I believe that successfully developing a business involves five stages of business planning and development.
Stage 1: Situation Analysis – Where are we now?
In this first stage of business planning and development, you determine where the business is currently in terms of finance and general positioning. So, you’ll need to analyze not only the financial position, but also who the business is marketing their services or products to. Are they addressing a market that has a lot of disposable income or no? It gives you an idea of the general position of the business.
Stage 2: Business Objectives – Where do we want to go?
Secondly, you have to consider where the business wants to go. These are the objectives, or the goals of the business. This is difficult, because most people will say they don’t know when asked where they see their business in three years time! When you work out whether or not the business owner expects to triple their business or establish one that is ten times as big as they are currently, you can then start identifying the next steps the business will have to take.
Stage 3: Strategic Analysis – How will we get there?
There is never a single path to get where you want to go. In the third stage of business planning and development, you will want to consider a number of different strategies you could adopt in order to achieve the goals of the business. I’ve determined that the strategies you can choose fall within one of five categories:
- Product development – you can develop more products for your existing market
- Market development – use existing products and move into new markets
- Diversification – develop new products for new markets and take your business into a whole new area
- Market penetration – spend money to win customers from your competitors
- Acquisition – buying additional businesses to grow your business (mergers)
I would say that market penetration is by far the most common path. To grow a business, though, it’s important to analyze all of the options of product and market development, as well as diversification and acquisitions.
Stage 4: Cost Analysis – How much will it cost?
Regardless of which strategy you choose, the costs will be predictable. There are a number of government agencies that can help analyze those costs, and financial forecast programs that allow you to consider the expected revenue compared with the expected expenses to see whether or not the business can afford to take on that particular business development.
Stage 5: Fund Analysis – Where will the money come from?
I believe there are really only four places where a business can get funding to develop, and they include:
- Business shareholders
- Bank financing
- Government grants
- Private/public equity
Each of these steps are crucial to ensure good business planning and development.