Business Plans: Doing the Groundwork

Some initial work needs to be done before your co-op sets off on the business planning process. This 'ground work' lays a foundation and provides a context in which to conduct your business planning. Ground work entails three separate activities:

• first, a situational analysis in which you assess your co-op s current condition;
• second, a review of the business planning skills of the key people in your co-op; and
• third, drafting or reviewing your co-op's mission and strategy statements.

Situational Analysis

The first step in the ground work process is a situational analysis. This entails a brief overview of your entire co-op, to review its overall strengths and weaknesses. The situational analysis serves several purposes. First, it orients the staff and board to the co-op's current condition. Secondly, it gives people a context for their future business planning work (each of your co-op's Key Systems will be analyzed individually later, using the results of this review as a starting point). Lastly, it will enable your co-op to set priorities regarding which Key Systems should be addressed first.

In the manual Business Planning for Cooperatives, a chart is provided to conduct the situational analysis. The chart is according to Key Systems, and lists some important aspects of each system. You can grade each aspect of the systems according to a scale of 1-5 (1 is low, 5 is high). This can be a fun exercise that brings people in the co-op together and gets everyone's creative juices flowing.

For example, the Marketing system portion of the chart looks like this:

All staff and board members should participate in this review, if possible (input from a number of people will add to the value of the exercise). If your co-op is small, your entire staff and board can do it together. If this is not practical, break up into smaller groups and have each group do a section of the chart, then review the results together.

Skills assessment

The second step in the ground work process is to assess the current skill level in business planning of the "key people" who will be involved in the process. This is important because it will enable you to evaluate your need for outside help. If, for example, no one on your management team has more than minimal experience in the development of a business plan, you may want to consider an outside advisor to help you through it.

The manual includes a form which can be filled out individually by each person who will be heavily involved in the business planning process. The form asks you to assess your skill leval and amount of experience in several areas, including the following:

• conducting market analysis
• formulating sales projections
• setting organizational goals and objectives
• budgeting
• writing/developing business plans

The store manager should compile the results of these self-assessments and discuss them with the other team members as a group.

Now you can make some important decisions as a result of these two exercises (situational analysis and business planning skills assessment). Based on your initial review of your co-op's key systems, which system(s) need the most help? In what order should your co-op address its key systems? In addition, given the assessment of your internal skills and level of expertise, determine if there are any specific areas in which your co-op should obtain professional assistance.

Mission and strategy

One other vital piece of business should be attended to before starting the actual planning process. That is the third part of ground work, the development of mission and strategy statements.

These statements encapsulate your co-op's fundamental philosophy and intentions in a few sentences. The mission statement is a broad statement that articulates your co-op's purpose and reason for being. It is an overview of why your co-op is engaged in the work it is doing. A strategy statement, on the other hand, identifies your co-op's customer and product focus. It should identify certain products and markets to pursue, and exclude others. It should also address particular strengths and opportunities that your co-op has, and articulate how your co-op will employ them.

If your co-op has already developed these statements, take some time to review them and ask how people feel about them. If your co-op does not have them, they should be developed prior to engaging in a business planning process. It is important to note that the process of drafting these statements gives staff and board members the opportunity to be involved in developing the co-op's philosophy.

People are sometimes tempted to gloss over or hurry through this process, thinking the statements are superfluous or too abstract to spend time on. It's true that "who we are" is an abstract concept. But once you've figured it out, these statements really have a practical use for your co-op. They should be used to guide you through the difficult and sometimes controversial issues that come up in co-ops, such as:

• Should we sell (or not sell) a certain product?
• How big do we want to get?
• Who do we want our future customers to be?

Say some people in the co-op want to sell meat, but others don't; or your co-op has the opportunity to expand, but some people on the staff feel that the co-op should not get too big. The discussions about issues like these can be difficult and divisive. It's helpful to go back to some commonly developed statements that say "who you are" and use them to define the debate a little. These statements probably won't answer the questions right away, but they will help you to start from a common ground that has already been agreed upon.

The first step that we suggest is to do a simple survey to figure out whether people (board, staff and customers) even know what your current mission and strategy statements say (if you don't have them, skip this step). Ask how well the statements as currently written reflect each person's views on the mission of the co-op, and what changes they would suggest making. This will give you a good idea of the amount of agreement or disagreement that currently exists, as well as generate some good ideas for revising the statements.

Although it is beyond the scope of this article to provide thorough instructions in how to write mission and strategy statements, many guides are available. Below are some criteria for writing strategy statements adapted from The Concept of Corporate Strategy, by Kenneth Andrews of Harvard University. We suggest you use them as guidelines.

1. Is your strategy statement specific enough to provide meaning? It should identify your co-op's chosen products, markets, strengths and opportunities in a very specific way.

2. Does the strategy statement identify specific opportunities that are unique to your business? Particular attention should be directed to opportunities that are unique to cooperatives.

3. Can you pursue this strategy with available financial resources both present and predicted? It is vital that you keep in mind the capacity of your co-op to pursue a particular strategy.

4. Is the strategy internally consistent? In other words, does it conflict with your mission statement, or with the personal philosophies of those who will be carrying it out?

5. Is the risk level reasonable? For example, if your co-op is in precarious financial condition, pursuing a risky business strategy that won't show results for several years is probably inappropriate.

6. Is the strategy consistent with the values of the people who work at the co-op? Do people (especially those in key positions) feel the drive to make the strategy work?

7. The strategy should be designed so that its success or failure can be evaluated fairly early in the process. If early indicators suggest the strategy is not working, you still have time to analyze the situation and consider changing your strategy.

Conclusion

The ground work described in this article lays the foundation for your co-op's business planning process. Conducting these exercises thoroughly will facilitate the longer, more complex process of business planning by enabling you to set priorities, obtain outside assistance where necessary, and base future planning decisions on well thought out and mutually accepted philosophic and strategic principles.