Business Planning 101- Know Your Environment – “Be the Bee”
Internal Environment – The ‘controllables’
Once you understand the importance of the Executive Summary and have attracted an audience to read further into your business plan, the next place an investor will probably explore within your plan is the environmental analysis. The typical investor wants to know that you have done your homework and understand the environment you are about to enter as an entrepreneur, especially if this is your first business or organization. You must, as they say in the popular movie, “be the bee”. Understand what you want the organization to be and engage your environment from the best position you can. Only planning and understanding the environment can get you ready to meet the challenge of the dynamic marketplaces that face organizations globally.
There are many different ways to describe an environmental analysis. Some call it a SWOT, (Strengths, Weaknesses, Opportunities, and Threats), analysis, others a situational analysis, and there are many other variations.
What you call it is not as important as that you do it, and do it extensively by defining your marketplace completely. You want to dazzle the investor with your knowledge of the environment that you are about to enter.
Let ‘Em See Your Knowledge Shine
In this article I will discuss the starting point or internal analysis. This is the section of the environment I call the ‘controllables’. You have more control over how you set up the internal environment as opposed to the external environment, which you usually can only affect and respond to. In the internal environment the following factors are under your direct control as an organizational leader.
The Essentials
Marketing plan – the four Ps
- Product
- Price
- Place
- Promotion
Firm management and organizational structure
- Structure
- Sole Proprietorship
- Partnership
- Corporation
- LLC
- Subchapter S Corporations
Information management
- Network
- Communications
Financial and accounting plan
- Accounting – GAAP
- Finance
- Debt and funding options
- Equity and investment
Strategy - Long term
Tactics – Short term
In future articles I will look at each category and examine them in detail.
The Value of Trade Associations to Business Start-Ups
The Small Business Administration website is a great place to find tools, resources, and current industry best practices for each of the above categories. Another is your local and global trade association, academic association, or academic institution. Local community colleges and other public universities often partner with the Small Business Administration to provide information and access to funding.
Join your local and global trade association as soon as possible before actually starting business operations. You can study your future competitors’ best practices as well as those of the industry’s leading organizations. Local, national, and global academic and trade associations are created to provide information for their members. That is their mission statement and their reason for being.
Trade associations, for example, the American Management Association, (a good one to join if you’re not sure, since everyone, from accountants to dentists, have to manage their organization in some way), provide information to their members regarding industry standards and best practices. The trade association is a place where competitors can meet and exchange information on ‘common ground’. Are they political? We as human beings are born to be political, even when we try hard to be apolitical. However, ignore the politics and concentrate on the journals and the information being shared. Competitors work hard to become speakers at these conferences and meetings. They want to provide their take on the best practices of the industry being represented. They are often willing to divulge information they wouldn’t tell even their best friends in order to showcase their talents and abilities.
Every year the industry, through its trade association, presents an annual report to its members. This information usually is worth the price of the membership fees. You will get a ranking of the top companies within the industry and an explanation as to how the ranked competitors were chosen. Each new journal or magazine that is published will contain information designed to either improve growth or lower costs, the biggest concerns of any organization.
Eternal questions, like why is McDonald’s always number one when Burger King works just as hard, are answered in these polls of the industry leaders. The best practices and benchmarked standards of the industry are always on display in publications and presentations.
Syed Tariq Anwar, a professor at West Texas A&M University has put together an extensive list of links to academic journals and benchmarking sites which will come in handy when you begin to search out information.
Smallbiz-enviroweb.org provides an extensive list of trade associations.
The Small Business Administration also provides links to industry and economic data through its website.
Let’s look at an example to demonstrate the importance these associations place on information. Remember most of this is free information. As a member you have access to more detailed information.
The American Management Association website has a solutions finder link, which will search out articles, white papers, seminars, books, webcasts, Podcasts, and special events and conferences full of information.
You can also find short articles and white papers under the Individuals, then Articles and White Papers links.
Look for future articles which discuss the benefits of these different organizations in detail.
Mark Johnson - A Pacific Northwesterner's perspective on the world of marketing and business.
