Marketing professionals use the 4 Ps of marketing mix – Product, Price, Placement and Promotion – as a tool for pursuing marketing objectives.
In a similar fashion, I advocate the use of the 5 Ps for a Business Plan – comprising Product, Patron, People, Profile and Profit – as a tool for pursuing business objectives.
This is a qualitative and value based approach towards a business plan, moving away from a mere number crunching exercise, which, as you know, is what most budgeting exercise degenerates into.
The concept of 5 Ps
This was developed while I was working in a marketing communications business, but these principles are equally applicable in any B2B service sector organisation and can, in fact, be modified to suit any industry segment. The 5 Ps are the five critical elements of business. These are –
In a service industry, the service offering to your clients is your Product. It is the most fundamental element of your business. In the planning or budgeting process, you will surely be evaluating your current status of “Product” and develop plans to improve the quality and the range of your Product/s.
Patron or Client – As we all know “customer is the king” and “we exist because of our clients”. Your business plan will not be complete without a review of your existing client base, how to retain and grow them, as well as how to expand your client base. (Here comes a second tier of P, P for Pitch for winning new clients).
Strength of your People resources, in terms of quality (not just headcount), will determine the growth potential of the business. Planning for Human Resources in terms of selection and training, performance management and remuneration will require a significant portion of the budget time – but more often than not we spend far less time on this aspect than necessary.
Another key element of the business which is often overlooked during the planning process especially in a service industry. The profile of your business, as perceived in the market place, and the respect it carries among peers will determine how the business will attract new clients, new talent etc. and will be a key factor in business growth.
This fifth element covers all the financial aspects of planning, not just profits. This element will cover revenues, costs, profits, working capital, capital expenditure and cash flow. Cash flow is another area that is often neglected during the planning process.
There are some second tier Ps (but not of secondary importance), which are necessary within each first tier P. For example, Pitching for new clients is part of the Patron element. P for Process is another second tier P within each of the 5 Ps above. Process review needs to be an integral part of the planning process for each of the 5 P elements.
The above 5 P elements will cover all the key parameters of the business and will help you to focus on the key elements on a qualitative basis, before moving on the number crunching part.
In the next post of this series I will talk about how to implement the 5 Ps of Planning in practice through a 5 step process.Email This Post 0