what is methodology in business plan

Business Planning Methodology

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Developing a business plan is an essential step in starting a new business. It helps business owners to forecast opportunities and, at the same time, anticipate the problems.

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By using the business planning methodology, entrepreneurs can have the chance to set objectives and goals, as it serves as a tool for obtaining external finances.

A business plan is a document that defines the goals of the business and how to fulfill those goals. It is also the key to attracting investment and possible strategic partnerships. When making a business plan, it is important to consider several sections, including the business's mission, market analysis, financial analysis, assets, and expenses.

Methods of Developing a Business Plan

The first method used in developing a business plan is conducting surveys. In making surveys, you should use questionnaires to make it easier for business owners to assess the markets. This is the easiest way to conduct market analysis. Offering quality products does not guarantee that the target market will buy the products. Through the surveys, the target market can obtain insights about your products. However, you should ensure that the questions can supplement the market analysis. It would help if you asked where they usually shop for specific products, why they prefer such products, and how much they can afford to spend on the product. Keep in mind that a successful survey can lead to obtaining customers.

Another method is through product tests in which potential clients can see, taste, or use the product. Likewise, product testing also provides insight into the value of the product. You should provide a product that is a fully finished version or prototypes of the products to be tested. Through product testing, customers can give detailed feedback. In this way, business owners can make changes if necessary. Moreover, another business planning method is through SWOT analysis, in which business owners must list the strengths, weaknesses, opportunities, and threats. By employing this method, business owners will be aware of the potential problems and eventually develop plans to counteract the problems. Likewise, SWOT analysis also defines the core competency and, at the same time, recognizes the opportunities.

7 types of process improvement methodologies you should know about

Business process improvements are methodologies in which a team evaluates their current processes and adapts them in order to increase profitability. This article highlights seven different process improvements your team can use to reduce inefficiencies and increase profit.

If businesses decided to consistently stay the same over time, many of them would collapse. Innovation requires change, and if businesses don’t change to meet customer demands, they won’t achieve much growth.

This is why many organizations use some form of process improvement methodology to adapt their processes to customer demands.

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What is process improvement?

Business process improvements are methodologies in which a team evaluates their current processes and adapts them with the intent to increase productivity, streamline workflows, adapt to changing business needs, or increase profitability.

7 types of process improvement methodologies

There are seven different business process improvement methodologies your team can use to help reduce inefficiencies. In most cases, the methodology you choose depends on why you want to improve your processes and what you’re looking to improve.

1. Six Sigma methodology

Six Sigma is often used in manufacturing, mainly because it helps minimize defects and inconsistencies. The goal here is to optimize for consistency, which in the end leads to customer satisfaction.

There are two main processes used in Six Sigma: DMAIC for existing processes and DMADV for new processes. Since this article focuses specifically on improvements to existing processes, let’s dive into the DMAIC process.

What is the DMAIC process?

DMAIC is a Six Sigma process used to optimize existing processes. DMAIC stands for:

Define the opportunity for improvement.

Measure the performance of your existing processes.

Analyze the process to find defects and root causes.

Improve processes by addressing root causes.

Control any improved processes and assess future process performance to correct deviations.

The bulk of the DMAIC process improvement happens during the analysis stage. During the analysis stage of DMAIC, teams use a fishbone diagram, or an Ishikawa diagram , to visualize the possible causes of a product defect. The head of the fishbone diagram states the initial problem—then as you follow along the spine of the fish, each rib lists different categories of issues that can lead to the initial problem. This type of visual analysis is a good way to identify the different issues one root cause can create.

2. Total Quality Management (TQM)

Total quality management (TQM) is a customer-focused method that involves continuous improvement over time. This technique is often used in supply chain management and customer satisfaction projects.

TQM relies heavily on data-driven decisions and performance metrics. During the problem solving process, you use success metrics to decide how you can improve a process.

Here some key features of TQM:

Customer-focus: The end goal of TQM is always to benefit the end customer. If your team is focused on improving quality, ask yourself how that process change may affect how end consumers experience your product.

Full-team involvement: Unlike other process improvement methodologies TQM involves the entire team—not just production. As a result, you may end up looking for ways to optimize more business-centric processes, such as sales and marketing, to benefit the end consumer.

Continuous improvement: Continuous improvement in business is the idea of making small changes with the goal of continually optimizing processes. There's a lot of variability when it comes to business, and continuous improvement helps your team adapt when outside circumstances change.

Data-driven decision making : In order to apply continuous process improvement, you must continually collect data to analyze how processes are performing. This data can help identify where there may be inefficiencies and where to focus improvement initiatives.

Process-focused: The main goal of implementing TQM is to improve processes. Other process improvement methods like Six Sigma work to minimize the amount of defects, while TQM works to decrease inefficiencies.

3. Lean manufacturing

This form of process improvement goes by many names, with lean manufacturing being the most common. It may also be referred to as Lean production or just-in-time production. Defined by James P. Womack, Daniel Jones, and Daniel Roos in the book "The Machine That Changed the World," Lean highlights five main principles based off of the authors' experiences at Toyota manufacturing.

The 5 principles of lean

Identify value

Value stream mapping

Create flow

Establish pull

Continuous improvement

4. Continuous improvement (kaizen)

The Japanese philosophy of kaizen guides the continuous improvement model . Kaizen was born from the idea that life should be continuously improved so we can lead more satisfying and fulfilling lives.

This same concept can be applied to business—because as long as you are continuously improving, your business can become more successful. The goal of continuous improvement is to optimize for activities that generate value and to get rid of any waste.

There are three types of waste that kaizen aims to remove:

Muda (wastefulness) : Practices that consume resources but don’t add value.

Mura (unevenness): Overproduction that leaves behind waste, like excess product.

Muri (overburden): Too much strain on resources, such as worn out machinery or overworked employees.

5. Plan Do Check Act (PDCA)

The PDCA cycle is an interactive form of problem solving. It's used to improve processes and implement change. PDCA was created by Walter Shewhart when he applied the scientific method to economic quality control. Later, the idea was developed even further by W. Edwards Deming, who expanded on Shewhart's idea and used the scientific method for process improvement in addition to quality control.

There are four main steps to the PDCA cycle:

Plan : Decide on the problem you would like to solve, and create a plan to solve it.

Do: Test and implement the plan at a small scale.

Check: Review how the actions in the Do stage performed.

Act: After reviewing the results of the test, decide whether or not you want to implement the change at a larger scale.

PDCA is an improvement cycle. This means that these steps can be repeated until your team reaches the desired result.

6. 5 Whys analysis

The 5 Whys analysis is a process improvement technique used to identify the root cause of a problem. It's a really simple process in theory: you gather a group of stakeholders who were involved in a failure, and one person asks: "Why did this go wrong?" Repeat this question approximately five times, until you get to the root cause of an issue. The 5 Whys analysis aims to identify the issues within a process, but not human error.

Here's an example:

Problem: There was an increase in customer complaints regarding damaged products.

"Why did this happen?" Because packaging was not sufficient enough to protect the products.

"Why was the packaging not sufficient enough to protect the products?" Because the team testing packaging did not test past a certain level of stress.

"Why did the team not test the packaging further?" Because current standard processes indicated that the testing indicated was sufficient.

"Why did the current standard process indicate that this testing was sufficient?" Because this process was created for a previous product, and not this current product that is coming back damaged.

"Why wasn’t there a new process for the new product?" Because the project template for launching new products doesn’t include stress testing the new packaging.

You can see from this example that the team asked “Why” until they identified the process error that needs to be fixed—in this case, adding a “stress test new packaging” step into their product launch template . When working with stakeholders in processes like this, it's important to identify the issues, and co-create next steps together so that your production can improve.

7. Business process management (BPM)

Business process management, or BPM , is the act of analyzing and improving business processes. Much like any organic being, businesses grow and shift over time. Your team may have implemented processes that worked when your team was small, but as you grow those processes may not scale in a way that allows your team to be as efficient as possible.

Most of the time, BPM helps teams identify bottlenecks, ways to automate manual work, and strategies to improve inefficiencies. There are five main steps to business process management.

Analyze: Look at your current processes and map them from beginning to end. This is commonly known as process mapping.

Model: Draft out what you want the process to look like. Ideally, you'll have found any inefficiencies in the first step, and you can draft how you would like to solve them in this stage.

Implement : Put your model to action. During this stage, it's important to establish key success metrics so you can gauge whether or not the changes made were successful.

Monitor: Decide whether or not your project is successful. Are the success metrics you identified in step three improving?

Optimize: As the process evolves, continue looking for inefficiencies in your process and continuously optimize as you go.

Manage process improvements to increase productivity

As a team lead, one of the most valuable things you can bring to your team are clearer processes and better workflows . When used effectively, process improvement increases your team's productivity and decreases inefficiencies.

To increase clarity and improve processes, try work management. Work management tools like Asana can help you take your team’s productivity to the next level by standardizing processes, streamlining workflows, and keeping your team in sync.