It’s Your Business Not Your Baby: Why Every Business Needs to Plan
Quotes, clichés, sayings – we love them. They pepper presentations, make beautiful images that are posted on Facebook and are re-Tweeted massively in Twitter streams. The reason we like them is that someone has summed-up, succinctly, a point or an issue that resonates with us.
A quick Google search of the terms “quotes” and “planning” will bring you an absolute mass of quotes both ancient and modern; from the classic by Benjamin Franklin, “If you fail to plan you are planning to fail” to John Lennon’s “Life is what happens to you while you’re busy making other plans.”
One of my favourites is “It pays to plan ahead; it wasn’t raining when Noah built the ark.”
So, with nearly half of small business failing within the first five years, why does business planning come pretty low on the agenda for many?
Could it be they think taking the time out from running the business to plan would be a waste of time? Maybe they think you only need a plan if you are seeking finance? Perhaps they’re not sure what to include in a plan or how a plan can really help move their business forward?
Starting a business is a pretty emotional experience. You pour your heart and soul into getting this ‘entity’ off the ground. This is a good thing; but it can also be a bad thing – making it difficult for you to see the business as an object that needs managing and where, sometimes, very hard decisions have to be made.
A plan allows you to disassociate from your business and provides you with greater perspective.
But does your plan need to be the traditional, take-it-to-the-bank, umpteen-page Business Plan? Absolutely not. It all depends on what you want to achieve. Your plan needs to be the plan that will most help you manage and grow your business.
Here are three types of plan that share similar characteristics but serve different proposes:
The Strategic Plan
Strategic planning is a systematic process of developing a series of long-term objectives. This type of plan starts with identifying the desired end results and working backwards to where the business is today.
My clients work on a 5-year timeline; they determine where they want their business to be within a five-year time-frame in terms of size, turnover, staffing levels, products services etc. Once that has been done it’s much easier to work backwards answering the question “If this is where I want my business to be in five-years time, where does the business need to be in four-years, in three-years…”
The Business Plan
Business planning provides the detailed route map that will take your business to the desired outcome, i.e., the objectives identified in the Strategic Plan
For a Business Plan you need to collect and analyse a wide range of information about yourself, your business and your business sector; about how it operates, how conditions are developing currently and identifying future trends.
If you are using your Business Plan to seek finance it will need to be an in-depth analysis of what you are selling, how you are selling your products or services, how much it will cost to sell your products or services and how much money you aim to make by selling your products or services. This is what I describe as the traditional, take-it-to-the-bank, umpteen-page Business Plan.
If you are not going out to finance, you still need a Business Plan, but it doesn’t need to be as complicated.
The Action Plan
A problem I have identified is that many of the business owners I speak to think a Business Plan is an Action Plan. It’s not.
- Your Strategic Plan outlines your overarching vision and business objectives, for example, reach new customers, drive repeat business, increase turnover
- Your Business Plan describes your market and identifies a set of measurable goals that will allow you to achieve your business objectives, for example, 10% new customers; 25% repeat business; 15% increase in turnover
- You Action Plan breaks down the measurable goals in your business plan into realistic and achievable monthly, weekly, daily activities that will allow you to achieve your business objectives, for example, develop a ‘loss-leader’ online course to upsell priced programme and attract 20 new clients (2%); offer a monthly 20-minute, free refresher to VIP clients, put prices up by 5%
In a nutshell, your Action Plan is the thing that tells you what you will be doing at 10.30am on Monday morning; and why you are doing it. It’s the list of things that need to happen to ensure you meet the targets you set yourself with your Business Plan and it’s the thing you can cross things out on with a big, red pen and say “Done that, what’s next?”
If you aren’t sure how to start the planning process for your business; or you’re not sure how to review and refresh your current business plan – please don’t hesitate to get in contact.