Preparing to Plan

For nearly 20 years now, I have been teaching leadership, management, and finance classes in the graduate program at New York University; first in the Graphic Communications Management & Technology program and more recently in the master’s program in Integrated Marketing. For the Spring semester, I look forward to teaching the final course in the program called “Capstone: The Business Plan.” This course requires each student to research, prepare, write, and present a comprehensive business plan for a new business with a special focus on ways in which integrated marketing will help the business achieve its planning objectives.

The recommended format for the business plan has three components: The organizational plan (how the enterprise will be designed and structured), the financial plan and the marketing plan. It begins with an overarching business strategy showing the scope of the business concept and category research to show the financial potential, the anticipated target audience (using what I call the three “graphics;” demographics, geographics and psychographics) and their competitive strategy, with a particular emphasis on how their offering will be differentiated.

The marketing section is developed with brand positioning, customer acquisition strategies and tactics, and a customer retention plan for lifetime value. Prospect data acquisition and lead generation channels and systems are included. Customer service processes are clearly articulated.

The financial plan includes projections for the company, a budget (annual and three-year pro-forma), and full profit and loss estimates. It also requires lifetime value analysis (that is, the amount of revenue and profits expected from key accounts over a period of years) and most importantly, cash flow estimates for the initial year in a format that will be monitored and updated annually (as I remind my students, companies don’t go out of business because they run out of profits, they go out of business because they run out of cash!).

The learning objective of the Capstone course is to teach graduating students how to think about the fundamentals that drives a business. Organization, finance, and marketing are the three foundational pillars upon which a solid business plan is built. While this is certainly true for a new business venture (particularly one seeking start-up capital from investors) it stands to reason that these same fundamentals can and should apply to any going concern. 

Does your plan include these essential elements? Is the operation design, structure and process reviewed annually? Is there a robust, detailed marketing plan (note I did not say “sales plan”? This is also needed but ideally as a sub-set of the marketing plan)? Does the financial plan include a detailed customer analysis and lifetime value projections and cash flow estimates?

For a detailed outline you can use to develop your business plan, contact me at joe@ajstrategy.com.