5 Ps for a Business Plan – Part 1 (The Concept)
Jan 25, 2009

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 –

1. Product 

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.

2. Patron

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).

3. People

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.

4. Profile

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.

5. Profit

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 Email This Post 0

You may also like

Profitability or Cashability ?
5 Ps for a Business Plan – Part 3 (Case Study)
5 Ps for a Business Plan – Part 2 (The Practice)
Cash Flow or Profit Growth?

6 Responses

  1. Diya

    Two very good posts! Very clear and easily understandable, especially for someone like me, who has been working for only a little over a year. I help my editors with budgets, and am coming to realise only too well how they become just a number-crunching exercise and how most people hate them! I look forward to your next post and more top-notch financial advice! 🙂

  2. Thanks Diya. Glad that you found this useful. Just a bit of caution – number crunching you cannot avoid in budgeting and in working out “what if” scenarios. But before this crunching exercise, we need to put some qualitative thinking behind the numbers. so that the final outcome – in terms of numbers – becomes meaningful.

  3. Pradip Chanda

    I continue to heed Drucker’s advice while drawing up a Business Plan: First off, Ask whether you should be in this business.
    Secondly no business plan will work unless three essential pillars in running any business are in place, viz., Vision, Organization and Resource availabilty. The rest will follow logically.

  4. Pradip, your points are at a very fundamental level and without clearing those issues the 5 Ps of a business plan cannot even begin.
    Most CEOs, however, will tend to shy away from answering the first basic question – “should we be in this business?”, because if the answer is negative, they wont have a job in the first place.

  5. Hi. Thanks for your comment. I just tested with IE and I didnt face any problems. If you can let me know the specific problem faced by you, I will get that checked out.
    Many thanks once again.

Leave a Reply