The business plan is an integrated definition of what will be accomplished in the upcoming year and the means by which it will be accomplished. Goals and objectives are set in the areas of marketing, sales and operations as well as the projected cost of achieving them. Finally a budget is created. The marketing plan, business plan and budget are interdependent and it may take several iterations to arrive at the final product. For example when the planning is complete and the budget is created it may be necessary to go back and change the marketing plan. Following are steps to building an annual business plan:
- Set Business Goals and Objectives – Business goals should be measureable and achievable. In order to be measureable they must be specific. For example stating that a goal is to improve labor utilization is not specific. Stating that a goal is to improve labor utilization by 2 percent is specific and measureable. Objectives should be stated in the areas of marketing, sales and operations.
- Create a Marketing Plan – The marketing plan is considered part of the overall business plan but due to the many areas it can address it is built separately. The marketing plan should identify specific marketing goals, the means by which they’ll be achieved and the budget dollars necessary to accomplish them.
- Identify Actions to Achieve Sales Goals – Sales goals such as improving the quote capture rate or the recommendation capture rate should be stated in specific percentages. The means of accomplishing them can span a wide array of options such as training, sales process modification, customer and employee incentives and many more. The objective of the business planning process is to identify the actions in this area that will have the most impact and fit within budget constraints.
- Identify Actions to Achieve Operational Goals – Operational goals should be geared toward their impact on the bottom line. As all business goals they should be measureable and achievable. For example setting goals of achieving a 2 percent improvement in the areas of labor utilization and efficiency are measureable and achievable. The means by which stated operational goals will be achieved and their cost should be stated and incorporated into the business plan.
- Build the Business Plan – A typical business plan format contains sections for marketing, sales and operations. The objectives and the means to achieve and measure them should be stated in narrative form. If the business plan is many pages sometimes an executive summary is included.
- Create an Annual Budget – Once the business plan is complete a budget can be created. The budget can be built in a spreadsheet and contain income and expense figures by month.