A startup is a vehicle that transforms an entrepreneur’s business idea into reality. But this road is filled with several obstacles. You need a solid plan, a proper business model, and execute the plan with flawless speed and accuracy.
However in spite of all that – around 70% of all startups fail. And if you do not want to be part of that crowd, you need to ensure that you minimize the possible risks that your startup faces. You need to get the variables under control and the most important of all variables is to have proper team cohesion, communication among your team members, and a set guidance policy for all members of your startup.
And that’s where a business policy comes into play. In this article, I will show you all you need to create a perfect business policy for your startup.
What’s in a Perfect Business Policy?
A business policy differs for different businesses. So, each one is unique in its own self. But, the main role of a business policy is to set roles and guidelines on how to perform those roles for the members of a business. The policy defines the scope of decision-making for the business management and limits within which each rank can take those decisions. The policy also allocates duties and responsibilities to varying levels of management.
In short, a business policy outlines the business goals and sets out how you aim to achieve them.
In order to be practically feasible and achieve workability, a business policy created by a startup has to adhere to the following characteristics –
- It has to be very specific in nature. You don’t want a policy that is too long and unwieldy. Instead, you want a short and crisp policy that is actually read by the members of your workforce.
- The policy must be unambiguous and straightforward in nature. It should never be vague. The best solution for that is to just keep the policy simple.
- The policy has to be uniformly applicable throughout the organization. If this is not followed, there can be confusion and resentment. Employees with the same rank may feel discriminated against if the policy is not uniformly applicable to them unless there is a reasonable requirement to the contrary.
However, this doesn’t mean the policy can’t be flexible. However, the places where the flexibility is provided for, has to be set out in the policy beforehand so as to make the policy more transparent in nature.
- The policy has to put forward the business goals above everything. This means you have to ensure that the main part of the policy is stable and is not changed frequently.
- The policy has to be inclusive of all the team members in an organization.
Why do you need a Business Policy?
A business operates in a highly volatile environment and is surrounded by large competitors at all times. As such, your team needs to react to changing circumstances at break-neck speed at all times. And for that, you need your team members to be independent decision-makers in and of themselves.
Having a business policy allows your managers to work with greater speed and independence and ensures the business strategy is followed at all times while allowing for the business model to be tweaked as per convenience.
How to Create a Business Policy
Previously, a business policy was supposed to be a document that was to be set in stone. But now, it has changed. Keeping the lean startup doctrine in mind, if you find your business idea to not be working or to be providing you with sub-par performance, you should pivot your startup and that means creating a fresh business policy from scratch each time you pivot. That said, I would suggest you create a business policy with the design thinking approach in mind.
Here’s how you do it-
- First, you do a business assessment. That means, do a SWOT test, conducting proper market research, either by yourself or by a third-party organization. We, at WinSavvy have been providing businesses with market research services since 2017. However, we would always suggest for startups without angel investment to do the market research themselves to save money.
- Now you formulate your business policy, keeping five things in mind – The Business Idea, the Business Plan, the Business Strategy, the Business and Revenue Model, and the Vision and Mission statements. I will be showing you how to do that in more depth in the next section.
- Keep an eye on the execution of the policy and take active feedback from the team members and management.
- Make revisions accordingly. No first business policy is perfect. And, it is your job to ensure that your policy is improved by making use of the feedback.
How You Can Formulate Your Business Policy
To create your business policy, you need the following things in mind –
- The Business Idea,
- The Business Plan,
- The Business Strategy,
- The Business Model and Revenue Model,
- The Vision and Mission statement.
I have linked to some resources on the above topics. But the most important part of creating a business policy is the vision and mission statement. It is surprisingly the most straightforward of the lot, but unfortunately most get confused between the two.
Here’s a pointer – While your vision statement states what your business wishes to achieve, your mission statement tells how you aim to achieve the vision. While your vision statement is the “what you want to do”, your mission statement tells the “how you wish to go to the final destination”. A vision statement is usually kept unchanged over the years while the mission statement may have to undergo some changes over time.
Here are some examples of the two-
Let’s take Tesla first.
Vision – to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,”
Mission – “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.”
As you can see, the mission is more direct and shows the exact process via which Tesla aims to achieve its objectives.
Let’s take TED as another example.
Its vision is – “We believe passionately in the power of ideas to change attitudes, lives and, ultimately, the world.” While this is more of a convoluted vision, it is made in the form of a belief shared by the TED organization. Its mission is more concise, to-the-point and sets out how it intends to follow its vision.
Its mission statement is – “Spread ideas”. While the statement is rather concise, it’s pretty clear as to what the organization needs to do in order to achieve its vision.
Wrapping it Up – How the Business Policy will Work
There is no set procedure for creating a business policy. It need not follow a format set in stone. It can be in the form of a booklet, an infographic, or a one-page cartoon – whatever you wish.
The vision and mission statement guides your employees as to the end goal of the organization. The business idea is important to be kept in mind by you when you are making the vision and mission statements, but need not be articulated separately in the policy.
The business strategy shows your business in more depth as to how you plan to achieve the goals and sets out the responsibilities and duties among the different levels of management.
The business model and revenue model show your employees how your business is structured as an organization, how it makes money, and how your employees fit in.
And that’s all it takes!
If you found the article insightful, leave a comment and I’ll get back to you. And, if your team is looking to create a business policy, don’t forget to share this article with your team members.