7 Types of Plans for Business Owners to Prepare for the Future
Anticipating the future is an integral part of any effective planning process. Running a business without planning and continual reforecasting is like driving your car with the windshield partially obstructed. The only way to continue is to slow down.
Your typical accounting reports are of no help, because they’re like rear-view mirrors, revealing only where you’ve been. To help you prepare for what’s ahead, there are seven planning tools for you to consider. Use one or more of these tools to accelerate your business to the speed of your choice.
Seven Types of Plans
Which of the following seven plans you decide to develop depends on the size, complexity, and nature of your business.
The Strategic Plan
Your strategic plan covers the company’s vision and long-term direction, and the evolution of the market. It identifies multiple opportunities and how the company will go about pursuing them.
The Business Plan
Your business plan describes the direction, market, and resources of your business and how your goals for the year will be achieved. It includes action steps.
The Marketing Plan
Your marketing plan identifies how your company will position itself in its markets and gain market share over time. It spells out the specifics of growth and market penetration, identifying how prospective customers will be identified, targeted, and reached.
The Sales Plan
Your sales plan sets out the strategies and tactics you’ll use to grow the company’s revenues profitably. It focuses on how the company will convert prospects to active customers.
The Succession Plan
Your succession plan addresses how new managers will move into positions of leadership. It identifies whether you have candidates inside the company who can lead the organization into the future or if you’ll need to attract outside talent. Inasmuch as this plan provides a blueprint for if, how, and when the children of owners enter the business, it is especially critical for founder-owners and family-owned businesses.
The Estate Plan
For privately held companies, your estate plan provides strategies for protecting and keeping the hard-earned wealth built in the company using tax, trust, and
insurance strategies. A commonly accepted estimate from a study by Tobias Moskowitz and Annette Vissing-Jorgensen indicates that the average business owner has more than 80 percent of their assets tied up in the value of their business. Yet two-thirds of business owners don’t have an estate plan or a succession plan.
The Exit Plan
Your exit plan identifies how ownership of the business will transition in the future. It’s wise to remember the saying, “All businesses transition eventually, whether by default or by design.” Decisions include to whom the business will transition: children, employees, a competitor, or investors. There are many ways to create a transition plan, and each choice requires different planning steps in the years before the transition. Each plan can be documented on a single page and laid out in a similar manner as the One-Page Business Plan.
A Plan is Only as Good as its Execution
Plans are a good first step, but they’re of little value unless the key players implement them. You must create an exciting, living, breathing plan that’s relevant for everyone in your organization. Make sure to keep it alive and flexible – revisiting it on a regular basis. You’ll thank yourself later.