Business planning process for existing business in a small, emerging organizations

Most of the Small, Emerging firm's business head think that business plan is meant for banks/finance institution to get financial assistance when they start a new business or expanding the existing business.

Actually, in the existing business itself, the business plan needs to be done at least once in a year irrespective of expansion or new plant. This planning process drives your thought process to navigate future opportunities and challenges in a proactive manner.

What is business planning or preparing a master plan is all about?

1. Visualizing the future opportunities/threats
2. Anticipating the risk
3. Proposing counteractions
4. Preparing your organization for next-level growth

How to do business planning for your business?

Inputs required for business plan

• Industry Trend / Changes in the business environment
• Volume forecasting/projection for the next 3 years
• Your organizational goal aspirations on profitability and growth 
• Customer segment or new customer's opportunity 
• 
  

Planning areas

Likely output from business planning Process

• Organization structure / Engagement initiatives
• Financial plan
• Organization development plan
• Initiatives on productivity/cost and quality aspects
• Product portfolio / business model / integration / diversity plan
• Marketing initiatives

This is a collective visualization and introspection process to make your organization to manage any uncertainties as well as to prepare your organization for future!

First, be aware of your pain and constraints

Some time back, I had met the small business owner, and when I asked him, " what is your business pain areas?". He responded that everything is fine. When I asked about his sales turnover, he said almost the same for the last 3 years. When I asked about profitability, he immediately responded, ok as of now, but when I showed him different trend patterns of profitability, he started opened out.

some of the signs as mentioned  by the business head 

• Business profitability had been in a declining trend,
• No sign for new customers order,
• People are not engaged and not listening to his instructions
• Not aware of the monthly performance as he was working based on the customer's pressure and somehow delivering.

Here the key point is as business head, you must know your pain point or constraint in your business which is affecting your delivery performance.

The constraint could be your manufacturing process, flow, equipment downtime, capacity imbalance, material shortage, people non-availability, and so on ... Even at the business level, the constraints could be your marketing or order procurement process or planning process or engineering function, and so on.

You must learn the techniques of identifying the constraints in your business through the following organizational capability.

1.Data collection and Transparency across all levels and functions on plant utilization, People efficiency, and product quality performance 
2.Review  / Communication mechanism at levels about performance 
3.WIP data 
4. The capacity and limitation of each function/process that could be manpower, equipment, working capital  or competency gap 

Developing those systems and process help you to be aware of your constraints 

once you know the constraints very well, you are almost towards the solution since with your expertise, once you the constraints clearly, you could figure out the answers quickly.

The point is, as a business head, you need to sure enough about your pain areas and constraints!

Factors for building winning culture in small, emerging organization

What differentiates the outstanding organization and mediocre organization is how the organization responds to customer's or market's expectation.

The response effectiveness depends on the internal organizational culture.

When the organizational culture is a positive and winning spirit, the response would be quick, reliable, and with cost-effective solutions or product. Whereas if the organization culture is more of victimized culture, then the response would be late, non-reliable and less cost-effective solutions or product. 

How the people are feeling themselves and working towards the customer is all about the indication of winning culture.

Building a winning culture is the time-consuming process, and it is a continuous effort, and predominantly, it is the prime responsibility of the business head than the followers.

Building a winning culture does not have a single factor, and it is a combination of multiple factors, as mentioned below. 

1.Respect
2.Environment 
3.Education
4.Forum for reviews and feedback
5.Communication process
6.Risk-taking and experimentation
7.Process and Standards
8.Recognition and appreciation

Balanced focus on Value addition and Value creation

In most of the small, emerging organizations, the business head is comfortable in dealing with day to day routine management activities and some extent, in improving one side of the business, that is on value addition or effectiveness improvement initiatives. Nothing wrong in developing in operational capabilities, however in this process, the other side of the business, that is on value creation activities get back seat.

Value creation activities include customer pipeline development, new product development, or improving NPD activities, working on strategic initiatives.

As long as the existing customer gives sales order and business also grows along with a few customers, there is no problem for the business head and his organization. The real problem starts when the current customer slows down in their business due to the economic cycle or reduces the share of the business; the business head feels the impact directly in terms of low sales turnover, profitability and cashflow challenges.

It is always prudent and proactiveness to focus equally on value addition and value creation for both survival and sustainable growth of the business.

The balanced approach calls for the mindset to come out of the comfort zone of the business head during good times.

How do you look at your people?

One of the concerns, most of the small, emerging organization  CEO or business head is " high level of attritions."

When we go in-depth of an attrition analysis, we may realize that people are leaving the organization in a short period of joining, say within a year. 

There could be many reasons for high attrition rate like compensation not matching with individual's expectation /potential, growth opportunities in the external world; people are not liking the work culture, safety, lack of learning opportunity. Those are the reasons for the employee or from an individual/employee point of view.

From the management point of view, I can attribute the reason for high attrition is the top leadership's mindset towards PEOPLE.

As a business head or leadership team, how do you look at your people?

Are you looking at them as a commodity or an asset? 

That perspective makes much difference in the way you conduct your business and treat the people.

If you look at the  People as a commodity:

• Your belief will be "there are many more talents in the market."
• If " x " is not there, I will take " Y." 
• You treat people cost as expenses and You do not show interest in developing
• You are reluctant to create a learning environment for people as you think  as expenses

If you look at the people as an asset:

• Your belief will be whoever is working for you is an asset to the organization
• You will look at each one's strength and look for leveraging and start developing further.
• People get respect for their uniqueness.
• You will build the organizational environment for learning where people will get recognized for taking the risk and delivering results. 

The point is "High-level attrition within short duration" is fundamentally the outcome of how people are treated or respected inside the organization for their uniqueness, effort, learning, risk-taking. If many individuals feel there is a scarcity of respect and the internal environment is conducive for basic survival and growth, then they find an alternative.

Business head or leadership responsibility is to ensure the conducive environment, and the intention of creating a climate comes from the belief and how you look at the people.

Hence, change your perspective on how you are looking at people, either a commodity or an asset!

How much can i do?

One of the clarity, most of the small, emerging organizations CEO / Business head should have is " How much sales turnover I can make? 

From a long term perspective, with existing and new market potential, the answer could be that sales turnover is infinite. 

However, realistic clarity is that with given the facility, infrastructure, installed equipment, with existing resources like working capital and people, how much sales turnover I can make?

Why the business head need have clarity?

• The sales turnover potential with given facilities will give the potential to be tapped.
• The clarity will provide the gap in existing performance and potential sale turnover
• Helps to drive the team towards achieving the potential target with conviction

How does the business head estimate the potential?

Data collection and analysis on the following aspects will help you to arrive at your potential capacity. 

1. The capacity of  all machines based on cycle time and existing Utilisation & efficiency
2. Understanding the constraint machine and its capacity  
3. Exact working capital required for an existing volume 
4. Function-wise human resources details and capacity 

The data may vary depends on the product mix and cost structure. Hence, the CEO or Business head must periodically ask this question and needs to understand his real capacity and existing status!

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