The 4 Pillars of a Strong Business Plan

Why Have a Business Plan?

To those that do not own a business, the notion of businesses operating without a plan may seem ridiculous. However, many businesses operate without a written plan or have such weak or misaligned business plans that they do not follow or revisit them regularly — highlighting the need for a strong business plan. In fact, only 33% of small businesses have a written business plan (Wells Fargo, 2015 Survey).

So, why even have a business plan? Here are a few eye-opening statistics:

95% of employees do not understand their company’s strategy (Harvard Business Review).
71% of employees cannot recognize their own company’s strategy in a multiple-choice question (Harvard Business Review).
Companies with written business plans grow 30% faster than those without (Journal of Management Studies).

Entrepreneurs have an image in their mind of what success looks like, but if they do not effectively translate that vision into a more formalized plan, their employees will not be aligned with the entrepreneur’s ambitions. This misalignment will cause confusion and ultimately be a hamper to business growth.

Simply put, entrepreneurs need a roadmap to rally their troops and make their dreams a reality, and this road map is a strategic business plan.

1) Casting the Vision

Articulating a clarity or purpose is one of the most important strategic business planning exercises you can pursue. Think of your business as a ship – the vessel that will ensure you arrive at your destination. The ship’s crew are your employees, and you are the captain. Your ultimate destination is your vision for the business.

Without a destination, your ship will drift aimlessly in the ocean, vulnerable to waves and storms. Without setting a course, what use would a map be? If the captain barked out orders, the shipmates may or may not understand the reasoning behind the decisions.

Don’t leave your business aimless with a confused crew – cast the vision! Only you as the entrepreneur can accurately paint the picture of where the business should be headed. And if you don’t, others will decide where it is headed for you—further emphasizing why a strong business plan is essential for long-term success.

Here are some resources to consider utilizing and deliverables to include in your written business plan:

Mission Statement: This is like your business’s battle cry; it tells everyone what you’re here to do and who you’re doing it for. It’s all about the now—what you stand for and why you get up in the morning.
Vision Statement: This is your dream scenario—where you see your company years down the line. It’s a beacon that keeps you inspired and striving forward, no matter the bumps along the way.
Long-term Vision Narrative: Think of this as the storybook version of your vision statement. It’s a detailed tale that describes what the future looks like for your business, giving everyone – especially your employees – something vivid and compelling to aim for.
Future Organizational Chart: This is a sneak peek at the future of who’s going to manage what in your company. It helps you plan out the roles you need to fill and the structure you’ll need to support your growing business, and it also helps team members see the bigger picture. Sometimes it might be hard to see the vision when viewing the business through its current perspective, so helping others see what the team may look like is beneficial.

2) Assessing Your Competitive Advantage

A strong business plan helps sharpen your competitive edge. Consider two lumberjacks: one with a blunt axe who worked tirelessly yet slowly, and another who took time to sharpen his axe, completing his work more efficiently. The sharper axe represents a business’s competitive advantage — making tasks easier and outcomes more successful. Like the lumberjack with the sharpest axe, an entrepreneur should identify what differentiates their business from competitors, answering the question “what does my business do best that no one else does?”

The competitive advantage of a business may not be obvious, and it oftentimes may not be something the business is focused on or even does to the best of their ability at the time. When honed, this advantage can propel businesses beyond their competitors. Once identified, the sharpening process involves clearly articulating what the advantage is and formulating a plan to further improve upon the competitive advantage.

Here are some exercises to including in your strategic planning process:

SWOT – ROCS Analysis:
- SWOT breaks down into Strengths, Weaknesses, Opportunities, and Threats. It’s a crucial tool for seeing exactly where your business stands, pinpointing what you excel at, identifying areas that need improvement, and spotting external factors that could impact your success.
- ROCS stands for Reinforce Strengths, Overcome Weaknesses, Capitalize on Opportunities, and Strategize against Threats. It’s like taking your SWOT analysis to the next level by actively planning how to use your strengths, improve weaknesses, seize chances, and defend against potential dangers.

Image source: The ClientWise SWOT ANALYSIS and ROCS DECISIONS™

Competitor Analysis: It’s about figuring out who your rivals are, what they’re doing right or wrong, and how you can outsmart them. Dive deep into understanding your competitors’ strategies, market positions, strengths, and weaknesses to better carve out your own niche or discover potential advantages you can exploit.

3) Prioritizing Critical Gaps

We all have things we want to work on, but there are typically only a few things we should be working on. Prioritizing critical gaps is akin to the concept of triage care in an emergency room. These are things that need to be addressed quickly so the rest of a business’ plans can fall into place. Prioritizing critical gaps will ultimately inform business goals and objectives, with the aim to help businesses avoid chasing their tails on projects and goals that are not critical now. The critical gap is the next most important thing on the spectrum of constant improvement.

There are several ways to aid in determining where your critical gaps might be. First and foremost, the SWOT – ROCS and Competitor Analysis should uncover several key issues a business can begin working on.

Once you’ve determined gaps, you can formulate improvement opportunities that can eventually lead to goal setting.

Here are additional exercises to help discover your critical gaps:

Keep-Stop-Start Exercise: This is a practical way to review your current activities and make decisions about them. You list what you should keep doing because it works, what you need to stop because it doesn’t, and what you should start doing to improve or innovate. It’s like spring cleaning for your business strategies, helping you clear out the clutter and focus on actions that truly enhance your operations.
Eisenhower Matrix: Named after President Dwight D. Eisenhower, this tool helps you sort tasks by urgency and importance into a four-quadrant box. It’s great for prioritizing what you need to do now, schedule for later, delegate, or not do at all. Use it to ensure you’re always working on what matters most, maintaining efficiency with your prioritization.

4) Formulating Goals & Objectives for a Strong Business Plan

A business plan needs to do more than just lay out information; it’s got to get things done. That’s where clearly defined goals and objectives come in. They’re crucial for benchmarking progress and keeping everyone accountable. Think of running a business like going on a long road trip—your goals and objectives are the mile markers on your map, making sure you’re still on the right path.

When it comes to setting these goals, there’s a ton of advice out there. But at BentOak Capital, we prefer two particular systems that we’ve found to be effective:

The OKR System – Objectives & Key Results: Big names like Google and Intel use this one. It’s all about setting big goals (Objectives) and then tracking your success with specific, measurable milestones (Key Results). It’s a straightforward way to make sure everyone’s efforts are really moving the needle. Recommended reading: “Measure What Matters” by John Doerr.
The EOS – The Entrepreneurial Operating System: This one is a favorite among smaller businesses and startups. It’s a comprehensive approach that covers everything from your company vision to the nitty-gritty of daily operations. The EOS helps keep all parts of the business aligned and focused, which is essential when you’re trying to grow a business and manage everything that comes with it.

Using these systems can turn a vague notion of success into a clear-cut plan of action—one of the hallmarks of a strong business plan. Whether you go with OKRs or EOS, you’re setting up a structured way to chase down those business goals, making sure everyone’s not just busy, but productive.

Bringing It All Together

When it comes to memorializing your business plan by putting it in writing, you don’t need to make it overly complicated. Concise and to the point is great. An effective way to write your business plan is in a pitchbook – rather than a rambling word document, create a short and compelling presentation. This business deck is something you would be comfortable putting in front of your team, investors, or lenders. Something that really tells the story in an easy-to-follow format. Also, you may consider recording a webinar of yourself presenting the business plan deck to unveil your updated strategic plan to your team in an engaging and thoughtful way. Plus, the narrative you provide can be revisited if recorded, so your team can digest the information at their own pace.

Remember, a strong business plan is more than just an operational guideline; it’s the cornerstone of your business’s strategic future. While the four pillars we discussed—vision casting, assessing competitive advantages, prioritizing critical gaps, and formulating goals—are indispensable, they’re part of a broader framework that must also include key business elements like marketing strategies, financial forecasting, key metrics, etc.

If you are an entrepreneur looking to up your strategic planning game, schedule a call with BentOak Capital to learn more about our business consulting services.

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