Let's talk about developing a business plan for your firm and how that will help to increase your business asset value. Even if you are not an equity owner in the firm, you should want the organization to have a business plan. You should also want to participate in its development in some manner. You'd be surprised at how many benefits practices do not have a formal written business plan. Or maybe you wouldn't. Does your organization have one? Why not? Well perhaps the process is a bit of a mystery to you and your colleagues. Never written a business plan? Don't worry. We've written dozens. Let's de-mystify business planning for you.

So what is the rationale for having a business plan in the first place? Let's address the business planning process and how to take a step-by-step approach to developing a plan. What components or elements should be in a business plan? What are the possible uses for a business plan? And finally, who are the potential audiences and stakeholders with an interest in a business plan?

So, why should you have a written business plan? There is a business adage that says any road will get you there if you don't know where you are going. Consider a business plan a road map; a guide for running your business. It should articulate your business purpose and your mission. Who are your customers? What is your value proposition? How will you grow your business? How much can it realistically grow? Will it still be profitable? And what resources will you need to make it all happen? These are some of the essential questions that need to be answered in a thoughtful, cogent manner. Still feel that it's a bit overwhelming? Don't worry, you can do this.

Perhaps you are asking yourself, why does my business plan need to be written? After all, you have it all in your head and you've gotten this far, right? There are several reasons why it should be written. First, the very discipline of writing out the plan forces you to think through all the issues involved in managing your business and to succinctly articulate why your business matters. A business plan will also cause you to put a stake in the ground about important and sometimes controversial issues like:

Foregoing profits to fund growth
Deciding what additional capabilities and resources are needed
Specializing in one or two industries to gain competitive advantage to the exclusion of general market prospects
Deciding to build/buy/or partner to add a synergistic product line or service
Merging with or acquiring a "friendly" competitor to increase revenues and strengthen the management team

Furthermore, it's easy to forget strategies or goals. It's also easy to rationalize an unplanned change of direction. Putting your plan in writing makes it more definitive or permanent, and it will solidify your commitment to the plan. And it will make it easier to clearly and effectively communicate your plan to internal and external audiences without misinterpretation. If you are contemplating a merger or sale, it will succinctly articulate your overall business direction and its value proposition. Need another reason? Historically, businesses that have a written business plan have a higher success rate.

Business planning is a strategic exercise that will undoubtedly require multiple versions or iterations. The content will need to be refined several times until you are satisfied that you have accurately captured all the key elements. Information gathering to establish the base line for your business is a logical place to start. Knowing where you are is essential when starting a journey. First, gather the key financial metrics for your business, but also pull together information about your marketing positioning, service standards and any service guarantees, client perceptions, etc.

You may be asking, who should you get involved in the process? Obviously, availability and the time commitment involved are factors. On the other hand, how many people do you involve in the planning of the holiday party? Isn't the future of your business at least as important as that? Engage key members of your staff to help you to gather the factual data about the current status of your business. A select group of team members that interact regularly with clients and their employees (business development resources, producers, consultants, account managers) would be likely participants. After all, they are the face of your business to clients and prospects. And they presumably also possess the institutional knowledge regarding client expectations and perceptions. So their input about where your business is today, and perhaps more importantly, where it can be tomorrow, will be very helpful.

Schedule a strategy session where you will collectively discuss the key issues involved in your business. Given that your team may be working remotely, using a video-conference platform will be beneficial. At a minimum, you will want to assure yourself that the discussion and ultimately the plan document accurately articulates the answers to the following questions:

Who does your business serve? Who are your target customers? Who should be interested in your services?
Who are your critical business relationships? (carriers, vendors, advisers, etc)
What is your business? What services and products does it sell? What will your firm sell in the future?
What is your value proposition? What is your competitive advantage?
What have the financial results been for the last three years? What will they be for the next three years?
What strategies will you employ to grow your business? What strategies will you employ to improve profitability? What role will technology play in your business?
When should a prospective client seek your services and counsel? When do your clients need your firm most? When the marketplace changes, as it inevitably will, will your business be ready?
How will your business grow? How much will it grow? How quickly?
How will you recruit the talent that you need?
How does your team define business success? How will your team know when success is achieved?

These questions are a great place to start, and should lead to some lively discussions. Designate a team member to keep notes to capture the commentary and suggestions. Some of the dialogue will be interesting, but may not materially alter how you conduct business in the future. However, you will hear some real "nuggets of knowledge" that can provide breakthrough insights. If you are uncertain about your ability to objectively facilitate such a session, a qualified business adviser may be of assistance.

At the outset, collect a wide range of comments and input. But as the discussion evolves, the potential significance of certain elements should become more pronounced and your thinking should begin to gel. Drill down on the topics that have real impact on business development and customer interaction initiatives. Think broadly and strategically about how to accelerate the growth and profitability of your practice. And keep it real. Focus on what is realistically possible within the time horizon that you are considering. You should begin to develop action plans and goals that are realistic but that cause your organization to "stretch."

What issues should be addressed in your business plan? While there are no right or wrong answers, here are some suggestions that should provoke your thinking and ultimately result in you deciding the financial resources and human capital that will be required to achieve your objectives. Consider these topics for your table of contents and business plan:

Executive summary
Client value proposition
Target markets
Products and services to be offered
Capabilities required
Marketing strategy and positioning
Growth strategies
Competitive advantages
Sales and distribution
Client and customer interaction
Enabling technologies
Operational support
Organization structure
Human capital recruitment and development
Summary of key business relationships (carriers, vendors, service providers, etc)
Corporate structure
Capital structure
Succession planning
Financial goals and projections

Clearly, it can be used as a roadmap with your own management team to run your business. After all, it is intended to help you manage your practice and keep it on track. In addition, it can be referenced when important strategic decisions need to be made, such as coping with the impact the current lock-down will have on open enrollment this year or how to enhance employee engagement when you will not be meeting with employees in person. New initiatives need to be consistent with your stated goals and business strategies. Or if your firm is going to branch out in a new direction, it should be a conscious strategic decision, and should be evaluated against the backdrop of your existing written plan. You will also want to periodically update the document as your business evolves so that it remains current and reflective of how you are conducting business at a point in time.

So what other uses are there for your business plan? Consideration should be given to sharing it with your trusted advisers, including your attorney, accountant, and tax adviser. You will want to have any third parties execute a confidentiality and non-disclosure agreement before you provide them your plan. It will be helpful to them to better understand your business and its plans for the future. As a result, they will be in a better position to provide you solid counsel and will enable them to be more cost-effective in providing their services.

In addition, if your firm is seeking financing, having a written business plan will be essential. Your banker will be interested to see that you have logically developed your business strategy, goals, and financial projections. Considering raising some equity capital? You'll definitely need a business plan to even have a chance. In fact in most types of financial transactions it will be required. Perhaps you are considering a merger with another local firm, or possibly even the sale of your business. A business plan will be critical to explain to a third party how you currently conduct business and what your vision is for the future. And comparing your plan with theirs will enable you to see where any potential synergies may exist.

Excerpts from your plan can also be shared with your entire staff. Shouldn't they have an understanding of what your vision for your business is? Most employees work better when they understand where they are going and how they are going to get there. And what about potential new hires? Certainly you will not share your financial results or any proprietary information; however, your business overview, the markets you serve, the products and services that you offer, etc will be important information for potential recruits to understand. That will enable them to make a more informed career decision, and it will help to eliminate any confusion or misunderstanding right up front. Likewise, excerpts could be provided to carriers and important vendor relationships. That will enable all parties to understand their respective roles in your future success. Help everyone that impacts your business to better understand your business and what their role is. Help them, so that they can more effectively help you.

So carve out a few hours, and think about your business, not just being in business. You plan an itinerary when you travel for business. Productive business meetings follow an agenda planned in advance. You plan where to take an important client or prospect to dinner. Doesn't something as important as your business practice deserve at least as much consideration? Solid business planning is a critical management skill. Develop a well-conceived business plan, and it will provide you with a road map for success. And it will ultimately increase the profitability and asset value of your business. Think of it as the GPS for managing your business in a changing environment. Enjoy the journey!

Instant Insights /

How business planning enhances your asset value

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