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How to Plan for Your Business

There are three types of plans that you can develop in your business.

But before I go through them, let me ask if you do any planning in your business?

Many people in small business ask why they need to do any planning at all, other than the most basic – they plan what they want to sell, they plan where they open their shop, and they plan to open! They say “I just do it!” Well, just doing it is like saying “Fire, ready, aim!”

In other words if you don’t put one foot ahead of the other, in the right sequence, you are going to fall flat on your face. How can you “just do it” if you don’t know what “it” is, whether you are equipped to “do” it, and at the end of the day have you moved from where “just” is? How can you grow your business if you don’t know where it is you want to get to in order to be successful?

So, let’s get back to the different types of plans and how to plan. The three types of plans are strategic plans, business plans and operational plans.

Strategic plans are long term plans. They are shorter on details like the day to day actions you intend to take, because they look further ahead.

Strategic plans deal with describing the end result of where you want to be – your vision for the business – understand where you are now, and create the general direction of getting from where you are to where you want to be. This is the plan that says “I want to be the leading widget maker in the Land of Oz and I will get there by heading east.”

Running a small business, you might think you are too busy in the detail of your day to day operations to waste time about long term strategies. I would say to you that without a long term goal and long term strategies on how you will get there, all you are doing is working for change!

The second type of plan is a business plan.

Business plans break the longer term strategies from the strategic plan, and work out how you will implement them within a shorter time frame. Typically a strategic plan may cover a period of 5 to 10 years while a business plan may cover a period of only 1 to 3 years.

In the business plan, you can take the long term strategies and set goals that you can achieve within the more immediately controllable future. These goals should be set as milestones on your way to the longer term strategic goals from your strategic plan.

In the business plan, you outline the shorter term tasks to get you to the vision. So it is here that you set yourself goals to improve the range of widgets so that you are selling 5 different types by the end of the first year and 10 different types by the end of year 2. It is here that you set yourself a goal to open one new store selling widgets every year and increasing sales by 50% in year 1, another 25% in year 2 and then a further 10% in year 3.

As you can see the achievement of these shorter term annual goals follows the longer term strategies you have chosen.

Finally there are operational plans.

These include plans such as marketing plans, production plans, sales plans, human resources plans and so on. Almost by definition these are short term plans, covering a year or so only. They deal with the details of how you need to organise yourself and conduct day to day actions in order to achieve your business plan goals.

Clients ask me why have these three types of plans? After all as small business owners they are busy people, and while I may have convinced them of the need for planning, couldn’t they try to conflate the process by writing one big plan?

Well, firstly most plans start to go pear shape almost as soon as they are written!

Take it easy, I haven’t argued against the need for plans!

Actually I have stated exactly why you need three plans with different objectives.

Strategic plans set your general direction towards your (constant) desired end point. If things start to go awry, don’t worry – the strategic plan points the way, the actual road itself can vary, but with a strategic plan you won’t lose sight of the general route and you will change your activities as necessary to head towards your vision.

Business plans are set within a more predictable time-frame. If things start to go pear shaped in the first year, that’s ok, you can adjust the details for the second half of the year as long as you keep in mind those short term goals so that when you adjust your activity, you don’t go off track.

Operational plans are the ones that may have to change the most if circumstances change your intentions – but hey, these are detailed, almost day by day activities, so their amendments won’t interfere with your ultimate, bigger picture, goals.

Imagine if you didn’t chunk your plans and something went wrong – there would be so much detail mixed up in the big picture so in it you wouldn’t know what to change first, and end up selling lemons instead of widgets just to get out of the situation.

The analogy I give my clients is this – think of planning your very big family holiday.

The first plan you make is when, where and for how long. That’s your strategic plan. Because it’s a holiday of say 6 weeks, you need to plan ahead by booking the time off work, and deciding where you want to go (where would be nice that time of year?). At this time you don’t actually have to book hotels or flights yet.

Once you have your strategic plan of where you want to go, when you will go and how long you will be there for, you can start preparing your business plan – which airline, how much will it cost, which hotels? You research the best routes and places to stay in order to get to your vision – of enjoying that holiday within the capabilities (budget) you have.

Finally, you then work out your operational plans – which sites will you see, which tours will you take and on which days.

Finally remember, all planning is about knowing where you are and where you want to get to so that you can work out how to get there within your capabilities. After that it’s all about designing activity.

So what have been you own planning experiences? Get over to teikoh.com and tell us, or ask a question and we’ll try to help.

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