Business Planning and Modeling

Ah business planning. A real drag—an ugly chore—and a huge pain in the neck.

If you feel this way then you’re right at home with most American business people. Why plan when you already have a successful, thriving company?

Here’s a question for you. Would you ever get on an airplane if you knew the pilots didn’t file a flight plan? I didn’t think so.

Remember Bill Walsh—the great Stanford coach who later led the SF 49ers to a number of Super Bowls? Bill became famous for scripting a flow chart of the first 20 offensive plays he planned to run. His teams practiced and rehearsed these 20 plays hundreds of times each week before they played for real on Sundays. Were these plays his business plans? Yes, of course they were.

Do you run your company the same way as Walsh ran his business? Honestly, it’s not that hard to do. A business plan should be short in length and big in content. It should flow logically and simply. The plan can be as short as seven or eight pages including financial forecasts which are mandatory for a sensible plan. Click here for the major headings that need to go into your plan.

The plan must be a team effort. Don’t sit down by yourself or with just one of your business colleagues to create a plan. Bring your team into the creating of the plan. People will buy in virtually 100% if they believe that they were an integral part of the process. Be sure your plan is written!

You are also deciding what kind of business model you want to create for your company. A business model describes—in the simplest explanation what your business looks like. Here’s a couple of parallel but different examples:

As I write this piece Ford Motor company has announced the layoffs of thousands of its employees and the closing of something like 15 plants. Bill Ford was quoted as saying this—“We cannot afford to play the game the old way. Our product plans for too long were defined by our capacity.” Well, for heavens sake where has the management been while the foreign market killed Ford? The model Mr. Ford is referencing now has been dead for some time…and his company is just recognizing the problems? To be sure the unions have had a hand in the downfall of the company; impossible-to-pay-for pension plans have hurt, but the real culprits are the Board and the senior managers. They kept making cars a declining number of people wanted to buy.

On the other hand, Honda, Nissan and Toyota began feasting on Ford and also on General Motors. And the food served up by the two largest domestic car makers continued to be tastier and tastier. How about this for a really difficult concept to understand—the foreign car manufacturers presented cars the American car buyers wanted to buy! So the core business models created by the overseas car executives i.e. scripted plays—thanks Bill Walsh—gave them essentially complete open fields with no defensive people in the way to block their advances in scoring. But this scoring resulted in much more than seven point touchdowns— huge market share improvements worth trillions of dollars killed GM and Ford. Who was on top of its business model and who was asleep?

Here’s a link to http://www.wikipedia.com. Its site provides a good basic understanding of modeling. Please don’t ignore the importance of creating one for company. Then go do your plan so that it dovetails into your model