Many companies start life as little more than a plan: a business plan. Even nonprofits and municipal agencies are born from missions initially written down on paper. Does your organization have such a plan? If so, have you looked at it lately?
A good way to kick-start your strategic planning for the year ahead is to pull out your business plan and match each section to your current conception and approach to “organizational effectiveness.” This term refers to strategies and initiatives that align, promote and reinforce the improvement of an organization or department to meet its mission, fully realize its potential and maximize its performance.
Let’s look into how your business plan, whether real or figurative, can provide a structure within which you can assess organizational effectiveness.
5 Parts to the Plan
Business plans serve many functions, depending on the nature of the organization in question. But, traditionally, they all have one thing in common: a practical structure. To that end, these documents typically comprise five parts:
A mission statement and organizational description. Many people believe only nonprofits need mission statements. Not true — every organization needs a clear declaration of why it exists and how it intends to meet that primary objective.
Think of your mission statement, which needn’t be much longer than a few sentences, as the heart of your business plan. All your goals and activities should flow from it. Do they? Or have you wandered astray from your stated or intended mission?
Ideally, your mission statement should be accompanied by a comprehensive description of your organization. Provide a brief history (unless you’re a start-up, of course) and then explain what you do, identify your marketplace or service niche, and assert why you’ll succeed. Again, review this information in light of your current circumstances. Is your organization as effective as it set out to be?
A management profile. People matter — not only in real life, but also in your business plan. Potential investors, lenders and even employees aren’t interested in a faceless, soulless entity. They want to know that competent, reasonable people are steering the ship.
So illustrate your organizational structure and management team. An organizational chart showing your structure followed by brief bios of key employees can work particularly well. If you’re a small organization or department, you may even be able to describe every employee and what he or she does. In any case, enhance your basic description with some solid reasons why your staff has the expertise to succeed.
Doing so can help you take a step back and clearly see how your organization is currently set up and who’s doing what. Then you can ask some hard questions about whether work is flowing as it should or if you might need to realign something. You may also realize that some positions have become redundant or outmoded. Or perhaps you need to add staff to keep up with growing demands or changing technology.
A financial portrait and strategy. Although stakeholders and other business-plan readers definitely want to learn about the personal (and personnel) aspects of your organization, they also want assurance of its financial stability. So include basic data such as a current and pro forma balance sheet, an income statement and a cash flow analysis. Don’t cut corners with these calculations — get a financial professional’s assistance or, at the very least, verification. If you’re a start-up, project this information as accurately as possible.
Above all, make sure your numbers demonstrate that you and your management team have considered the key drivers that will determine your success or failure. Don’t pad the business plan with overly optimistic financial projections that could ultimately depict your company in a bad light.
If you’re struggling financially or falling short of your goals, again look into the alignment of your organizational structure. Also consider whether your processes or job designs aren’t achieving the right results. You might have heard the expression, “Do what you love and the money will follow.” Similarly, organizations that work effectively tend to see positive financial results as well.
Marketing or service objectives. Of course, expertise and past success mean little without an up-to-date strategy for bringing your products or services to the public. So describe your intended market or constituency, giving specific details on its size and how much of it you intend to serve.
What is your current market’s or constituency’s growth potential? What new and specific geographic, economic and perhaps even political factors now play a role?
Another important aspect of your marketing or service objectives is competitive intelligence. Name your five biggest competitors and convince business-plan readers that you can serve your market better than these rivals. Don’t conceal your weaknesses, either. Recognizing the challenges you must still overcome conveys that you and your management team are in touch with reality.
An executive summary. Many organizations write decent business plans that no one ever reads, because they forget to provide an executive summary. Truth is, many readers (such as venture capitalists, nonprofit donors and loan committees) will often initially look only at this section.
That’s not to say they’ll never read your entire business plan — it only means a concise, readable executive summary may be necessary to getting your foot in the door. Plus, your executive summary can serve a selfish purpose as well. The better it’s written and more updated its information, the more useful you’ll find it when assessing organizational effectiveness and brainstorming ways you might improve.
True to its name, your executive summary should hit the highlights of each business-plan section. Don’t slam readers with a lot of numbers or technicalities here. Just give a clear, confident synopsis of who you are, what you do and where you’re headed.
Once again, as you write or revise the executive summary, look for disconnects between the words on the page and reality. Your ultimate objective here is to match what your organization does on a day to day basis with your description. And, of course, you want that description to be positive and growth-oriented.
A living document
Your business plan is not mere words. It should be a living document that your leadership team studies and revises regularly to keep your organization on the right course to success.
Performance Dimensions Group has extensive experience working with organizations such as yours. Our organizational effectiveness team can help you revise your business plan — or write one to begin with — to help you accomplish your goals in the coming year.