The immediate response to surviving an economic downturn involves battening down the hatches and simply weathering the impending storm, cutting whatever is necessary to make it through the chaos. Marketing usually falls to the wayside, workers are cut, and prime opportunities to position your company as a customer service or market leader pass by unnoticed.

You may be hearing some of the most promising news that’s come along in months, however. Yes, the bleak outlook that companies had just a few months ago is transforming into a positive, though cautious, attitude. While economic experts have noted a five percent growth in the economy, your segment may not fall within one of these industries. Regardless of whether your industry is included or not, Integrated Business Planning or Sales and Operations Planning (S&OP) remains a necessity not only to surviving an economic downturn but also succeeding, both now and in the future.

One of the few perks of a recession is that it eliminates under-performing players, practically wiping the slate clean for your company, helping it to gain a better foothold in the market, and effectively evaluate business initiatives and goals. This downtime is key to winning customers and ensuring you have systems robust enough to weather any other potential storm along the way. With a well-positioned Integrated Business Planning, or Sales and Operations Planning (S&OP) process in place, flare-ups can be dealt with immediately, and issues can be managed without constant monitoring. Not only are short-term solutions presented, but long-term tools for surviving another economic downturn are addressed as well.

Key Points to Remaining Successful

In terms of weathering this or any other recession, management is the glue that keeps the company together. When management spends excessive amounts of time addressing daily issues rather than focusing on the big picture, however, a lapse in meeting market and customer demand occurs. With so many factors in play, what can management do to ensure the company beats the competition and identifies ways to deal with the eventual uptick in business? Following are three key points to remaining successful:

1. One way to weather the storm is to make preparations that are specific to your business. Luxury items, for instance, are taking longer to rebound in the market; and while people are finally cracking open their wallets, these funds are usually spent on lower-priced items. How has the recession affected long-term consumer expectations? Part of Integrated Business Planning involves an in-depth evaluation of your business model, including asking:

• What are our differentiators? Should they be streamlined to meet the changing business landscape?
• Why do we sell this product? Are we known for our prices? Are we fooling ourselves if we think we can make money on this particular item?
• What are our strengths? Do we focus on higher-quality products with lower prices?

Point blank, to succeed, you must always emphasize your strengths – even though the easiest answer may not be the best solution to your problem. The only way to gain an accurate picture of your current and future situation is to assess your strengths and weaknesses honestly and identify core competencies that set you apart from the crowd.

2. Another solution to surviving an economic downturn is to introduce stress through technology. Technology can provide data models that identify gaps in plans or aggregate data from multiple sources that save the company time and money. These are important tools for successfully surviving an economic downturn. During this period of introducing new technology and evaluating new processes, it’s possible that the company may either lose or gain market share. Over time, your Integrated Business Planning processes will mature, helping you and your team pinpoint supply and demand goals, understand financials in greater depth, identify acquisitions, and improve cash flow management.

3. It is the responsibility of executive management to take the time to challenge themselves to think differently about their business. Oftentimes, however, cultural factors within the work environment can prevent positive breakthroughs. It falls on the shoulders of the management team to challenge pre-existing notions and beliefs about the business. Sure, the economy will change, but nothing is guaranteed, which is why having the proper Integrated Business Planning tools in place ensures the company will continue to profit and push ahead. Strategic Integrated Business Planning, if implemented in every element of the company, should address the following:

• In terms of our competitors, leads, and sales, where are we?
• What are our future goals, and where do we go from here?
• How will we get to that point? What strategy do we have to address these goals?
• Who are our customers? In which market or region will our products/services fare best?
• What do we sell? Will our services and/or products change at any time?
• How will we triumph over our competitors? What makes us different?

Emerging Victorious from a Downturn

Winning (and, for the time being, surviving) in an economic downturn means that you must evaluate your bottom line with open eyes and honestly assess the situation. In many cases, the outlook may still prove bleak, but times are getting better. Integrated Business Planning and preparation ensure you have something to fall back on when the storm gets too rough. Addressing both the short- and long-term issues that plague your business in a downturn through various Integrated Business Planning tools also ensures you’ve evaluated all aspects with a mind responsive to change and growth.

Evolution of S&OP into Integrated Business Planning

Sales and Operations Planning is evolving into what many companies are now calling Integrated Business Planning. It is no longer just a process for aligning product portfolio plans, demand plans, and strategic plans. The key driver of this evolution is the benefits companies realize from integrating ALL company processes into an Integrated Business Planning process that the executive team uses to manage the business. The key differences between S&OP and Integrated Business Planning are:

• Greater financial integration across at least a 24-month planning horizon resulting in improved information for decision-making and greater accountability.
• Financial performance metrics.
• Inclusion of strategic initiatives and activities in the monthly IPC management process, reinforcing that one primary management process is used to run the business.
• Improved modeling and simulations to help develop contingency plans for changing operating and financial parameters.
• Easier translation from detail information to aggregate and aggregate to detail enabling more quicker, more timely simulations and greater granularity of information for operations and finance.
• Improved decision-making through an integrated reconciliation process to keep decisions at the lowest practical level.
• Improved trust throughout the management team with one process, clear accountability, and commitment to the behaviors required to ensure the Integrated Business Planning process is effective.

When it comes to buying a business, a good business plan is crucial. It’s an invaluable guide to listing your objectives and aims in detail. It’s a good source for information and analysis of your aims, targets, customers and prospects. All in all, it’s a great resource to refer back to time and time again. By setting up the business plan, you will have a better chance of success because you have listed everything down in your head on paper.

The vendor of the available business will need to see this in order to ascertain whether you are right to buy. It will demonstrate whether you have the correct business acumen required and whether you are serious about the business. It will also be useful when it comes to the financial side of things, but more on this in a minute.

By making a business plan, you can pick out any potential flaws that might hinder you. It’s a good chance to find any problems or issues that may arise, and then deal with them accordingly before you get caught up in the business. Also, outside parties can cast a fresh eye over the plan, and may pick out something that you may not have spotted.

It’s also important to show the business plan to the vendor or bank manager. If your business needs financing at the beginning, then you need to turn to one of these sources for financial assistance. With that in mind, you need to produce a detailed business plan that shows that your business is credible and also has potential for making money. Not only does the plan prove that you are serious about the business, it also shows that you have a sound business mind and a good grasp of what needs to be done in order to achieve good profits.

So what should you include in your business plan? Well, at the start, it should list the concept of the business. What is the business all about? What are its aims? What sort of returns do you aim to get?

With regard to the aims, you should set these out in bullet point form and alongside these, list sound, realistic ways of achieving them. It’s also worth noting any potential problems that may come your way, and producing effective solutions to combat these. Not only will you be prepared for these problems, the vendor or bank manager will see that you can deal with any pitfalls.

On the subject of finance, you need to produce realistic financial details. How much money will the business require? What are the expenses required? How much tax will you need to pay? What are the profit margins? Do you stand a good chance of achieving these sums, and how? Finance plans should include income statements, cash-flow statements, balance sheets and profit analysis. This should form a big part of your business plan, in order to convince the vendor or bank manager of your credibility.

You should also be aware of what NOT to put in your business plan. The issue of future forecasts is a contentious one. While it’s all very well attempting to make future forecasts, it’s difficult to predict too far ahead. What you need is to look to the short-term future and then produce your plan accordingly. As the business plan then continues, you can modify the content as and when it’s necessary. Long-term planning, however, will only prove to be a pointless exercise.

Another point of contention is how optimistic you should make your business plan. The problem with making over-optimistic predictions and plans is that these plans could well go wrong. Unforeseen circumstances can always put a spanner in the works. Therefore, it’s wise to err on the side of caution when it comes to devising your business plan. Indeed, it’s wise to predict conservatively and prudently when it comes to assessing the possibilities of future targets, sales and profits. A worst-case scenario will always prove to be less of a shock than one that raises expectations too high.

Another point to bear in mind is that you need to keep the business plan relatively simple. Don’t use fancy business jargon or clichés, since this will only cloud the important issues. In particular, if you are presenting the plan to a vendor or bank manager, you will need to keep the plan on point and free of over-fussy language and business speak. Present the facts in a concise, straightforward manner, and this will result in a plan that’s both accessible and plausible.

On average, a good business plan will be about 15 to 20 pages. Keep it concise but detailed. A good business plan will pay dividends both in the short and long terms. An investor and/or bank manager will see this and if the plan holds up well, then this will bring you the business that you seek. And from a personal point of view, a great business plan is something that you can return to time and again as a good reference point – something that you can draw upon in the future.

Once you present a business plan to an investor or lender, questions may begin to fly at you. If this happens, do not be alarmed! It is evidence that they are truly interested in your business. You can prepare for these questions by running through potential questions, like these seven, ahead of time.

“Why did you choose to begin with this target market?”

“We have to start somewhere” is not a great answer. Consider why the costs are lower or returns greater with your chosen first target market, or, better yet, how tackling that market first will make entry into additional markets easier later on.

“Why can’t competitors imitate your competitive advantage?”

Know the strengths, weaknesses, and branding of your competitors to understand what will stand in their way from doing what you are doing. It could be that your competitive advantage is contradictory to what they are trying to do or that you have protected intellectual property in your business, for example.

“Why is your team best qualified to launch this company?”

Funders know that there are potential managers in the job market who could be hired to run a startup like yours. Know how your chosen team combines industry, functional, and leadership experience with an understanding of startups.

“What best practices of the industry will your business use?”

Study best practices companies in the industry use to become more efficient and know which will translate into your startup, which can be implemented only as you grow, and which will not be possible because of their conflict with your underlying strategy.

“What is your unique selling proposition (USP)?”

If someone asks what makes your new business unique, you had better have an answer. This should be stated explicitly in the business plan.

“What would it take to reach break even sooner?”

Be prepared to defend the time you estimate it will take for the company to break even and to start making a profit. If funders want to see you break even sooner, know what it would take in terms of different staff, additional resources, or increased investment, but do not be too quick to push your schedule up. This only shows funders that your estimates were based on flimsy assumptions to begin with.

“What are your projections of growth based on?”

Be able to explain the assumptions about the market and your company’s conversion rates (of potential customers to actual customers, for example) which led to your projections of growth. You should know how your projections compare to other success stories in your industry and in other industries so you can be sure there is precedent for the growth you anticipate.