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The development of a company involves strategic, commercial, and financial plans to clarify objectives and means. A development plan typically covers 3 to 5 years, a marketing plan 2 years, and a budget one year. Planning is essential because it engages your stakeholders in the vision, definition of objectives and implementation of your strategy. A coherent business plan, a precise marketing plan, and a well-justified budget will clarify your objectives and address your main strategic, commercial, financial, and organizational challenges.
E. Krieger
The development of a company involves strategic plans, financial forecasts, and action plans aimed at clarifying your objectives and the means required. The horizons of these plans differ, from the most distant to the closest. Thus, a development plan typically spans 3 to 5 years, while a marketing plan extends over two years and a budget over one year.
Dwight Eisenhower summed up the virtues and limits of the planning process with the aphorism: « Plans are nothing, planning is everything. » Indeed, a plan is nothing (or so little) in itself, as it will almost never unfold as expected. The planning process, on the other hand, is essential because it involves several stakeholders in a reflection that helps to clarify objectives, share a vision, and agree on strategy and action plans.
A coherent business plan defined by an entrepreneur alone would have little chance of being implemented effectively without the buy-in of the entire team. The same goes for a budget, which allocates scarce resources among various departments that must cooperate to achieve the set objectives.
The Business Plan: A Tool for Strategic and Financial Planning
The business plan, or development plan, summarizes your business project in about twenty pages. Its main components are as follows:
- General presentation of the company and its mission.
- Market analysis and growth opportunities.
- Presentation of the company’s expertise and product and/or service offerings.
- Analysis of your competition and competitive advantages.
- Objectives, targets, and commercial strategy.
- Presentation of the organization and the management.
- Key development stages and a provisional schedule.
- Financial forecasts and required funding.
This framework is purely indicative: each business project is unique, and the business plan of a biotechnology startup will emphasize very different elements than that of a software publisher.
Strictly speaking, financial forecasts are the numerical translation of the business plan. The process of formulating your forecast accounts can be done as follows:
- Segment your offer and present your sales and direct cost forecasts.
- Anticipate the skills and profiles required: workforce, salaries, and payroll.
- Evaluate the investments (Capex) required for the development of your company.
- Plan for required external expenses (Opex), particularly promotional costs.
- Estimate the working capital requirements (WCR): inventory levels and payment terms for customers and suppliers.
- Balance the financing plan with appropriate resources to cover any needs.
The Marketing Plan: Focusing on Commercial Objectives and Means
The marketing plan schedules the main actions planned to achieve your commercial objectives. The main steps in developing the marketing plan are as follows:
- Segmentation, definition of objectives, and means for each segment: priority segments; size and growth of each segment; setting revenue targets for a defined territory and for each offer; specifying the required marketing resources, commercial staff, and corresponding costs.
- Specification of commercial and marketing resources: website; product sheets; demo tools, animations, and other content; mailings and emailing; specific events; outsourced prospecting, operational marketing actions; trade shows and conferences; public relations and press relations; search engine optimization, advertising, and media buying…
- Synthesis of sales, costs, and margins and scheduling of actions over time: total marketing and commercial expenses of the company; overall margin forecasts on commercial and direct costs; scheduling of the main commercial and marketing actions.
The Budget: Revenue and Expense Forecasts for Next Year
The budget, strictly speaking, is an accounting document that presents your revenue and expense forecasts. The process of developing a budget helps answer several essential questions:
- What is your market and what are the priority segments?
- Which offer(s) support the growth of your company?
- What are your commercial objectives, in volume, value, and market share?
- What are the direct costs and required workforce?
- What investments are necessary for the year considered?
- What is the amount of budgeted external expenses?
Clarify Your Strategic and Financial Dilemmas!
These questions are far from exhaustive, as the development of a company is as much a matter of choices as it is of market and competition analysis. The value of a budget, a marketing plan, and the multi-year forecasts of the business plan is to allow for debate on many commercial, strategic, and financial issues. For example:
- What is your mode of international development?
- Is your expected profitability comparable to industry leaders?
- What are the opportunities and threats related to the current economic situation?
- Can we proceed with acquisitions to grow faster?
- What talents need to be recruited?
- What are the synergies between existing activities?
- What is the strategic and financial value of the company in the long term?
We return to Dwight Eisenhower’s aphorism: « Plans are nothing, planning is everything. » Such an exercise provides a unique opportunity to step back and ask the right questions about your company’s development.
Almost everything revolves around the value or values created and shared by your company: for your customers, your team, and your shareholders.
Good luck with the preparation of your forecast documents and, more generally, with the development of your company!
