BUSINESS PLANNING IN NEW VENTURES

Business Planning in New Ventures

Business Planning in New Ventures

Introduction to Business Planning

Every business and organization can experience a serious incident that can prevent it from continuing normal operations. This can range from a flood or fire to a serious computer malfunction or Information Security incident. The management of the organization has the responsibility to recover from such incidents in the minimum amount of time, with minimum disruption and at minimum cost. Control in a crisis is an elusive, but vital, quality. Without it, a business is left to the mercy of the catastrophe - in whatever shape it arrives. But with an effective Business plan in place, the job can be made a lot easier.

Business plans are alternative plans that can be put into effect if certain key events do not occur as expected, as defined by Dr. Fred David in his book, Concepts of Strategic Management. Or, as Lester Digman explains in Strategic Management: Concepts, Processes, Decisions, Business plans are preparations that are considered if situations arise that were not included in the strategic plan. Business planning recognized the need to find solutions to specific aspects of a problem.

By its very nature, Business planning is a hedge against changes that might occur. Business planning, then, is planning for a change: It seeks to identify in advance important aspects of a business or its market that might change. It also identifies the ways in which a company will respond to changes.

Findings to Support the Planning School of Thought

Today, many companies use computer programs for Business planning. Suppose, for example, that a company develops a plan to create a new division. It expects sales to increase at an annual rate of 10 percent for the next five years and develops a marketing strategy for maintaining that level. But suppose that sales have increased by only 5 percent by the end of the first year. Does the firm abandon the venture, invest more in advertising, or wait to see what happens in the second year? Regardless of the firm's choice, however, its efforts will be more efficient if managers had decided in advance what to do in case sales fell below planned levels. Business planning helps them to do exactly that.

September 11 awoke U.S. businesses to their vulnerability to disaster as never before (3). Awareness of the need for disaster and business continuity planning soared to all time highs, yet surveys continue to show that most companies are not adequately prepared for disasters and would be unable to quickly restore business operations. Medical device companies that expect their businesses to survive a disaster-let alone maintain their position in the marketplace-must develop a better understanding of the business impact of significant disruptions and the true cost of downtime on their organizations. This information can then be used to create business continuity programs that set realistic recovery objectives and provide a clear sequence of activities for meeting them.

There's no doubt that business continuity planning can be a complex ...