While running a business, one of the most valuable exercises can be the creation of a business plan. These business plans can be either used for running the entire business, or for the assessment of a specific project or investment.
The value of an effective business plan is multifold, including, but not limited to:
- It provides a way to support or reject “gut feelings” and emotions
- Demands that both planning as well as operational / execution issues are “thought through”
- Insures diligence is present in running the business, and in doing so asks questions that have to be answered
- Requires that assumptions be justified and rationalized
- Indicates all resources that are required, not just funding (e.g. cash) needs
- Provides a forecast, from which success can be measured
- Delineates Risks
- Creates a timetable
- Includes an exit strategy, so the plan won’t become a resource “sinkhole” if unsuccessful
Business planning is not just an exercise in bureaucracy that generates paperwork; if it is done correctly, it can both optimize the success of worthy plans, as well as avoid potential disasters inherent in unworthy plans. It is critically important that the entire business plan is completed and approved before it is funded and executed, as its effectiveness is greatly reduced if done later.
Principles of business planning are typically not thought of as strictly relevant to fiscal stimulus and other “intervention” measures. However, the many benefits derived from the business planning process can be successfully transferred to the stimulus / intervention process. This is especially relevant to the current situation facing the U.S. economy, as the economic problems seem to be of a complex nature.
Perhaps the most pertinent aspects of business planning with regard to current and future stimulus plans are the last four listed above: the forecast; the delineation of risks; the timetable; and the exit strategy. These are especially important given the fact that there are no assurances that current, or future stimulus and other intervention measures will prove successful; and the possibility of failure needs to be addressed well before the possible failure occurs.
Forecast: The forecast provides a measure for which success, or failure, can be measured. Without a definitive way to measure success, “success” can become very subjective or vague…which is exceedingly problematical on many fronts.
Risks: The risks inherent in the bailouts and interventions are many; perhaps the first that come to mind is the “hard-dollar” expense, which has an additive effect on the national deficit and debt. However, there are innumerable other risks that need to be analyzed and measured as well.
Timetable: Multiple issues with regard to time present themselves, including: As envisioned, how long will the stimulus and intervention efforts last? In what period will improvement be seen? Without a definitive timetable, the risk is that efforts have no “grounding” with regard to time, and they may drag on indefinitely, thus prolonging expense as well as risks.
Exit Strategy: What is the exit strategy if the stimulus measures and interventions aren’t as successful as planned? This needs to be carefully formulated, as the amount of money currently approved, as well as envisioned for the future, is massive. If resources are continually allotted in the face of failure, this “sinkhole” could become exceedingly large, and in itself could become a crisis. What are the safeguards against this happening? If needed, who “pulls the plug,” and when/how is this done?
As seen above, there are many aspects of business planning that can, and should, be applied to the current stimulus and intervention plans. Without these business planning measures, the nation runs the risk of compounding the current economic maladies.
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