allowed
matters of such detail to be faced and handled with greater ease than
ever before. Remember too that in this example we are talking about
analyzing and then planning around a small proportion of customers
whose business may contribute 80% of sales and profit.
SUMMARY
Given the need to plan, and the need for planning to be based on sound
information, there are key principles here to be noted. Technology
will doubtless continue to produce new things to wonder about as
planning is done, and some of this may cause difficulties, or at least
uncertainties. More positively, electronic methodology can:
» save time and reduce costs;

» ensure greater accuracy and therefore allow better plans to be
produced; and
» make possible analysis, and therefore consideration, of information
the manipulation of which would be impossible (in terms of time,
cost, or both) done manually.
Planning can usefully utilize every method that improves the quality of
what the plan can do for the business. You might rule out some planning
methodology – the more sophisticated methods, if you like – as being
impossibly costly, time-consuming or just downright over-complicated.
If this occurs with something that could act to help improve results,
then it might be an opportunity lost. In addition, it may be important
for the thoroughness of the work on which plans have been based to
be visible (for example to the bank). Technology offers assistance with
a great deal in this area and helps you create better plans in the process.
02.09.05
The Global Dimension
» Why do business overseas?
» Overseas is different
» Research
» Finding out and making decisions
» Planning how to organize matters
» International options
» Suitable support
» Some invisible exporting
» Key factors necessary to success
» Summary
‘‘The future is out there in the world, and the one place you won’t
find it is the place where most people look for it. It’s not in your
office.’’
Faith Popcorn, American business consultant
You may already view your market as international, or you may aim
to grow and do so one day. If you are to deal with overseas markets,
doing so must be approached as part of your planning. First, consider
the opportunity.
WHY DO BUSINESS OVERSEAS?

There are a variety of reasons.
» Market size: the simple fact that the world is a bigger market than
any one local market, and that particular markets are individually
worthwhile (e.g. the USA takes more than 15% of the UK total
export, valued at more than £200bn).
» Diversity: some markets may be especially well suited for a particular
product or service and thus provide special opportunities.
» Safety: operating in more than one market protects you from the ups
and downs of one (which may be either seasonally or economically
prompted).
» Interest: this may be less ‘‘business-like’’ but is nonetheless important
to the smaller business; perhaps you want to travel or have interna-
tional involvements. So, provided it is financially sensible – why not?
» Utilising under-used capacity: overseas sales can allow production
increases, reduce unit costs, and increase profits.
The reasons that make it right for you need thinking through, appraising
honestly, and then – for the smaller business – it needs linking to plans
for where you will operate, at least initially. The megalomaniac tyrants
in the movies may say and tomorrow the world!, but realistically just
one, or a small number, of territories may need to be selected to keep
things manageable, at least initially.
THE GLOBAL DIMENSION 33
OVERSEAS IS DIFFERENT
It is important not to underestimate the differences of operating away
from your home base. It is not just that people may speak a foreign
language; other factors are involved.
» Distance: with the attendant higher cost and time this involves.
» Contracts: must be honored and may involve the complexities of
international or foreign law.
» Credit: longer payment terms are common and this will directly
affect cash flow and financing.
» Local differences: can mean difficulties caused by everything from
political changes to customs and documentation problems;
» Culture: the way people operate may itself be different in both
small ways and large. Some understanding is necessary if business
relationships are to be built successfully.
» Foreign currency: no one should operate overseas without clear
knowledge of the currency implications.
» Physical distribution: local delivery can be problematic; delivering
half way across the world with attendant insurance, shipping, and
packing implications is not to be undertaken lightly.
The need for specialist knowledge in these kinds of areas is obvious.

Planning must reflect the need to be appropriately set up for overseas
trade as well as the need to be able to operate and sustain it.
RESEARCH
The principles here are the same as with any business venture: fore-
warned is forearmed. You need to do your homework; and much of
this needs to be done market by market.
» Desk research: a great deal of information can be obtained from

publications, Websites, Chambers of Commerce, business libraries,
etc. Such information will include: details of the market (economics,
currency, business practices, currency, etc.); market size; competi-
tion; operating practices (duties, taxes, quotas, etc.); standards to be
met (quality, safety, etc.); potential customers (location, creditwor-
thiness, etc.); distribution (packing, insurance, etc.)
» Field research: you will also need to check things out on the ground,
as it were. Visiting a market costs money (and it is easy to make the
mistake of thinking that it can be done on a rapid in and out basis).
But there is no substitute for talking to people direct and seeing what
things are actually like, whether contacts are potential customers,
competitors or distributors or other potential collaborators.
There are plenty of sources to help this process, both at home and
overseas, but you must be sure that information is up to date, that
advice is genuinely helpful and that promises mean what they say.
Time spent on reconnaissance of all sorts can pay dividends.
The box below begins to suggest some of the questions to which
you must have answers before moving too far or too fast.
FINDING OUT AND MAKING DECISIONS

Ask:
» which of my product/service ranges is suitable for overseas sale?
» which makes a suitable starting point?
» do products/services need adaptation to help (or make possible)
their sale overseas?
» what mandatory regulations or other factors affect the product
(e.g. local voltage for electrical products)?
» is climate a factor (e.g. chocolate has a ‘‘less-likely-to-melt’’
formula in hot countries)?
» is the product name suitable (not being a trademark elsewhere
or rude in a foreign language)?
» how is labeling affected?
» does language pose any other problems?
» will different promotional materials be needed?
» what about servicing (e.g. of machinery)?
» how well can you afford to keep in direct touch with on-territory
visits?
» what can you do from base and what must be done on the
ground?
» how will prices be set (including discounts if you go through

intermediaries like distributors)?
» what other additional costs are involved? (e.g. landing charges
or air freight if things are urgent).
Such a list can only be a starting point. Many questions must be

considered and answered before initiatives can be taken in this
area. In terms of planning, one of the most important things to
do – at the start – is to allow time and resources for this to be done
systematically and thoroughly. And remember that such time may
be invested only to discover that one factor or another means that
a particular market is shown not to be viable.
PLANNING HOW TO ORGANIZE MATTERS

There are a wide variety of ways of becoming involved in international
trade. The potential methods are not mutually exclusive, but what is
best needs careful research and the chosen methods will need action
plans to make them work just as any other part of the business does.
As a starting point it may be worth having one person head up
overseas operations. If time and resources are exclusively dedicated to
it, then it is more likely to succeed. It must not be planned or organized
in any way that allows it to be the ‘‘poor relation.’’ Lack of commitment
is almost always a part of any failure here, and this has its roots in
insubstantial planning.
INTERNATIONAL OPTIONS
To review how your overseas business can be approached you need
to consider the various ways in which international business can be
organized. The following is adapted from the ‘‘Global Dimension’’
section of the ExpressExec volume on Sales Management. This lists
the main options for organizing international operations.
Export marketing
This means selling goods to overseas customers but doing so from a base
in your home market. Essentially this implies physically shipping goods
across the world. This may be done by the organization themselves:

for example, using their own fleet of trucks to ship goods to Europe
or beyond. Its execution may be dependent on the use of shippers,
whether goods are to travel by road, rail, air, or sea. It can be done with
no, or little, support or presence in the final market; but is an area that
demands specialist knowledge of such things as export documentation,
shipping, insurance, credit control, etc. as well as marketing.
Export with a local presence

The form that a local presence takes clearly affects the way a company
operates and thus the nature of the operation involved. Maybe the
company will have certain facilities.
» Their own local office: this will link with the headquarters and may
handle independently a range of things that have to be done locally
(and maybe done differently from the way they are executed at
home); local advertising or service arrangements, for instance.
» An agent or distributor: in other words, a local company that
undertakes the local work, and marketing, on behalf of the prin-
cipal. Such a company may specialize, only selling, say, construction
machinery. Or they may sell a wide range of products, sometimes
across the whole range of industrial and consumer products in
the way large distributors – often called trading houses in some
parts of the world – do. Sometimes such arrangements are exclusive,
meaning they will not sell products for competing manufacturers;
sometimes not. Payment of such entities is often on the basis of
results, but they cannot simply be set up and left to get on with
it. Success is usually in direct proportion to the amount of liaison,
support, and communications that is instigated between the two
parties by the principal.
International marketing
This implies a greater involvement in the overseas territories, everything
from setting up subsidiaries, to joint ventures and, in some businesses,
local manufacture. The complexities here can become considerable,
with components, for example, being sourced from several different
locations around the world, assembled in one or more main centers
and then distributed to and sold in many markets. Such is common, for
instance, in the motor market.
Licensing
Here nothing may be done by the principal on an ongoing basis. They
sell the right – the license – to produce the product to someone else.
The deal may include help with a variety of set up processes (from the
provision of drawings to machinery), but thereafter the local company
runs their own show, and marketing, and payment is on some sort of
‘‘per product produced’’ basis.
There are other methods also: for instance franchising, well known
from the likes of McDonald’s and Holiday Inn, but used with a wide
range of products and services. Management’s job is to select and use
methods appropriately; and maybe to originate new ones. Any option
will only succeed if its implementation and ongoing operation is well
planned.
SUITABLE SUPPORT
Whatever way, or mix of ways, overseas activities are organized in, they
must be well supported. ‘‘Well’’ means appropriately, systematically,
and regularly – and usually it also means personally and often enough
in person. For example, you cannot simply appoint an agent and
leave them to get on with it. They need information, motivation, and
possibly helping, training, even cosseting. Time and effort so spent pays
dividends – and all these processes need planning and orchestrating
with all the other aspects of the business.
Despite the challenges inherent in doing business overseas, even
small businesses can organize an international element to their activities
and make it worthwhile, profitable, and useful in a number of other
ways. An example will illustrate.
Some invisible exporting

A snapshot of the training business undertaken by the author’s company
in South East Asia provides an example, and shows that services – so-
called invisible exports – are also part of the international scene.
This activity is not untypical of small business thinking; it is a mixture

of the practical and of personal taste. First, it reflects the fact that, once a
training course is originated, it is more profitable to conduct it numbers
of times than to endlessly originate others. Secondly, overseas work
and clients adds to the credibility of the business. And I like to travel.
So, why South East Asia? There are several reasons:
» it is an attractive part of the world, for the most part a pleasure to

visit, especially in a miserably wet, cold British November;
» English is widely spoken (though more so in, say, Singapore than in,
say, Thailand);
» English expertise is widely acceptable and, with English education
having left its mark locally, this is certainly true of training; and
» travel and accommodation costs are reasonable.
Business was initiated from face to face meetings, and from small
beginnings – trial courses for some of the management associations – it
grew. In-company work was obtained too, in part via the first contacts
where they acted as referral points. Some projects became regular,
with certain public courses repeating once or twice each year.
Crucial to success was a basis for maintaining the momentum of
sales activity. It proved easier to arrange several visits each year than
one. Three or four visits meant that it was never too long from one until
the next planned visit, discussions on one visit could lead to work on
the next. With several people traveling to some extent the frequency
of presence worked well.
In addition, because public seminars are planned well in advance,
this assisted our ability to quote dates ‘‘when we will be there,’’
giving both a feeling of regular presence and of commitment, and a
practical basis for agreeing in-company work. On larger projects air
travel is funded by clients, especially if they want to guarantee a date,
alternatively numbers of smaller inputs can be arranged with internal
financing of the visit – the total revenue simply needs to be sufficient
to pay for travel and leave an acceptable margin.
KEY FACTORS NECESSARY TO SUCCESS

» Quality of service: courses are seen as being delivered from an
international context so they are not expected to reflect every
nuance of local conditions – but they must reflect key differences

and give evidence of being delivered by someone who knows the
area (as well as being good, practical programs).
» Continuity: it is vital to keep in touch regularly; out of sight is
definitely out of mind without taking steps to maintain memory.
» Hassle reduction: although in fact – not least because of modern
technology – it is not too difficult to keep in touch, visible efforts
to reduce any difficulty and make the relationship work, despite
the distance, are appreciated. So too are helpful actions which are
manifestly more than the minimum necessary.
» Priority: what is also looked for is a commitment; people do like
to feel that the region is a peripheral part of your business and that
any one client is of no great importance – elements of all the other
factors can be used to prevent this view.
» Understanding of their business and way of working: this affects
many things, but one example makes a point. There is a distaste
for guru-type speakers who set up a visit, not intending to come
regularly (though that may not matter) and then, for instance, run
up excessive hotel bills. So, I never charge alcoholic drinks at all,
just as a small part of creating the relationship that I feel works
best. Tolerance of things that create difficulties (like the Malaysian
government’s reluctance to set public holidays for the year until
about five minutes before midnight on 31 December; I exaggerate
only a tad) may also be necessary.
Having analyzed matters in this way, planning must reflect these issues.
Thus, course preparation must allow time to build in some recognition
of local factors (and observation on territory must add new examples).
Beyond that, the manner of liaison must be prompt and efficient, and
time must be planned in amongst other priorities to ensure that the
regularity, reliability, and continuity of communications can flow as
necessary.
Strategies are evolved around a set amount of time for work in the
region. This is linked to the advance selling of public courses, and a
regular series of visits then transpires. The scheduling has to fit both
ends. For example, it is little use trying to schedule courses in Singapore
around Chinese New Year, but August (which can be a low month
in the UK because of holidays) is good. The centers have varied over
time, one new involvement in, say, Jakarta or Borneo leading to further
assignments worked out on the first visit, and with contacts linked back
into the cycle of regular contact.
The fact that there is such an overseas element to the mix of business
activities certainly makes planning a more complex process. But some
aspects of it fit well with the core business and it has produced
interesting assignments and profitable work over many years.
SUMMARY
It is important to think about overseas markets in the right way. The
following are key:
» do your homework and check out the potential and practicality;

» accommodate the differences; do not expect every market to be the
same;
» maintain contact, offer service excellence, and do not try to do
everything at arm’s length – go there;
» do not overreach yourself. Maybe you cannot deal with the whole
world but a few selective markets may produce profitable extra
business; and
» plan carefully and ensure that your plans at home and abroad are
compatible.
02.09.06
The State of the Art
» Mission statements
» The core planning principles
» Compiling the business plan
» The promotional plan
» What do you need to incorporate into your plan?
» Marketing plans
» An element of control
» Summary
‘‘The process of planning may be more important than the plans

that emerge . . . Managers must think about what has happened,
what is happening, and what might happen. Managers must set
goals and get agreement. The goals must be communicated to
everyone. Progress towards the goals must be measured. Correc-
tive action must be taken when goals are not being achieved. Thus
planning turns out to be an intrinsic part of good management.’’
Philip Kotler, American marketing guru
It has been said that planning is only anticipating the inevitable and then
taking the credit for it. In reality it is much more than that, of course,
and the reasons that make it necessary – and useful – are explored
in Chapter 2; changes making it even more relevant are discussed in
Chapter 3. Here we review the art of actually doing it, doing it well, and
making sure it is of practical use to your business. As Philip Kotler is
quoted as saying, above, planning is a key element of the management
job. The effective business plan must recognize and balance:
» the needs of the company;

» the needs of its staff (and other groups such as shareholders);
» the demands of the external environment and the market;
» the activities of competition; and
» the resources and capabilities of the organization.
The starting point should be having a clear overall view of the business.
MISSION STATEMENTS
This now ubiquitous piece of jargon describes what is simply a succinct,
but all embracing, statement about a business and its role, purpose, and
goals. It is not so much having a mission statement that is important,
though it does have considerable merit in communication terms, acting
to enthuse employees, customers, and shareholders if appropriate, with
the feeling that the company knows what it is doing. Rather it is being
able to construct one that is vital. For without thinking through much
about the organization, writing such a description may be impossible,
and if you are not clear in overall terms about what you are trying to
achieve, how can you ever devise a detailed plan?
THE STATE OF THE ART 43
Mission statements are not panaceas, they do act as useful means

to an end. Preparing one is a logical first step in the overall planning
purpose. They can be devalued by being turned into a public relations
statement; this can result in something nice sounding, but less useful
for planning purposes. Specifically, mission statements should:
» define the kind of business the organization is in;

» identify dimensions of business which current plans exclude;
» focus on customers, specific customer categories, and customer
benefits;
» link to benefits to stakeholders (e.g. shareholders, owners, and, not
least, employees); and
» say something about the organization’s culture and values (these
may be an important part of the profile of the firm, as with the Body
Shop’s environmental attitudes).
Note: one important point here: a mission statement is not an internal

statement, it must describe the organization primarily in terms of its
outside involvements with markets and customers.
THE CORE PLANNING PRINCIPLES

Essentially business planning stems from five key questions. These may
seem deceptively simple, but between them they define the process,
illustrate its logic, and dictate what must be done to accomplish it.
1 Where are we now? This needs addressing through research and

analysis – and is sometimes called ‘‘situation analysis.’’
2 Where are we likely to be (at a particular future time)? This is
the situation addressed by forecasting, whether this constitutes an
intelligent guesstimate or a sophisticated system and the likes of
regression analysis.
3 Where do we want to be? This is simply your objectives: what you
want to achieve and by when.
4 How will we get there? This relates specifically to the objectives you
set – and specifies the strategies you will use to get there; it is the
action plan.
5 How will we know whether we are on track and – ulti-
mately – when we have got there? This reflects the needs for
management control and control systems. It also reflects real life: no

plan can be a wholly accurate description of what will happen. It
is designed to be as accurate as possible and if you do achieve it,
then that is good. But it is essentially more like a route map than
a strait-jacket. It must not restrict you to one course of action, but
allow – and help – you to take action to change and fine-tune things
as a period goes by. This is just like a route map. You may plan your
ideal route on that, but it will also help you find alternatives if things
do not go exactly to plan (if your chosen route has road works, for
instance).
Now we address the actual process. It needs a clear, well-defined, and

systematic approach. The next series of headings are therefore sub-
sections of the overall approach, which encapsulates those elements
currently seen as the main issues. This is intended to be a good, practical
guide – and, not least, to demonstrate a manageable approach – hence
the inclusion of simple forms to illustrate how actual compilation of
the plan can be organized.
Note: though core aspects are common, the detail of what any
individual needs to do must be tailored to the situation of their own
organization.
COMPILING THE BUSINESS PLAN

Naturally, writing a plan presumes that those doing the planning know
the markets in which they operate, have clear marketing objectives
and have the power to authorize or recommend action to agreed cost
levels.
All companies should have financial goals expressed in budgets of
revenue and expenditure (see Fig. 6.1) and the first task is to note
them. The financial aspects are referred to again in Chapter 7.
However, since sales and profits can only be made from customers
in the markets we select, the first task must be to translate the financial
objectives into market objectives. These must answer the question,
‘‘What results must be achieved in the market place to produce the
financial objective required?’’
Meaningful answers can only be produced by considering two
interrelated analyses.
FORM 1 FINANCIAL GOALS
Financial Objectives
Revenue Last years’s actual Next year’s plan

(by product)
Total
Costs
Profit
Comments:
Fig. 6.1 Form 1.

FORM 2 STRENGTHS AND WEAKNESSES
Company
Strengths Weaknesses
Action:
Fig. 6.2 Form 2.

» What opportunities and threats will be present?

» What are the strengths and weaknesses of the company?
These together form what is called a SWOT analysis (Streng-

ths/W eaknesses: Opportunities/T hreats). More on this appears in
Chapter 8. This only means taking a hard, objective look inside the
company and out, before setting down more of the plan.
Figs. 6.2 and 6.3, Forms 2 and 3, allow you to make notes under
these two headings.
The list below gives examples of the sort of questions that should
be asked (this appears also, in a different form, in Chapter 8).
Market opportunities and threats

What do we know about our market?
» How large is it (how many potential customers)?
» What do they currently buy?
» How much do they buy (e.g. annual/monthly spend)?
» How often do they buy (i.e. frequency)?
» Who do they buy from?
» How do they find/locate potential suppliers?
What do customers think of the market?

» Why do they buy? And why do they buy the way they do?
» What do they think of the product/service (e.g. good value, over-
priced)?
» What do they think of service from suppliers?
How is the market served competitively?

» Who are our direct/indirect competitors?
» What are their strengths/weaknesses?
What are the trends?

» Is the market growing, contracting, changing, restructuring – and
how is the competition reacting?
Thus, for example, good information about how and why people buy
may allow sales approaches that are better than the competition and
FORM 3 OPPORTUNITIES AND THREATS
Market
Opportunities Threats
Action:
Fig. 6.3 Form 3.

therefore provide an opportunity (which links to an internal strength).

Conversely, the development plans of a competitor may represent a
threat.
Internal strengths and weaknesses

What is our customer base?
» Who do we deal with (by size, location, industry, etc.)?
» What is customer mix (e.g. which category is most important)?
» Are our customer groups increasing/decreasing in size?
» How dependent are we on our largest customer?
Range of products/services
» Does it accurately reflect market needs?
» How does it compare with competitors?
» Is it too narrow/too broad?
Prices/price policy
» How do we set price?
» Are we competitive?
» Are we seen as offering ‘‘value for money?’’
Promotion and selling

» Whom do we communicate with, how often, in what way?
» What do they know/feel about us?
» Are we selling the range?
» Are sales contacts seen as providing good service?
Internal factors
» Does our planning help the business?
» Is individual responsibility well defined?
» Do we set appropriate standards/targets and measure and control to
fine-tune performance?
There is more here than can reliably be kept in mind, and thinking it
through and making some notes that may influence action is valuable.
Fig. 6.4 relates to objectives and strategies.
FORM 4 OBJECTIVES A ND STRATEGIES
Objectives:
Strategies:
Fig. 6.4 Form 4.

Objectives and strategies

The next step is to translate financial goals into marketing objectives
that bear in mind the SWOT analysis, then, with the objectives in mind,
to identify strategies which could be pursued.
The difference between objectives and strategies and the precise
definition involved here is crucial:
» an objective is a desired result in the marketplace; and
» a strategy is a course of action to achieve that result.
Let us take these in turn. Without objectives, it is impossible to focus

and to place any tactical activities in order of priority. Yet the main
options available to us in marketing objectives are limited, perhaps to
six.
1 To increase market share. In a static market this can be done by
‘‘conquest selling’’ or winning business from competitors.
2 To expand existing markets. This objective will focus on selling the
fullest range of products/services to existing customers and markets.
It also presumes very close co-operation between those who are
involved in different aspects of the business.
3 To develop new products/services for existing markets. This
marketing objective can involve simply the revision of existing
products/services or else the introduction of the radically new.
4 To develop new markets for existing products/services. This is more
attractive and lower risk than some options, but is finite; especially
so in some service areas where demand is already met.
5 To develop new products/services in new markets. This is an
example of true diversification. This usually carries the highest risk
of all marketing objectives. Many companies do not even consider
such objectives. Future pressures, however, for the growth necessary
to keep good staff, may force a reassessment.
6 To improve the profitability of existing operations. When growth
opportunities are limited, many companies must in the short term
seek higher returns from higher productivity and greater cost-
effectiveness of their operations.
From the analysis of market opportunities and threats and the internal
assessment of strengths and weaknesses, we can select the marketing
objective(s) which will best achieve the financial goals for the planning
period.
Next, objectives must be linked to strategies, the purpose of the
strategy being to focus effort, co-ordinate action and exploit identified
strengths of the firm. By corollary, the purpose is also to avoid wasting
resources on peripheral and non-productive activities.
Clearly, different objectives will require very different strategies. For
instance, the two might line up as follows.
Table 6.1 Strategy alternatives for marketing objectives.
Marketing objectives Some possible strategy alternatives
To increase share of the existing Marketing segmentation and

market concentration of resources on
selected segments
Developing product/service
applications and range extension
Range of registered firm names for
different segments
To expand existing markets Increasing the frequency of customer
purchase
Increasing product/service usage (in
other applications)
Opening new branches
To develop new markets for existing Expanding the range of segments
products/services currently dealt with
Overseas expansion
To develop new products/services in Diversification by purchase/take-over
new markets Technological extension
Exploitation of corporate resources
and skills
To increase profitability of existing Improving the total product/service
business package offered to each account
Marketing audit and productivity
analysis
Reduction of product/service range
The selection of strategies need not be mutually exclusive. Often a

combination that combines several different strategies can provide an
even stronger effect in marketing plans. However, the greatest danger

at the point of selecting appropriate strategies is that we may be
tempted to adopt too many courses of action. Such a mistake spreads
management too thinly and prevents commitment of maximum effort
to the prime and most important courses of action.
Business planning, and especially that part of it that relates directly
to the market, must then begin with a thorough and creative attempt to
choose the most appropriate focus of the entire firm’s marketing effort.
The determination to concentrate simplifies the tactical marketing
plans which must then follow for the range of products/services to
be offered, the prices to be charged, and the promotional and selling
actions to communicate with the chosen markets.
Products/services and price

Next, using Form 5 (Fig. 6.5), we turn to products/services and price.
There are factors to be considered here, such as product lifecycle
and positioning, which are beyond the scope of this work. However,
we do need something that will prompt ongoing thinking about both.
Products need to be changed and updated and must keep up with the
market; services too.
And price must be watched constantly for profitability and compet-
itiveness; such decisions must not become merely formulae. A small
firm, without long decision-making processes, may be able to steal an
edge of competition with their use of price. (I once saw an independent
petrol station compete very successfully on price with a large group
rival across the road because it took them two minutes to decide what
price to set, whereas their larger rival took two weeks to liaise with
head office before a change could be made.)
With products/services, consider particularly that:
» long established, mature products/services may remain the same in

principle as they were years ago, but they will have to change in
detail to meet changing customer needs;
» new products/services may have to be developed, both to meet new
customer needs and to keep out competitors who see them as a
means of ultimately acquiring more business;
» there may well be opportunities to offer a range of differently priced
variants for different customers and different situations; and
FORM 5 PRODUCTS A ND PRICES
Unchanged products:
Modifications to existing products
Products A ction/timing
New products
Products A ction/timing
Deleted products
Products A ction
Price
Products A ction
Fig. 6.5 Form 5.

» as any harsh economic climate forces corporate customers to seek

productivity improvements in all functions of the business, so they
become more demanding, but the same pressures may also produce
new opportunities.
And with prices, ask yourself the following questions.
» How aware are customers of price – the actual levels and the hourly
rates (e.g. car service)?
» How do customers perceive price? Does, for example, a higher
price imply in their minds higher quality or do they view price as a
commodity factor, with no differentiation between firms?
» Are there ‘‘price barriers’’ in a customer’s mind that we must avoid
in any quotation for business (e.g. £100 or £10,000)?
» How far can we price differentially because of the perceived and
accepted reputation we have?
Price is a critical area of the marketing mix and one that tends to receive
too little analytical attention. Far too often, the decision is simply to
keep in line with the competition or to work essentially on a cost plus
basis. In fact, price should reflect the overall policy at the strategic
level and show creative flexibility at the tactical level, up or down,
depending on the threat or opportunity.
THE PROMOTIONAL PLAN

Successful promotional activity needs to be based on a continuous
process of review and action, and preparing and implementing a
comprehensive promotional strategy demands time, skill, and a system-
atic approach. This is an inherently important part of the plan and also
makes a good example of the detail into which different sections of the
plan must go.
The checklist below makes clear 12 key points which will then
be examined in more detail. They can be considered under five main
sequential stage headings.
» Analyze the market and clearly identify the exact need.

» Ensure the need is real and not imaginary and that support is
necessary.
» Establish that the tactics you intend adopting are likely to be the
most cost-effective.
» Define clear and precise objectives.
» Analyze the tactics available, taking into consideration the key factors
regarding:
» the market;
» the target audience;
» the products/services offered; and
» the firm’s organization/resources.
» Select the mix of tactics to use.
» Check your budget to ensure funds are available.
» Prepare a written operation plan.
» Discuss and agree the operation plan with all concerned and obtain
management decision to proceed.
» Communicate the details of the campaign to those involved in
implementing it and ensure that they fully understand what they
must do and when.
» Implement the campaign, ensuring continuous feedback of necessary
information for monitoring performance.
» Analyze the results, showing exactly what has happened, what
factors affected the results (if any), and how much it cost.
1 Analyze the company’s needs

The prime difficulty in the analytical stage is not so much the iden-
tification of the need, but ensuring that the need is real and not
imaginary.
Identification of a need can come from:
» formal, and informal, research;
» own company investigation;
» professional staff;
» specific market demands; and
» your own observations.
Such analysis is part of the total marketing review (and SWOT). With
promotion, we are primarily concerned to show clearly the inter-
relationship between customer categories (i.e. the kind of firm/organiza-
tion/individual they are), products/services, and business (i.e. new
business – a new client, extension – an existing customer buying more,

etc.). We may well have to plan different strategies to impact specific
areas, for example to create sales to a specific kind of business with
whom we have not had prior contact.
Once a need has been clearly identified, it must be established that
the kind of support you intend using is likely to be the most cost-
effective method of fulfilling that need. Then the planning stage can
commence.
2 Preparing the operation plan

The first stage of any plan must be the quantification of the objectives.
A clear statement is needed of exactly what you want to achieve, stated
as specifically as possible. Listing an objective ‘‘to improve business’’
is just not precise enough. Whereas an objective which states ‘‘to
improve the number of new customers buying Product A by 50% this
year’’ makes it clear to everyone exactly what needs to be done and
above all how success will be measured.
Once the objective is finalized the selection of tactics can take place.
This will depend on a number of factors, including the following.
The market available

» What is its nature?
» Is it buoyant or is it in a low period?
» Is it price-conscious? If so, how?
» What is the competition doing?
» What is the customer profile?
The target audience

» Types of people/organization?
» What are their buying habits?
» What motivates buyers?
» What are their current attitudes to promotion?
The products/services we offer

» What is our current performance?
» What are the strengths and weaknesses?
» What promotional support has it received in the past?

» Capacity available?
» Market profile/image?
» Position in life-cycle (i.e. is it seen as new and interesting or old and
dull)?
Organization of the firm

» What are our current sales and promotional methods?
» Would some tactics cause internal difficulties, e.g. in terms of admin-
istration or resources?
» Is the company involved in any other activity which might affect
what we want to do or detract from it?
Having answered these questions, there may still be a number of

alternative tactics, all of which could be suitable for achieving the
objective. Which tactic to use will depend on which is the most
cost-effective.
Once the decision on tactics has been made, the details should be
formalized into a written operation plan. It is always worth writing this
down, even in a small firm. This should not be a one-off exercise, but
will eventually provide a reference, which can be updated regularly so
that it always sets out the plan for the next period. Planning of this
nature is a ‘‘rolling’’ process. It should include:
» background information as to why the promotional support is neces-

sary;
» the objectives;
» profile of the target audience(s);
» reference to product/service details;
» details of additional support other than that which you are actually
planning, perhaps that being done by associated offices, or various
staff;
» budget details – how much the action is estimated to cost;
» details showing exactly how the plan will be implemented;
» controls, standards, and methods of obtaining results; and
» an action plan or timetable, showing what actions are required, when
they should be carried out, and by whom.
There are a variety of ways of making the decision on the budget more
logical, for example using comparisons with competitors, standard
percentages of revenue and so on.
3 Preparing for implementation

As long as the operation plan has been correctly prepared, the pre-
implementation preparation should be a formality.
This can only be achieved if the operation plan has been discussed
and agreed with everyone concerned with the support activity, well
before any action is required. This can ensure you pick up ideas (or
identify snags) from everyone in the firm, some of whom may surprise
you with their constructive comments.
Do not forget, either, that if everybody feels involved they will more
readily commit themselves to the next stage.
4 Implementation
The success or failure of any promotional activity, providing it has
been thoroughly planned, then rests on how well it is implemented.
The effectiveness of the implementation will depend on how well the
details are communicated around the company and then controlled.
Therefore the details of what is to be done must be communicated in
such a way that they are clearly understood by everyone.
Effective methods of controlling the implementation must be set up
to obtain maximum feedback while promotional activity is running.
This will permit any necessary changes to be made at the earliest
opportunity.
5 The analysis of results

Any promotional campaign can involve a great deal of personnel time
and is often expensive in terms of opportunity cost. This is true
regardless of what is spent on the other aspects.
You therefore want to know how money is being spent and what
achievements are obtained from that expenditure. Examining the
detailed results of every form of promotional activity will show clearly:
» what the situation was prior to the activity;

» what we aimed to achieve (the objective);
» what the situation is after the promotional activity has ended (and
what we have achieved);
» whether there are any factors outside our control which might have
influenced the result, what they were (e.g. competitive activity,
legislation changes), and their effect;
» what has happened to the rest of the market or at least our near
competitors;
» what the effect might have been had we not carried out the promo-
tion; and
» what the budget was and how it was spent.
Careful analysis of what has been achieved is important, not least as

part of the planning and consideration of what to do next, which
should be occurring in a continuing cycle.
No promotional activity plan can be carried out in isolation, partic-
ularly without linked sales follow-up and service along the way. This
must be planned too, so, as an addendum to Form 6 (Fig. 6.6) – the
promotion plan – Form 7 (Fig. 6.7) focuses on sales.
Here we should think about and list who will do what.
» How much prospecting will be done, when, how, by whom?

» Who will follow up leads, to what time-scale?
» What sales targets are necessary?
» What record will be kept?
Planning and implementing a soundly based systematic promotional

plan is not easy, nor is ensuring that all the back-up resources, people,
skills, and systems are geared to converting the initial enthusiasm
created in potential customers into actual business. But it is certainly
necessary and, done successfully, it provides a sound basis for securing
and, more importantly, enlarging your business.
(Note: Most people plan and work with the promotional plan
(Form 6) best if it is in the form of a calendar. This creates an ideal
rolling plan [a perpetual year planner will give you a 12-month view at
all times] and the detail will fill out as time goes by. Thus, in January,
99% of the activity will be listed for, say, January to March, whereas
only half can be listed at that point for the next part of the year. Using
a wall chart with plenty of space and tailoring the headings to your
FORM 6 PROMOTION PLAN
Advertising Promotion Public relations
January
February
March
April
May
June
July
August
September
October
November
December
Fig. 6.6 Form 6.

FORM 7 SALES PLAN
Sales plan
Individual targets
Name Target
Actions/timing
Name Action Timing
Fig. 6.7 Form 7.

business will provide a practical planning and implementation tool and

also shows the relationship in time terms between different activities
at a glance.)
Finally, it may be worth having one last sheet, Form 8 (Fig. 6.8), on
which to note ‘‘other issues.’’
This flags the implication of the rest of the plan for other elements
of the business. Here are some examples.
» Does a sales initiative (involving formal presentations perhaps) neces-

sitate training being done in advance?
» Does recruitment need to build in the new skills required in future?
» Does the organization or structure need changing (e.g. a new job
description)?
» Do systems/controls need adjustment?
As has been mentioned, any – and every significant – activity area may
need its plan as a sub-section of the overall plan. The box below lists
possible areas, but think about what you need before finalizing a plan’s
content.
WHAT DO YOU NEED TO INCORPORATE INTO

YOUR PLAN?
Headings might include (in no particular order):
» management roles, structure, and succession;

» legal matters;
» research and development, and new product launch;
» action to alter relationship with competitors;
» production, quality control, and capital equipment;
» personnel and HR activity;
» training;
» information technology;
» design.
If these, and more, need their own section within a plan, so be it.
Business planning, and all its components, is a broad issue. The fore-
going represents a minimum approach; it should not put you off doing
FORM 8 OTHER ISSUES
Issues:
Action By whom By when
Fig. 6.8 Form 8.

more (and investigating more), but think carefully before omitting the
thought or action implied in any of the areas that are specified. A sound
foundation makes everything in this book more likely to hold up.
Note: there is merit in keeping plans for the continuation of the
existing business and new ventures separate (while, of course, ensuring
that they operate in an integrated fashion); if that is done then new
ventures may justify the addition of further dedicated forms.
MARKETING PLANS
The core of the corporate plan is usually regarded as being the
marketing plan; after all, revenue comes only from outside the organi-
zation, so how markets are addressed is paramount. It is worth having
a checklist style approach to what any individual section of the plan
must do, an overview that specifies the core elements it should contain
and the key issues it should address. As an example, the marketing plan
should usually include:
» a statement of basic assumptions regarding likely future develop-

ments (for example, short/long-term economic, technological and
social changes);
» a review of the past sales (revenue and profit) in as much detail of
individual product, market, geography, and even major customers as
seems useful;
» a statement of the external part of SWOTs – the opportunities and
threats;
» an analysis of the organization’s strengths and weaknesses (the
internal side of SWOTs), in terms of such factors as facilities, human
resources and skills, finances, customer franchise, etc. – also parallel
competitive information is useful here, so far as it can be ascertained;
» a statement of long-term objectives and the strategies for achieving
them;
» a detailed statement of the objectives and strategies for the year
ahead – taking this to whatever level is appropriate, i.e. individual
product, market, and elements of marketing activity;
» a specific action plan scheduling what will be done, by whom, and
the full timing implications of implementation; this needs to deal
separately with all the component parts of marketing utilized (that
is, public relations, advertising and promotion, sales, etc. – and the
detail of each). It is here above all that activity needs to link tightly
to the budgets and financial statements;
» a look ahead at how the plan for the next year will need to pick
up from that for this (and for years beyond that depending on the
organization’s scale of operation); and
» a statement of priorities showing what is key to the plan and how the
organization will capitalize on its opportunities, identify and correct
any weaknesses, etc.
A ELEMENT OF CONTROL
Finally, never forget that one way in which plans assist the running of
the business is with control. Two things are important here.
» Corrective action: if actual results diverge from plans, then controls

need a diagnostic element. It may be necessary to discover why
things are going wrong and to fine-tune activity so that the deviation
is overcome and activity, albeit revised, still produces what the plan
intended.
» Positive feedback: just as important is analysis when things are
proceeding better than planned. Again, questions need asking and if
useful lessons are learned there may be positive lessons to build into
future plans.
SUMMARY
Details notwithstanding, the key issues here can be summarized in just
a few words. A plan must be:
» approached systematically;
» based on sound information; and
» practical and able positively to assist the decision making and action
that drives the business.
02.09.07
In Practice
» What business are we in?
» An accurate basis for information
» Ensuring the process is creative
» The mechanics of brainstorming
» Doing the research
» No magic formula
» Some approaches to deciding the promotional budget
» Satisfying the bankers
» Balancing the books
‘‘If one wants to be successful one must think; one must think until
it hurts. One must worry a problem in one’s mind until it seems
there cannot be another aspect of it that hasn’t been considered.’’
Lord Thomson of Fleet, former chairman of the Thomson
Organization
Business planning is important. You may have accepted that and taken
on board the processes it involves, yet still feel completing it is a
daunting prospect. In this section, therefore, the rationale for business
planning and the principles of doing it are exemplified through a
number of examples. The first reflects the most basic question of all.
CASE: WHAT BUSINESS ARE WE IN?

The thinking demonstrated here is an excellent example of how the
most basic form of planning – just defining the business – can focus the
mind and lead directly to new opportunities and growth.
A company, let us call them Scaffolding R’ Us, leased scaffolding;
they defined their business very simply and directly as the provision
of scaffolding to the building trade. Just rethinking this took them
through three stages, all of which helped their business growth.
» First, they replaced the description building trade with construc-

tion industry. This broadened the market at which they directed
their marketing efforts, taking them into areas selling to companies
constructing, for instance, motorway flyovers, or to oil rigs (where
there is evidently copious amounts of scaffolding) – effectively a
different market and one of potentially larger order size.
» Secondly, they described what they did less in terms of what they did,
more in terms of what that did, in turn, for customers – providing
temporary access and support. This took them into the leisure
market, providing scaffolding networks to support seating at sports
events and parades.
» Thirdly, they refined that description with more confidence, stressing
their skill and expertise in providing temporary access and support.
This, in turn, prompted them to enter export markets. Not erecting
their scaffolding overseas (clearly, shipping heavy steel poles is
IN PRACTICE 69
prohibitively costly), but running training schools for local organi-

zations and their staff in new markets where building was a rapid
growth industry.
This kind of thinking can be very productive, and it is sometimes

surprising how the status quo acts to blind an organization to new
opportunities that only need a fresh look and an open mind to spot.
CASE: AN ACCURATE BASIS FOR INFORMATION

A personnel recollection: I was working with a medium-sized firm
of Chartered Accountants (four offices across one county) and asked
about their ‘‘typical client.’’ The senior partner described a family
business of a certain size and type (the details are unimportant). I asked
what proportion of their clients fitted this category and was told it was
‘‘about two-thirds.’’
Subsequent analysis – simple analysis – showed he had overesti-
mated by twice the number, in fact one-third of their clients fitted
the description. He was both out of date and had not troubled to
check. Of the clients he personally handled, two-thirds did fit the
description and up to a couple of years before, the proportion had
been right across the firm. Times change.
This is not just a matter of getting a few numbers wrong. It matters.
In this firm decisions about marketing and promotion were being
made on the assumption that the higher figure was right – promotional
materials were being designed largely for the wrong kind of people.
Probably their effectiveness suffered as a result.
Moral: planning, and the strategic decisions that follow it, must be
based on accurate information about what is happening.
Now, we turn to more positive things.
CASE: ENSURING THE PROCESS IS CREATIVE

In a European management consultancy firm (with around 100 emplo-
yees) two factors of their planning process are worth noting. Overall
the process is systematic. There are prescribed formats and a planning
cycle is scheduled and agreed well in advance. The dates for all the
meetings this will necessitate are set, together, in advance. They are
regarded as mandatory on those deputed to attend; this avoids the

progressive delay that so easily creeps in when at one meeting the next
is to be scheduled and other commitments necessitate its being set later
rather than sooner. This is a sensible practical point worth noting. The
process results in a written plan, and the use of this in communications
and as a practical ‘‘route map’’ to drive and assist operations during the
year is well proven.
Two factors help, and both rely on sensible decisions having been
made about the make-up of the planning group. The right individuals,
a manageable number of people, and having all aspects of the business
represented are the key guidelines here. Over and above the basics of
getting the job done, creativity is fostered by:
» Brainstorming: early in discussions, before there is a chance to get

locked into simply extending the status quo or there is great pressure
of time with deadlines looming, critical areas are reviewed in a
wholly open-minded way through brainstorming (see box below).
This makes sure that designated areas, especially those demanding
attention or reflecting opportunities, are examined broadly ahead of
discussion being locked into any particular option for action. This
proved invaluable to the adoption of new approaches, and areas of
the business have regularly benefited from this process, with radical
plans kick-starting new ventures or changes acting as a catalyst to
new – and successful – ways of working
The mechanics of brainstorming

Brainstorming is a group activity and can be used to provide
an almost instant burst of idea generation. It needs a prescribed
approach:
» gather people around and explain the objectives;
» explain that there are to be no comments on ideas at this stage;
» allow a little time for thought (singly or, say, in pairs);
» start taking contributions and noting them down (publicly on,
say, a flipchart);
IN PRACTICE 71
» when a good sized list is established, analysis can begin;

» grouping similar ideas together can make the list more manage-
able;
» open-minded discussion can then review the list; and
» identify ideas that can be taken forward.
Such a session must exclude the word ‘‘impossible’’ from the
conversation, at least initially (and especially when used in senses
such as ‘‘It’s impossible, we don’t do things that way’’ (why not?)
or ‘‘It’s impossible, we tried it and it didn’t work’’ (how long ago
and in what form?)).
By avoiding negative or censorious first responses, by allowing
one idea to spark another and variations on a theme to refine a
point (perhaps taking it from wild to practical), you can produce
a genuinely new approach. It can be fun to do, satisfying in
outcome and time-efficient to undertake – and a group who brain-
storms regularly gets better at it, and quicker and more certain
in their production of good, useable ideas. Try it, you might be
surprised at the results; it can creatively augment planning and
what planning produces.
» Challenge: timing is always the bugbear of planning. People are

busy running the organization now, and it can be that thinking
about the future is categorized as a distraction. Here the time-
scale was specifically long to include a stage where draft plans and
ideas could be challenged. People were encouraged to pick holes
in the plan – and did so. Sometimes this led to further discussion,
which then produced much better ideas; sometimes major problems
were avoided. And this was only possible because planning started
sufficiently early and an open-minded attitude amongst all concerned
was carefully fostered.
CASE: DOING THE RESEARCH

To show that even neglecting basic things can throw a spanner in
the works, I refer to an American firm who manufactured and sold
a waterproofing treatment for buildings with flat roofs. They were
successful Stateside and wanted to expand overseas, choosing Europe
and the United Kingdom on little more than the basis that it was
accessible and spoke the same language (well almost!).
Their planning was painstaking, they set out plans which included
moving key executives to and housing them in the UK, investigating
materials and contractors, reviewing and selecting possible sites for
their factory, building the factory, and launching their promotion
just ahead of launching sales operations. They then asked a research
company to do some market research, primarily to see in which areas
of the country sales staff should principally be deployed. The results
were a revelation.
The incidence of flat roofs in the country was found to be only a
small fraction of that Stateside. The market they had assumed was there
was much smaller than they had anticipated. So far down the line in
commitment and investment, they struggled on. But the factory closed
again within a year.
The moral: it is surely clear, planning – and even the most thorough
plan – must always reflect the real situation. If that is not known, then
finding out becomes a priority. Here, if only research had led the way,
a great deal of time and money would have been saved. Perhaps it was
a case of enthusiasm overriding common sense. And it is from America
that the maxim ‘‘Ready, aim, fire! is always the best order in which
to do things’’ comes.
NO MAGIC FORMULA
Planning would perhaps be much easier if there was one set, and
better still one straightforward, way to do everything – but there is not.
Some things are more complicated. They must however be addressed.
Inventing a simple formula that is just easy to apply, rather than
dealing with the facts, is a mistake and leads to plans being wrongly
based. One good example is that of deciding the budget for something
like promotional activity. Various mechanisms suggest themselves, and
indeed are used by some people, but the best way forward needs some
thinking through. Doing so relates decisions to the job to be done and
provides a much more realistic and useful way forward. The box below
illustrates this.
IN PRACTICE 73
SOME APPROACHES FOR DECIDING THE

PROMOTIONAL BUDGET
Percentage of sales
To take a fixed percentage based usually on forecast sales relies
on the questionable assumption that there is always a direct
relationship between promotional expenditure and sales.
It assumes, for example, that if increased sales of 10% are
forecast, a 10% increase in promotional effort will also be required.
This may or may not be realistic and depends on many external
factors. The most traditional and easiest approach, it is probably
the least effective.
Competitive parity approach

This involves spending the same amount as competition, or main-
taining a proportional expenditure of total industry appropriation
or an identical percentage of gross sales revenue compared with
competitive firms. The assumption is that in this way market share
will be maintained. But competition may be aiming at a slightly
different sector, and including competition in the broadest sense
is no help. If we can form a view of competitive/industry activity it
may be useful, but the danger of this approach is that competitors’
spending represents the ‘‘collective wisdom’’ of the industry and
the blind may be leading the blind!
It is important to remember that competitive expenditure
cannot be more than an indication of the budget that should be
established. In terms of strategy, it is entirely possible that expendi-
ture should be considerably greater than that of a competitor – to
drive them out – or perhaps, for other reasons, a lot less.
Remember that no two companies pursue identical objectives
from an identical base line of resources, market standing, etc. and
that it is fallacious to assume that all competitors will spend equal
or proportional amounts of money with exactly the same level of
efficiency.
What can we afford?

This method appears to be based on the premise that if spending
something is right, but we cannot objectively decide the optimum
amount, whatever money is available will do.
We look at:
» what is available after all the other costs have been accounted
for, i.e. premises, staff, selling expenses, etc.;
» the cash situation in the business as a whole; and
» the revenue forecast.
Then in many companies advertising and sales promotion are
left to share out the tail-end of the budget. More expenditure is
considered to be analogous with lower profits; in others, more
expenditure on advertising leads to more sales at marginal cost,
which in turn leads to higher overall profits.
Fixed sum per sales unit

Similar to percentage-of-sales approach, except that a specific
amount per unit (e.g. per holiday sold) is used rather than a
percentage of pound sales value. In this way, money for promo-
tional purposes is not affected by changes in price. This takes an
enlightened view that advertising expenditure is an investment,
not merely a cost.
What have we learned from previous years?

The best predictor for next year’s budget is this year’s.
Are results as we predicted? What relationship has our spending
to competition? What is happening in the market? What effect is it
having and what effect is it likely to have in future? We can do the
following.
» Experiment in a controlled area to see whether we are under-
spending or over-spending. As the chairman of Unilever once
said: ‘‘I know that 50% of our advertising expenditure is wasted,
the trouble is I don’t know what 50% .’’
» Monitor results. This is relatively easy and the results of experi-
ments with different budget levels can then be used in planning
IN PRACTICE 75
what next (though we must always bear in mind that all other
things do not remain equal).
Task method approach

Recognising the weaknesses in other approaches, a more compre-
hensive four-step procedure is possible. Emphasis here is on the
tasks involved in the process already described of constructing a
promotional strategy. The four steps of this method are as follows.
» Analysis. Make an analysis of the marketing situation to uncover

the factual basis for promotional approach. Marketing opportu-
nities and specific marketing targets for strategic development
should also be identified.
» Determine objectives. From the analysis, set clear short- and
long-term promotional objectives for continuity and ‘‘build up’’
of advertising impact and effect.
» Identify the promotional tasks. Determine the promotional
activities required to achieve the marketing and promotional
objectives.
» ‘‘Cost out’’ the promotional tasks. What is the likely cost of each
element in the communications mix and the cost-effectiveness
of each element?
What media are likely to be chosen and what is the target (i.e.
number of advertisements, point of sale material, sales promotions,
direct mail leaflets, etc.)? For example, in advertising, the media
schedule can easily be converted into an advertising budget by
adding space or time costs to the cost of preparing advertising
material. The sales promotional budget is usually determined
by costing out the expenses of preparing and distributing sales
promotion material, etc.
The great advantage of this budgetary approach compared with
others is that it is comprehensive, systematic, and likely to be more
realistic. However, other methods can still be used to provide ‘‘ball-
park’’ estimates, although such methods can produce disparate
answers, e.g.:
» we can afford £10,000;

» the task requires £15,000;
» to match the competition would require £17,500; and
» last year’s spending was £8,500.
The decision then becomes a matter of judgment allowing for our

overall philosophy and objectives.
There is no wholly accurate mathematical or automatic method
of determining the promotional budget. The task method does
provide, if not the easiest, probably the most accurate method of
determining your promotional budget.
SATISFYING THE BANKERS

A major reason for many smaller businesses to take an interest in
business planning is that funding from their bank is dependent on
it. The banks, not unreasonably, prefer to lend money to those who
have given their business some real thought, however good the idea
or opportunity on which it is based. Thus it is worth looking at what
precisely the banks suggest that their clients do.
Many of the banks produce literature about business planning. This
is aimed primarily at start-up businesses, but those further down the
line might well find useful information here too. Apart from general
guidance in the form of text, there is usually information in format
form. Barclays’ planning guidelines are a good example. There is a
certain amount of information geared to new business (date of set
up, etc.) and financial details; beyond that the information that they
suggest is documented is worth noting. The headings used, just slightly
paraphrased (presented in the bank’s material as a form with room to
enter details) are shown below:
» My ultimate goal is:
» I expect to achieve the following (in year 1, 2 and 3):
» My market may be described as (e.g. type, size, location):
» My customers may be described as:
» My product/service is special because: (to which it is suggested that
a comparison is run with main competitors on such factors as price,
IN PRACTICE 77
quality, availability, customers, staff skills, reputation, advertising and

promotion, delivery, location, and after sales service; this list can, of
course, be made specific to your operation)
» My main advantages over competitors are:
» My personal strengths are: (experience, skills, training etc.)
» My promotional and advertising intentions are: (methods and
costs – and reasons why)
» My competitors’ promotional strategy is:
» My pricing strategy is: (suggesting a detailed costing to ensure this is
viable)
» My sales projections are: (listing orders firm and in prospect)
In addition the format includes provision to note details of anticipated

operating costs, assets, credit availability, premises, and other financial
details that will link to the task of producing supporting budgets.
BALANCING THE BOOKS

In the last part of this section we look at the question of finance.
At the end of the day money drives every business profit-making and
non-profit – unless the finances are well organized then the business is
in jeopardy however well it may be doing in other ways. Planning must
incorporate action to create financial certainty within the business.
This stands repeating: without the key financial mechanisms being
addressed no business plan is doing a good job and, at worst, too
little attention here can spell disaster. It is worth remembering too
that a common circumstance of business failure is not simply when the
business is failing to produce revenue from the marketplace, it is when
it is growing and becomes over-stretched.
The following should be planned.
» A good relationship with your bank: that includes negotiating the

terms under which they deal with you. Any overdraft facility needs
to be clear. It can be a particular problem for things to change
suddenly, so build in regular reviews, keep in touch and advise and
consult your bank about any change sooner rather than later. Sharing
your plan with your bank is not just for start-up businesses, it can be
useful to do year by year.
» Sound financial provision: at various times this will include a

number of areas:
» start-up funding
» profit and loss forecast
» cash flow forecast
» managing working capital (i.e. debtors, creditors, stock or work in
progress, cash and/or overdraft)
» financial records
» provision for investment
» tax arrangements and provision (including income tax, National
insurance, Value Added tax, Capital Gains tax, Corporation tax and
eventually perhaps Inheritance tax)
» insurances.
All the above speak for themselves, but one perhaps deserves special
mention. Cash flow. The forecast, monitoring, and record of this on
an ongoing basis is vital. It is one of the key things that banks want
from a new business, one of the first things they look at in reviewing
progress and one of the first that will give you trouble if it goes away.
Plan the cash flow and sleep untroubled at night.
» Budgets and management control systems: you need to link plans,
finances, and budgets. Management controls need to operate accu-
rately and always give you an up to date picture of the state of the
business. It is said of the Ford Motor Company that their corporate
headquarters knows the details of every car sale made world-wide
within 24 hours of its having been secured. If they feel they need to
know that and can organize it that fast, there should be no excuse
for smaller businesses. The budgets need to show revenue on the
one hand and costs on the other.
Note: some costs can be scheduled easily as a result of activity: if
you sell 10 widgets, say, you are going to incur the cost of making
or purchasing them. This is pretty straightforward. Other budgets
may be less easy to find a basis for setting, but one always needs to
be found. An example of this, in context of a promotional budget,
appears earlier in this section.
A sound financial situation is necessary to the success of a business.

It is also necessary to the smooth running of the business, if constant
fire-fighting is necessary just to keep the bailiffs at bay, then time and
IN PRACTICE 79
attention is inevitably taken away from activity that could build and
grow the business.
A FINAL WORD
A personal memory: many years ago, going out as a young salesman
in the days before much in the way of formal training existed, my
sales manager regaled me with various instructions and maxims.
One that I have always remembered, and that certainly came
back to me forcefully when I started my own business, was to
remember – it is not an order until the money is in the bank!
Wise words.
The moral: make sure you plan and organize not only sound
contractual terms and accounting processes, but good credit
management as well. Debt collection can be embarrassing (though
why this should be so is perhaps a mystery), but it needs to be done
and done right. Your plan focuses and directs all your business
and all that it does. If you see business activity as a cycle, perhaps
the last act is paying the revenue into the bank (so that you can
ultimately pay the profit back out!).
02.09.08
Key Concepts and
Thinkers
» Glossary
» The top ten financial terms
» The SWOTs concept
» Boston Grid
» Ansoff Matrix
» GE Matrix
» Strategic approaches
» The scope of planning
‘‘Without strategic vision, a business might struggle to succeed.

The vision is the creative idea, image or imagination about the
business. It is often the idea of the founder of the business or those
responsible for particular projects or initiatives. A vision that is
communicated effectively to others is likely to be shared by all and
be successful.’’
D. Hall, R. Jones, and R. Raffo, business authors
First, in this section, we list some terms that link directly to business
planning and the processes it involves. This is not a long list, though
you may find it is worth checking separately any terminology used
in the budgeting and accounting side of the business that lies close
alongside planning. Below the glossary is a list of 10 key terms; this sets
the scene and certainly here are things that must be understood.
GLOSSARY
Analysis – the purposeful thought and investigation of data that is a
prelude to any properly constituted planning exercise.
Ansoff Matrix – a planning device which focuses on the interrelation-
ship of products and markets in terms of key strategic alternatives
(see more in this chapter).
Audit – a business or marketing audit is simply a review, albeit a
thorough one (perhaps using something like SWOTs), conducted as
a preliminary to business planning. The term ‘‘environmental audit’’
is also used in the concept of audits linked to planning.
Boston Grid – this describes an analysis device originated by the
American consultancy firm Boston Consulting Group. It provides a
particular vision of a company and its products and markets; more
details appear later in this chapter.
Competitive advantage – this is a key feature of what a planned
strategy is designed to achieve; to give you an edge, to put you one
step ahead of your competitors.
Contingency planning – the sensible precaution of anticipating prob-
lems or complications and planning how they could be dealt with.
These may be specific, something expected like a rise in fuel cost,
or more intangible or uncertain.
KEY CONCEPTS AND THINKERS 83
Corporate culture – this is the attitudes, values, beliefs, and attendant

intentions of the organization. A statement of such is usually part of
a mission statement and thus a foundation factor in planning.
Delphi method – popular forecasting technique involving a range of
forecasts being made around an organization, with these then being
centrally aggregated and, if necessary, modified before being looked
at again by individuals. The final forecast thus incorporates the best
estimates made both centrally and in individual sections.
Forecast (sales forecast) – a statistically valid extrapolation of future
sales based on the facts from the past and reasonable assumptions
about conditions in future; forecasts may never be completely accu-
rate, but they provide the only possible guide in a key area of
planning.
GE Matrix – this is a device developed by McKinsey consultants on
behalf of General Electric (it is also sometimes referred to as the
Multifactor Portfolio Model). What it does is to help assess the
relative attractiveness of products in two dimensions: that of the
organization and that of the customer. More details follow.
Hierarchy of plans – this describes the interrelationship of plans,
with the corporate or business plan at the top underpinned by what
may be separate plans for finance, marketing, human resources, and
operations, with further layers consisting of areas such as market
research, communications, etc. and then areas like promotion and
sales.
Markets and market segments – the market is the group of
customers, potential and actual, that a plan is directed at accessing;
market segments are sub-units of a market, groups of people with
similar needs who act in similar ways – segments may well need to
be addressed separately in planning.
Marketing plan – the core element of the business plan that focuses
on the process of bringing in the business.
Mission statement – a succinct general statement of a company’s
beliefs, role, and intentions.
Objectives – these are desired results; they should be specific, measur-
able, and timed, and provide a realistic basis for managing the
business.
PEST analysis – a process of analysis defined as examining the external

environment and the global factors that may affect a business. It can
provide a quick and visual representation of the external pressure
facing a business and threatening the success of its strategy. It divides
its attention across four external influences: political, economic,
social, and technological.
Planning cycle – the time-scale and deadlines involved in putting an
annual business plan together.
Porter’s five forces – describes five factors that affect the potential
performance of any organization, identified by management guru
Michael Porter. They are:
» the nature of competitive activity;

» the threat of new entrants;
» the threat of substitute products;
» the power of suppliers; and
» the power of buyers.
Searching for changes here is very much a part of the planning

process.
Product life cycle – the bell curve that shows the typical progress of
a product from inception and launch, through growth, maturity, and
ultimate decline; product planning needs to take into account the
stage a product is currently at in its cycle (for example aiming to
extend maturity).
Reward – this simple word is used in a planning context to label the
result of a successful strategy.
Situations analysis – the first stage of planning, answering the ques-
tion ‘‘where are we now?’’ through research and analysis.
Strategy – this is the course of action – the route – to be taken in order
to achieve set objectives.
SWOTs – the method of analysis that is a necessary preliminary to
planning. It encapsulates the process by prompting examination
of internal factors (Strengths and Weaknesses) and external factors
(Opportunities and Threats); it is not a magic formula, but neatly
systematizes a process, helping to make it more manageable. An
example of the technique in use appears later in this chapter.
Vision – the broadest statement of what an organization sees itself

doing; it is an integral part of a mission statement and linked to the
organization’s culture.
As an adjunct to this list the box below defines 10 key financial terms.
THE TOP TEN FINANCIAL TERMS

1 Return: net profit (and this usually means profit before tax).
2 Capital employed: the fixed assets in the business and the
working capital.
3 Fixed assets: money locked up in buildings, land, machinery,
equipment, etc.
4 Current assets: money locked up in stock, work in progress,
debtors etc.
5 Current liabilities: this is money in the business but owed in
the short term: creditors, loans, provision for tax, and dividends,
etc.
6 Working capital: current assets minus current liabilities.
7 Fixed liabilities: money within the company on a long-term
basis, includes shareholders’ equity, long-term loans, retained
profits, etc.
8 Margin: sales revenue minus costs of goods sold or services
provided.
9 Balance sheet: the overall statement of the company’s posi-
tion – a snapshot at a particular moment (most often the end
of the financial year). It shows all the sources of money in the
company, that is, fixed assets plus current liabilities, and how it
is deployed, that is, fixed assets plus current assets.
10 Profit and loss account: this is a statement showing the results
of the company’s trading during a particular period; it itemizes
revenue expenditure and thus calculates profit.
There are a number of devices (for want of a better word) that can
assist planning, and the main ones are commented on here in turn.
It is important to realize that while these can be used with some
sophistication, they can also be used in ‘‘cut-down’’ form. Simply,
even to the extent of utilizing just a few estimates and guesses on

the back of an envelope, they can still provide useful guidance. While
you should not oversimplify this sort of thing, and some care is, of
course, necessary, they are devices that many people can utilize to
some degree. The first appears in the form of a well-known acronym.
THE SWOTS CONCEPT

This acronym stands for Strengths and Weaknesses: Opportunities and
Threats. Essentially it only formalizes a common sense view of what
needs to be investigated early in the planning process. It is a classic
means to an end. SWOTs prompts the questions that should sensibly be
asked. These may need investigation before they can be satisfactorily
answered, and the answers may need some analysis before it is clear
what they are telling you.
Diligently addressed, the process ensures that planning can proceed
on the basis of a sound knowledge of the situation within the organi-
zation (SW) and externally (OT). Some answers will be obvious and
well-known. Others will not, and investigation may produce surprises.
Even one key area of information may affect action materially.
If such an analysis has never been done in the past it will take a
moment. On an annual basis it is not a daunting part of the total process
to update the picture. That said, here SWOTs is perhaps best expanded
on through an example of the sort of questions that are used during
the analysis (which can, of course, be applied to products or services).
An organization’s strengths and weaknesses

1 Customer base
1.1 What is our current customer base, by size, by location, by
category?
1.2 How does our disposition of customers (customer mix) compare
with the market mix?
1.3 Are our customers in growth sectors of the market?
1.4 How dependent are we (as a specific measurement) on our
largest customers?
2 Range of services
2.1 How closely does our product range reflect the market’s needs?
2.2 How does our range compare with competitors?
2.3 Are the majority of our areas of business in growth or decline?
2.4 Is the span of our product range too narrow to satisfy our
markets?
2.5 Or is our product range too broad to allow satisfactory manage-
ment of performance across the range?
3 Price structure
3.1 What is the basis of our pricing policy?
3.2 Do our direct and indirect competitors structure in the same
way?
3.3 Are our prices competitive?
3.4 Do our customers perceive our prices as offering ‘‘value for
money’’?
4 Promotional and selling activities
4.1 With which customer groups are we communicating?
4.2 What do they know and feel about us?
4.3 Are we communicating with enough of the ‘‘right’’ people (both
groups and individuals)?
4.4 What means of communication are we using?
4.5 What attitudes exist internally that influence approaches to
promotion and selling?
4.6 Is each person in contact with customers capable of selling the
full range of our range, and doing so equally well for every
element of it?
4.7 Do they possess the necessary knowledge and skill for selling?
5 Planning marketing activity
5.1 Do we have agreed plans for marketing and selling?
5.2 Do the plans state specific activities as well as objectives and
budgets, and are they measurable and able to be monitored?
5.3 Do we have individual/departmental as well as corporate plans?
6 Organizing for marketing
6.1 How is the firm’s marketing activity organized and co-ordinated?
6.2 Are authority and responsibility for each person/activity clearly
defined?
6.3 Are all our people committed to contributing to a marketing

culture that will assist the achievement of commercial success?
7 Control and measurement of marketing
7.1 Have we defined ‘‘success’’ for ourselves and our staff?
7.2 Have we established all the necessary key result areas to measure
that success?
7.3 Do these standards examine marketing as well as publishing
goals and standards?
7.4 Do we measure performance against desired standards and take
appropriate (and prompt) corrective action?
Market opportunities and threats

1 How is the market structured quantitatively?
1.1 How many people/organizations of what type are there in our
market who have a need for our kind of product?
1.2 What are their current buying practices?
1.3 How much do they spend on such items?
1.4 How often do they buy (e.g. annually/monthly)?
1.5 Whom do they buy from currently?
1.6 What do they not buy?
1.7 How do existing and potential buyers access our market and our
kind of products?
2 How is the market structured qualitatively?
2.1 Why do existing and potential customers buy/not buy?
2.2 What do they think of what they buy (e.g. good value/overpriced,
etc.)?
2.3 What do they think of those who supply their current needs
(e.g. too big/too small/helpful/unhelpful)?
3 How is the market served competitively?
3.1 Who are our direct competitors (i.e. other similar companies)?
3.2 Who are our indirect competitors (i.e. ‘‘overlapping’’ companies,
some of which it may be easy to overlook as uncompetitive)?
3.3 What are their strengths and weaknesses (e.g. list-size/staff/
image/pricing/marketing skills/geographic coverage, etc.)?
4 What are the quantitative and qualitative trends?
» market/segment size;
» market/segment requirements;
» market/segment structure;
» market/segment location; and
» competition.
Such an analysis is an invaluable tool in charting a course into the

future. Which areas are most important will vary depending on the
size and type of organization concerned. It may seem to indicate a
daunting task, and indeed it can be a significant one, but once it has
been addressed then it needs updating and carrying forward rather
than necessitating starting again with a blank sheet of paper. This is
part of the concept of what is called a ‘‘rolling’’ plan, one that builds
on the past as it moves on to the next year and beyond (rolling plans
crop up again in Chapter 10).
Practical use of SWOTs

The questions in the example above (the example is adapted from one
in my book Marketing Professional Services, [Kogan Page/Institute of
Directors]) form a starting point. Certainly they are indicative of the
sort of thinking that must be done, and of the sort of information that
needs to be clear to allow effective operation to follow. Every company
needs to tailor their approach – and their specific questions – to this
kind of thinking, both in terms of the nature of the company and the
nature of the markets in which it operates. For example, customers
can be defined very differently – if an organization sells direct or only
to one industry, then the power of the retail chains may not concern
you. But all the specifics of your particular mode of operation must be
accommodated.
Now, some further planning aids.
BOSTON GRID
The Product Portfolio Analysis developed by the Boston Consulting
Group is a much copied strategic tool that reviews a product’s market
growth rate and its market share, presenting a graphic picture that can
assist strategic planning. Fig. 8.1 shows the general concept.
The categories of product used are defined broadly as follows.
Question marks Stars

Market growth rate
Cash cows Dogs
Relative market share
Fig. 8.1 Boston Grid.
» Stars: as the name suggests, these are products that are doing well,
they have a strong market share and good prospects to retain or
grow it.
» Cash cows: these are currently good, they have a substantial market
share now, but their prospects for growth are low; meantime they
can produce significant profit.
» Dogs: these are bad in both respects: they have low market shares
and are also rated low in terms of growth prospects, frequently the
situation in mature markets and candidates to be phased out.
» Problem children (or question marks): products with a low current
market share, with prospects but needing a substantial investment
of time and money to gain real growth; might become either stars or
dogs.
Such a technique is in part just to focus, though alternatively it can

be used with some precision and the graphic picture may have the
members of a product range positioned exactly within their appropriate
square.
ANSOFF MATRIX
This is a planning device that, in context of other thinking, helps decide
strategy. There are only four key strategic marketing options, these are:
» market penetration (selling existing products to existing customers);

» marketing development (selling existing products in new markets);
» product development (developing new products for existing
customers); and
» diversification (developing new products for new customers in new
markets).
Graphically the analysis appears in Fig. 8.2.

These options become more risky as you go down the list. They
are not mutually exclusive. A company may undertake more than one:
a manufacturer of agricultural weed killer might undertake market
development, selling a version of the product more usually sold to
farmers for domestic home and garden use, while at the same time
developing a new chemical product for sale in overseas markets (diver-
sification). One of the advantages of this planning device is to highlight
problem situations in terms of competing resources such as money or
personal time.
GE MATRIX
This useful tool is designed to help portfolio analysis. Developed by
consultants McKinsey for General Electric, it is a flexible tool that allows
a variety of variables to be reviewed in whatever way is appropriate for
an individual organization. The matrix – see Fig. 8.3 below – is a device
to rate one against the other.
» Competitive advantage: how likely customers are to buy a product

in terms of their rating of its price, specification, performance, etc.
Products
Existing New
Market penetration Product development

New
Markets
Market development Diversification

Existing
Fig. 8.2 Ansoff Matrix.
» Product attractiveness: that is, product attractiveness for the organi-

zation in terms of profit potential, revenue generation possibilities,
fit in product range and more.
Several steps are involved in the use of this device.
1 List the characteristics that, for you, together create product attrac-
tiveness.
2 Weight each factor in terms of its relative importance, to create an
overall score of, say, 10.
3 Score each of your products against this picture, say from 1–5.
Competitive advantage
Strong Medium Weak
High
Product attractiveness
Medium Low
Fig. 8.3 GE Matrix.
4 Multiply this score by the weighting factor to produce a total for

each product.
5 Similarly build up a picture of competitive advantage and then log
each product onto the matrix in the appropriate position.
6 Use their positions to influence decisions about what plans for each
product should be.
This is a simplification of a process which is essentially part of the core

marketing element of the plan. There is a good example of it in action
described in the book Marketing Plans with a Winning Edge (Angela
Hatton, Pitman Publishing).
STRATEGIC APPROACHES
Much of the best writing and comment on business planning is on the
core element of marketing planning. Without a doubt the main and
best-known guru here – and one that has a great many sensible things
to say – is Philip Kotler. His seminal work is Marketing Management
(Prentice Hall) and there is much in this about planning and more
about strategy. He has a list of books to his credit, some with a specific
industry focus; his latest book is Kotler on Marketing.
THE SCOPE OF PLANNING

The description ‘‘business plan’’ has an air of substance about it. What
do you plan for? You plan for the business, of course. But it is also
important to consider the level down to which planning is taken, and
the most important aspect of this is planning at the level of individual
customer. Customers are subject to the 80/20 rule (Pareto’s Law,
which, in this context, says that 80% of your revenue and profit is
likely to come from around 20% of your customer list). This means that
large customers are different from smaller ones and that, while small
customers are important, major customers warrant some individual
attention. If planning seems unnecessary at this level consider the
effect of losing one of your own key customers. Size here has no
specific measure, it is what is important to you and thus in a small
business may be what a large company would rate as small.
To illustrate what is worthwhile here, consider two approaches. The
first is designed to flag up opportunities with major customers and help
plan sales strategies to exploit them. The second addresses the topic of
customer profitability.
Strategic planning for an individual customer

Again a matrix approach is useful here, one that plots revenue from
sales of different products alongside ‘‘buying points’’ (these might be
different locations, people or departments across a large organization;
in the training business for example, different courses might be bought
by different departments: sales by sales, business writing by a central
HR department and IT training by a technical department). If the
significant turnover from a big customer is split across the matrix,
gaps may show up. There may be good reason for these, or they may
represent an opportunity and need a change of sales tactics that can be
linked into, and specified, in the plan.
The form in Fig. 8.4 shows how this works.
Markets or buying points

1 2 3 Total
Products
A
Total
Fig. 8.4
Planning to protect and increase customer

profitability
This has come to be more important as customers have polarized and
the big have got bigger. As customer demands or services offered (or
both) extend, more and more margin is vulnerable to being eaten up
in just getting the business.
Any company that analyzes the costs of obtaining business may
be shocked at just how many things seemingly conspire to reduce
margin. These include: all the costs of the sales force (from recruitment
to commission); discounts (and there may be many different bases
for them, e.g. quantity bought or when purchase is made); special

packing, delivery (maybe to multiple locations), labeling, credit terms
(and beyond), advertising and promotional support, merchandising
assistance, training of customers’ staff . . . the list goes on. Unless this
is addressed carefully, profitability may well be in danger. A plan for
‘‘large’’ customers may be useful, but the situation should be measured
quantitatively with individual customers of appropriate size to make a
link to an action plan for any where the figures demand action is taken.
Action: management must plan by addressing the list of possible
‘‘profit diluters’’, the policy involved, and sales staff’s attitudes and
competence. For example, it may be that policy is at fault and profit
being lost because published terms need attention, or that policy is
right, but that sales people are losing out due to poor negotiating skills.
Overall, while there are a variety of techniques to consider, what
you do must be a practical compromise that allows planning to take
place and reflects the needs of your business.
02.09.09
Resources
» Business gurus
» Marketing audit
» Small business agencies
» Banks and accountants
» Summary
‘‘To talk about information is to talk about objectives. A lot of

thought is now being applied throughout the NHS to mission
statements and objectives, from which we should obtain a clearer
view of our information needs. However, objectives will never
stand still, and therefore an information strategy will of necessity
be a continuously developing concept. The process of clarification
will be incremental, and the concept of a definitive strategy will
remain illusory.’’
An extract from a Northern Regional Health Authority report
quoted in The Independent.
Reading the above example of gobbledegook and woolly thinking one

thinks at once that the first overall prerequisite to successful business
planning is clear thinking. Fair enough, now what will assist such
thinking? Here we look at a variety of resources to back up planning
and make it more effective.
This is an area in which the smaller business needs to proceed on a
well informed basis, but with regard to which things need to be kept
manageable.
BUSINESS GURUS
There is a wealth of books on business planning and many of the short
guides (from publishers such as Kogan Page) are more than enough for
many a small business.
For those wanting more the most useful and stimulating writing
probably covers the core element of the marketing plan. The best-
known guru of all, Philip Kotler, is worth reading on this subject.
Indeed it is worth identifying, as a possible useful checklist, the basis
on which he recommends a marketing audit is conducted (see boxed
example, based primarily on his views).
MARKETING AUDIT
The approach here is to pose questions in all these areas, and
planning must be done in light of the answers (indeed planning
may include finding out the answers).
RESOURCES 99
» The macroenvironment: questions here relate to the broad,

external environment: the demographic, economic, natural
(such factors as energy and the environment), technology, polit-
ical, and cultural. So, for example, if your product’s sales are
influenced by lifestyle changes, this will be one of the areas
investigated under the cultural heading.
» The task environment: that is: markets, customers, competitors,
channels (of distribution – the subject of another ExpressExec
title), suppliers, publics (in the public relations sense). Again,
detailed questions may need posing in all these areas.
» Marketing strategy audit: Mission, objectives, strategy,
budgets – a range of questions here will be important, not
least checking that objectives and strategy link appropriately.
» Marketing organization audit: this may seem less important in
a small company than in a large one with many staff, but who
does what (even if everything that must be done is somehow
spread between few people) is important. Questions here can
review formal structures, efficiency levels, flexibility, and cross-
functional communication.
» Marketing systems audit: under this heading comes the impor-
tant matter of information systems, also: the planning system
itself, management control, and such factors as new product
development and launch.
» Productivity audit: here questions address the key area of
profitability and cost-effectiveness.
» Marketing function audit: this questions product, and all the
areas of marketing activity that present it to the market: price,
distribution, advertising and other forms of promotion, and the
sales force.
It may well prove worthwhile to investigate such an overall approach,

even if you pare down the concepts for use in a small business.
Other reading you might find useful

Branch, A.E. (1990) Elements Of Export Marketing and Management,
2nd edn. Chapman and Hall, Great Britain.
Business Link – The Department Of Trade And Industry – Services For

Business. The Essex Business Centre.
Cohen, G.N. (1992) The Business Plan. Gower Publishing. London.
Gorman, R.T. (1999) Online Planning – How to Create a Better Busi-
ness Plan Using the Internet. Career Press, USA.
Hall, D., Jones, R. & Raffo, C. (1999) Business Studies. 2nd edn.
Causeway Press Limited, Lancashire UK. Chapter 2 – Setting Up
In Business – pages 10–17. Chapter 15 – Strategy and Planning
1 – pages 119–126. Chapter 16 – Strategy and Planning 2 – pages
127–133
Hammond, A. (April 1998), Planning For The Future. ‘‘Business
Review’’, 28–9.
Hatton, A. (2000) The Definitive Guide To Marketing Planning. Finan-
cial Times, Prentice Hall. Pearson Education Limited. Great Britain.
Kotler, P. (2000) Marketing Management. International Edition. The
Millennium Edition. Prentice Hall International, USA.
Kotler, P., Armstrong, G., Saunders, J. & Wong, V. (1999) Principles Of
Marketing. 2nd European edn. Prentice Hall Europe.
Lynch, R. (2000) Corporate Strategy. 2nd edn. Prentice Hall. Pearson
Education Limited, UK.
Mullins, L.J. (1996) Management and Organisational Behaviour. 4th
edn. Pitman Publishing, Great Britain.
Richardson, B. & Richardson R. (1992) Business Planning – An App-
roach to Strategic Management. 2nd edn. Pitman Publishing, UK.
Websites
Business (and marketing) planning crops up as a topic in many busi-
ness journals. Pick what suits you (e.g. Management Today for overall
matters, Better Business as a practical guide for small business). Simi-
larly it may be worth adding certain overall business information
Websites to your favorites.
US Small Business Administration:

http://www.sbaonline.sba.gov
Provides a wealth of business planning advice, including business
plan outlines, preparing financial statements, and how to apply for SBA
loans.
RESOURCES 101
IPO Central
http://www.ipocentral.com
Has daily listings of initial public offerings with corresponding links
to EDGAR online. Use this site to compare your business with others
that are going public (selling stock).
Business Week Magazine

http://www.businessweek.com
Publishes a yearly listing of ‘‘hot growth companies’’ with descrip-
tions of their management, growth strategies, and industry positioning.
The question of business planning is a generic topic that is referred to
widely. Moving on, we consider next some more hands-on assistance.
SMALL BUSINESS AGENCIES

» Local authorities: many local authorities, counties, and even quite
small towns, put a good deal of resources behind helping small
business. They may have an eye on local employment and on matters
such as the business rate, but they do it, and many do it well. In my
own county, Essex, the Enterprise section at County Hall offers good
services. This is certainly an area worth many people checking out;
more so if your own business is primarily local in its operation.
» Other agencies: as has been said, it is difficult to give a definitive
picture of the range of ‘‘Business Link-type’’ services that exist. The
point has already been made that these are worth checking out,
essentially in the context of planning they provide.
» Information: much of which is a useful aid to planning and which
includes information about: companies, markets, grants and subsi-
dies, training, standards and patents, published market research,
EU – and other – legislation, export information (opportunities,
agencies, and research).
» Training: some they do themselves, or they can recommend
others.
» Advice: about a range of issues such as information technology,
design, finance and more.
They provide the benefit of experience; that is, you may be faced
with doing, or planning to do, something for the first time (especially
in a business start-up situation) and they have been involved with it

many times. The advice is as good as the advisor, of course, but some
of the people working in this way are well worth knowing.
» Consultants: it may seem like an expensive route to get a consultant
to do your planning for you, and so may be the case (though if it made
the difference between getting the bank’s approval or not, it might
be worthwhile). On the other hand some small firms and individual
consultants can offer very cost-effective approaches. Providing the
role is well defined, and a basis agreed that makes clear what fees are
being incurred, a specific contribution to the process may be very
useful. Consultants can also act as sounding boards (something that
is sometimes lacking in a small business), either on a one-off basis,
or with some continuity, with this process merging somewhat with
the role of a non-executive director (but being simpler to set up and
disband).
» Networking: it is worth stating that help may be available informally.
Just by being in touch with other business people (through local
business clubs, branch level activities of management institutes, etc.)
you may find people who have just been through what you are
trying to do in planning – or other things, of course – and can pass
on advice or warnings.
Another body that may be useful is the Federation of Small Businesses.

They have regional activities and may be contacted centrally at Whittle
Way, Blackpool Business Park, Blackpool, Lancashire FY4 2FE. Tel:
01253 336000. Website: http://www.fsb.org.uk/
BANKS AND ACCOUNTANTS

Both of these have much to offer. In selecting which bank or accoun-
tancy firm to deal with, ancillary matters such as planning (if indeed
they are ancillary) should be part of the selection criteria. They were
mentioned first in Chapter 4, in the context of information technology;
the comments made then are repeated here.
» Banks: many people have a love/hate relationship with the

banks – and with their own. You pay for their services (much too
much you may say!) so you may as well get the best from them. The
most help here is relevant to small and start-up businesses. You may
RESOURCES 103
want to take on board the bank’s experience of business planning

or, more important, you may want to do it their way because their
funding is dependent on their liking your plan – both what it says and
the way it is done. Not only do the major banks provide guidance here
(see Chapter 7 for more about this), they provide specific planning
formats – and do so on disk. You can simply take a disk out of their
pack, slot it into your computer and fill your plan in under their
headings (though of course you can also use it as a starting point and
tailor it to your precise circumstances). For a simple plan this may
be all you need.
» Accountants: an element of the plan links to your accounting system
and similar things apply here. Use the computer system that your
chosen accountant recommends and uses, and you will certainly save
time and money. They can train someone to use it, they can adapt
the standard version just for you and they can help link it to any
other allied systems that you want. Again, technology has changed
the way this can be done. They might well have experience of the
slightly more specialist systems needed by some (e.g. the profitability
analysis of major customers – see Chapter 4).
SUMMARY
Planning, that is the need for planning, should never take you by
surprise. Having accepted the premise that it must be done, and
actually faced with the job of doing it, you need to be:
» well informed and up to date about the facts of your own business;
» clear about what useful sources of information to tap (so as not to
waste time); and
» in a position to proceed to the job in hand well informed in all
respects.
Information really is power in this context; that said, the success of

planning – and just how useful it proves to be – is in a systematic
approach (Chapter 10, next, summarizes the key issues).
02.09.10
Ten Steps to Successful
Business Planning
1 Take some time
2 Formalize the process
3 Create and maintain the necessary database
4 Analyze the information
5 Discuss the possibilities
6 Finalize and agree the plan
7 Draft the written plan
8 Communicate
9 Implement
10 Make it a rolling plan
‘‘I love it when a plan comes together.’’

Catchphrase of Hannibal Smith in the popular, and much
repeated, television show The A Team.
In Chapter 9 I suggested clear thinking as the first overall prerequisite

to successful business planning; and the second? I would put attention
to detail. This latter is especially important in terms of the financial
elements of the plan. Beyond that, in this final chapter the key individual
issues about making business planning successful are encapsulated into
10 approaches. These are listed only in loosely sequential order, but do
make a major contribution to making the planning process work and,
more important, making it practical and useful. It is the cumulative
effect of these being brought to bear together that gives planning
power.
1. TAKE SOME TIME

The reasons why planning is necessary have been explained (starting in
Chapter 2), and here we assume an acceptance of its necessity and its
desirability. Yet, even when that is accepted, one of the prime reasons
why business planning is sometimes ineffective is not so much that it
is done badly, but that it is done superficially – the job is skimped. It
is a clear prerequisite that if planning is to be done and done properly
some time must be committed to it.
Making sure this occurs is the responsibility of senior management,
perhaps, in a small business, of the managing director; but it involves
others too. Each Chapter of the business must be represented. This
may include core functions: marketing, production, and finance. It
may include Chapter heads or those with responsibility for individual
products where a wide product range makes this the way things are
organized. Whoever is to be involved, and clearly, sensible decisions
need to be made about the planning team, all those concerned must
set aside sufficient time to do the process justice.
That said, there are two aspects to the time requirement that need
emphasizing.
» Lead time: first, the planning process must be started sufficiently far
ahead of, and related sensibly to, the financial year of the organization
TEN STEPS TO SUCCESSFUL BUSINESS PLANNING 107
which is central to the planning process. A similar philosophy must

be applied to any subsidiary processes that underpin planning. For
example, data used as a basis for planning must be available in agreed
up to date form as an integral part of the planning cycle.
» Planning time: at the same time, there must be a sufficient amount
of time set aside to undertake the actual job of planning. All the
elements – data collection, analysis, discussion, etc. – take some
time.
It is frustrating if time runs out, or if there proves never to have been a

chance of doing an adequate job before the process even ends. Giving
the process sufficient time makes everything else that is necessary,
possible.
2. FORMALIZE THE PROCESS

Successful planning needs a systematic approach. It needs certain
aspects of the process to be formalized, and what is laid down to be a
mandatory requirement for all those involved. If you are planning for
the first time, then there is more to organize, and discuss, here. Then
some parts of the mechanism can serve for a while thereafter (though
everything ought to be reviewed regularly). Prime areas to formalize
are:
» planning formats: these provide the agenda, the topics that planning
needs to address (see details in Chapter 6); they also give an indication
of the amount of detail into which the plan should go;
» time scales: see number 1 above. It is certainly important that timings
are regarded as mandatory and deadlines are respected – and hit – by
all concerned; and
» written format and style: how matters will be drafted, by whom,
and, if different people produce different segments of the plan, also
who will edit the whole and bring a final, cohesive version together.
The time to change formats and procedures is not in the midst of the
planning cycle, when concentration needs to be on getting the job
completed.
3. CREATE AND MAINTAIN THE NECESSARY

DATABASE
Successful planning is dependent on good information, and examples
of this have been given elsewhere in this work (for instance in Chapters
6 and 7). It is too late to start to try to find information as the planning
process demands it, and it is certainly to late to start to collect it (though
you can plan changes in information collection for the next year).
This needs addressing by management at another time, and systems
need setting up clearly and unequivocally. This includes carefully
briefing people involved down the line in the collection process.
The last thing you want is for poor briefing to come to light when
information is sought – I’m afraid I haven’t kept it up to date – I
didn’t realize it was important.
Review possible information needs. What is:
» essential to decision making: this is what must be available, and

systems need to be in place to guarantee it in whatever form and at
whatever time it is needed;
» desirable: here more compromise may be necessary, balancing what
is needed with the cost in money and time of getting it; and
» useful: here it may not be worth spending more time and effort, but
if information is available (perhaps as a result of other data-collection
processes) then use can be made of it.
As Chapter 4 touched on, this part of the process is very much tied up
with overall company systems and usually with computer systems. One
specific area for care is with computer specialists. Goodness knows we
could not manage without them, but some can be very blinkered in
their thinking. They may understand every ramification of the system,
but can only produce a focus on operations if they understand the
reason why things are being done and how information is to be used.
One example: producing more information might well be possible, but
the extra may or may not be useful – and incorporating it could just
result in an information overload that disguises important facts, not
allowing the wood to be seen for the trees.
4. ANALYZE THE INFORMATION

This heading harps back, in part, to number 1 above. It is one thing to
have information, another to take time to look at what it means. Some
elements of some companies’ plans owe more to an ‘‘automatic pilot’’
style of management than to anything else. Adding on 10% to the sales
target becomes a sort of mantra. There is little thought of a rationale
for this, it may downplay the importance of the information to hand,
and omit analyzing more detailed information in a diagnostic manner.
Planning cannot fly in the face of the facts. If facts dictate one thing,
then divergence from that demands action very specifically designed
to work in a way that creates change. Yes, you might be able to buck
the trend of a downturn in your industry, say, but only by finding a
strategy that addresses the problem.
The whole question of the data needed to facilitate planning, the
collection process needed to capture it, and the analysis and use of
it to assist planning needs addressing clearly – and in advance of the
planning cycle.
Having relevant, sound information as the basis of your planning is
the best possible way to start making the process work.
5. DISCUSS THE POSSIBILITIES

The stage where discussions take place is key and needs viewing and
organizing in the right way. Idea generation and then decision making
are involved. Care needs to be taken in selecting the planning team,
scheduling sessions for them to meet and thrash out the possibilities,
and allowing time for this to happen.
Two heads really can be better than one. A group of people involved
in constructive discussion can bring the planning process to life. The
agenda must be clear and attention given to making discussions.
» Constructive: what happens can literally set the scene for operations
for the year ahead, and often the influence is longer. The idea is to
review everything that might help, to explore ideas, to investigate
practicality, and be both realistic and innovative. Planning must
never be seen as a chore. Of course in a hectic period fitting it
in may present difficulties, but the potential results should make it
interesting, worthwhile – even fun.
» Creative: it is important to be open-minded. If there is a reluctance

even to put ideas on the table then opportunities may be missed.
Processes (such as brainstorming, touched on in Chapter 7) should
be actively deployed to prompt idea generation, and whoever is in
the chair should not act, even inadvertently, to cut things off too
soon.
» Challenge: debate should be open and constructive too. Things
should not be agreed on the nod if there are reservations (or might
be if something was considered more carefully). This goes especially
for assumptions about the status quo. It is too easy to find someone
saying right, I guess we go on doing (so and so), what about . . .
Something that can benefit from change is then perpetuated by
default.
Whatever is decided, having it thoroughly discussed can also act to

make it more acceptable, and make it more likely for people to commit
to it.
6. FINALIZE AND AGREE THE PLAN

Agreement is important too. At some point discussion needs to stop. A
range of possibilities having been discussed, the ‘‘best’’ needs deciding
on. Sometimes – often? – making a decision involves making a compro-
mise within the group, so the decision making process must be clear
and everyone must feel that they can commit to the way ahead. At
the end of the day, democracy is not usually the best way to run a
business. So, once opinion has been sought and discussion has taken
place – someone must decide.
It is important therefore that there is:
» clarity: it must be very clear what is to be done, and nowhere more so

than with targets and financial goals. If the revenue target year on year
is to increase, then it must be clear how this will occur. When will
sales come, month by month? What product mix will be necessary?
All such matters must be spelt out and be clear to all – especially
to whoever may have particular responsibility for implementation;
relating to one specific product or division, perhaps. Similarly with
costs. The links to cash flow and budgets must be clear throughout;
» realism: plans must reflect real life. It is one thing for them to
be challenging, quite another to be seen as impractical or frankly
impossible; and
» commitment: everyone must finally agree – for better or for worse –
that the accepted plan is what will be used; and they must then give
it their best shot.
7. DRAFT THE WRITTEN PLAN

Various papers and drafts may have been put in writing during the
process. Then, finally, a definitive document must be produced. This
need not be long, indeed should not be overlong, but must summarize
key issues (often the same finalizing exercise will produce the budgets).
The writing should be:
» clear: this is no place for gobbledegook. It should also be borne in

mind that a wide range of people around (and outside?) a company
may well read this document and that it should make good sense to
them all, whatever their role or level;
» action based: the document must spell out the clear chapter and
verse of who does what and when: the timing implications must not
be overlooked and they may start before the planned year commences
and stretch beyond its end. This links to control systems.
One overall editor is needed if the plan pulls together contributions

submitted from different people.
8. COMMUNICATE
The plan must be communicated to everyone whose role affects its
achievement (and in some cases this can literally mean everyone
in a smaller company). The need to make it intelligible to all was
mentioned above. It may be, in some circumstances, that two versions
are necessary: one containing all the operational details, a second,
highlighting key issues and summarizing the way ahead, for wider
circulation. Certainly plans should not be completed, then filed away
with a sigh of relief.
Remember the motivational implications here. Staff should find the
plan interesting, challenging (though the realism should be spelt out),
and relevant to them. Making it so should be a priority. Note: bear in

mind too if there are to be any external readers (the bank?); if so, they
too may need a specially adapted version.
9. IMPLEMENT
A simple point perhaps, but plans must be implemented. At worst
the plan is put aside and the operation is managed reactively, perhaps
managed well in a sense, but with no focus on the agreed objectives.
The plan is only useful if it becomes a working document. Budgets
tend to be referred to more than plans, but the two go together. The
purpose of the plan is, above all, to bring direction to the business. If
throughout the year you use the action plan elements and link planned
intentions to control, it will act as a catalyst to action, work for you;
and make achievement of objectives more likely.
The chart in Fig. 10.1 shows the overall link between planning,
implementation, and control.
Planning Implementation Control
Strategic objectives Tactics (short range Variance analysis

(the long range plan) operational plans)
Corrective action/
Available resources Controls fine- tuning
Times Communication Monitor
Fig. 10.1 The link between planning, implementation, and control.
10. MAKE IT A ROLLING PLAN

Finally, link plans together. The concept of the ‘‘rolling plan,’’ one that
deals with the coming year and looks further ahead, makes planning
easier and more useful. In some businesses the time-scale is longer than
others. Five year plans are often mentioned, but two or three years
ahead may be enough for some organizations and others may need
to look further ahead (Japanese management talk of ‘‘hundred year
plans,’’ but that is only for the very few!).
Let us be clear. The concept here means that the plan:
» sets out the detailed plan for the financial year ahead;
» also addresses some detail of the next; and
» adds something about the period further ahead.
The time-scale and amount of detail (which will be less and less into
the future) is something you must decide. In planning terms it means
that at the end of one year, as discussions commence, they in fact
have a first core of information, intention, and ideas on which to build.
Remember too that without this, with a financial year running from,
say, January to December, planning might start in September/October,
at which point plans only exist for a very short time ahead.
A rolling plan simply reflects the realities of life (and the fact that
time does not pause conveniently at the end of an operating period
while you gather your wits and prepare to move on).
Overall, well-conducted deliberations during a planning cycle can
provide a solid foundation for successful operation. A well planned
operation is better at reacting to unpredicted difficulty and change
(and there will always be some of that), and it is better focused and able
to be more purposeful – knowing where it wants to go and working
consciously to get there. Yes, it takes a little time, and some thought,
but it is time well spent.
Plan the work, and work the plan; this old maxim is good advice.
The alternative is a future doing no more than reacting to events.
Frequently Asked
Questions (FAQs)
Q1: Must I have a plan?
A: Chapter 1 sets out a positive answer.
Q2: Will it help my relationship with my bank?

A: Chapter 6 shows how plans can help, and how the bank can help
you plan.
Q3: Must I write it down?

A: Chapter 6 sets out an approach to planning and includes this sort of
detail.
Q4: How does it help explore overseas markets?
A: Chapter 5 investigates the global implications.
Q5: Is it just bureaucratic overengineering?

A: Chapters 6 and 7, among others, take a practical view of what
planning can do to help the business.
Q6: Just what details need to go into the plan?

A: Chapter 6 sets out full details of plan content and coverage.
Q7: Who should see the plan?

A: Again, both Chapters 6 and 7 will help you here.
Q8: Can I use some sort of ready made format for my

plan?
A: This is one of the matters touched on in Chapter 4.
Q9: Will compiling a plan have financial benefits or

just cost money?
A: This is inherent to the plan; see Chapters 1, 6 and 7 in particular.
Q10: How can I plan, but keep the process manage-

able?
A: Chapter 10 sets out and summarizes the key aspects of making the
process work.
Acknowledgments
I can claim no credit for the origination of the unique format of the
series of which this work is part. So thanks are due to those at Capstone
who did so, and for the opportunity they provided for me to play a
small part in so significant and novel a publishing project.
Some of the material in Chapter 6 is adapted from ‘‘The One-hour
Plan’’ which appears as an appendix in my earlier book Marketing on
a Tight Budget (Kogan Page).
I am grateful to Barclays Bank, and to Gail Everson in the Business
Sector Marketing department in particular, for permission to reproduce
a small part of their overall information pack for business start-ups. It
is valuable to be able to show exactly what seems important about
planning from the standpoint of a major bank.
Last, but by no means least, thanks to Emily Smith who acted as
researcher, searching out back-up material and references that saved
me time and helped me meet a tight deadline. She took on the task at
short notice and did a thoughtful, thorough, and useful job; such help
is much appreciated.
Patrick Forsyth
Touchstone Training & Consultancy
28 Saltcote Maltings
Maldon
Essex CM9 4QP

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ENTERPRISE

■ Fast track route to writing and implementing rock-solid

■ Covers key areas of business planning, from understanding why a

■ Includes the low-down on key planning aids such as swot

■ Includes a glossary of key concepts and a comprehensive

First published 2002 by

All rights reserved. No part of this publication may be reproduced, stored in a

This title is also available in print as ISBN 1-84112-315-3

Substantial discounts on bulk quantities of ExpressExec books are available

Frequently Asked Questions (FAQs) 115

The information presented here is directed at those managing, or

a foundation to all aspects of operating success – and that is planning.

THE CAUSES OF FAILURE

» lack of experience and skill in the founder

So, let us end this short introduction by quoting some well-known

The process of running a small/medium sized business was never

A BUSINESS PLAN – DEFINED:

Business planning is, or should be, a response to four specific factors,

THE DYNAMIC BUSINESS ENVIRONMENT

» Economic climate: Financial factors may frequently seem restrictive

In recent years another influence has been added to this list.

» Environmental considerations: The green movement has affected

» Competitive pressures: a broad view needs to be taken of what

the use of other writing instruments (in the UK a recent survey

DRIVING THE BUSINESS

difficulties – a process that can sometimes best be described as panic.

OPERATIONS MUST BE CONTROLLED

» identify opportunities for future profit improvement;

» provide better protection for the future of the business;

Further, if it is to be a practical process, it will help if:

» the approach is an integration of ‘‘bottom up/top down’’ (i.e. it

‘‘There are three kinds of companies: those who make things

matters linked to employment law to the provision of information to

SMALL BUSINESS ASSISTANCE

The conclusion of even momentary thought about this is that plan-

» had a bias for action;

Commentators have not significantly altered these since and they

philosophies that are dependant on planning. Planning, or certainly

» One of the prime reasons for planning is as a response to dynamic

‘‘Rushing gleefully into the information-laden future – a future in

PLANNING THAT REFLECTS FAST CHANGING

Example 1: Competitive intelligence

Example 2: Planning for product development

» team one: had the task of developing short-term improvements so

This kind of approach is clearly designed with an acceptance of the

THE POWER OF TECHNOLOGY

» Word-processing: just about the simplest form of IT, this is invaluable

ability to turn a plethora of figures into a neat graph can transform

» Though initial investment in (computer) equipment is necessary,

‘‘The widespread availability of the Internet and World Wide

Amongst the areas of information this book suggests are available in

» statistical, financial, and economic data;

More becomes accessible every day.

‘‘ Prediction is always difficult, especially of the future.’’

» the accuracy of the data on which they are based; extrapolating a

In terms of technology therefore, if you do not understand, say,

YOUR CALL IS IMPORTANT TO US, YOUR CALL

respond to people in the queue, record their number, and initiate

» Banks: many people have a love/hate relationship with the

point and tailor it to your precise circumstances). For a simple plan

Analysis of customer proﬁtability

These sorts of cost are all in addition to normal production and

» sales approaches and account management; and

And about the individual items of cost.