The 5 Stages Of Business Planning
I have been working with small business owners for over 35 years and I am still amazed every day that the large majority of small businesses don’t have a business plan!
Let me run through these familiar statistics again – 80% of small business startups fail within the first 5 years; statistically, the main reason these failed small business owners cite as the reason for their failure is that they did not foresee their best path forward. That’s code for “did not have a plan.”
If you are an emerging small business owner with a relatively new business, and you do not have a business plan that you are working to, every day must be an adventure!
Imagine living your life like that where you had no plan for anything!
Let’s go on holiday! OK, we’ll just turn up at the airport and buy a ticket on the first plane leaving!
Let’s take the kids to the movies! OK kids here’s $20 to see what you want at whatever time you want!
Let’s buy our first home – we’ll turn up at any open-house and immediately sign up to buy it!
You would not live any part of your life like that, so why would you try to run your business in this way especially when it is so easy to write your own business plan?
If you are working through day to day chaos where your business seems to meet conflicting priorities and initiatives and you can’t decide what to do, you will find order and calm once you discover how a business plan establishes clear goals and priorities.
Here are the 5 simple steps to take in order to write your own business plan:
- Get ready to plan;
- Define where you want to end up;
- Understand where you are now;
- Create strategies to bridge the gap; and
- Create systems to implement and be held accountable.
I’m not going to fool you – preparing your business plan is easy, but you do have to work at it.
So, you need to treat it with respect and get ready to start planning.
You need to make various decisions before you start. First, decide what the objective of the plan is. Is it to apply for a bank loan? Is it to drive the way you will go about growing the business? Knowing this will then allow you to focus your planning considerations on this objective.
You also need to decide the term of the plan – how far ahead will you plan for? Would you prefer to plan for a predictable future or look further ahead as you set up your aspirations?
Who should be involved in the planning considerations? Who would add value to discussions on where you want to go, what works and does not work for you now, and how you move forward?
When and where will you set time aside to spend the time to have planning discussions and complete and document the plan?
Where Do You Want To Go?
In this step, you look ahead to the ultimate future of your business.
Describe your business at journey’s end – what is the purpose of your starting this business? Who does it serve and how? If you already have a vision statement, dissect it and tease out a tangible description of your business and what it looks like at this time in the future.
This sets the strategic direction for your business, and you can then measure all future decisions based on this strategic direction. All you have to ask when you need a strategy to get to where you want to go is to ask “what do I need to do to get me to that specific picture?”
If you are faced with a day to day decision – simply ask “which of these options will get me to that vision and which will get me there faster?”
Where Are You Now?
In step 3, you need to understand your business as it stands currently, in the context of where you want to go.
OK, so your business of the future turns over $10 million in sales, and currently, you turn over only $1 million. That describes the gap and certainly tells you where you are now. However to put it in the context of the future you need to ask why there is a gap. Is it because your marketing sucks? Is it because your products are not of the right quality? Or is it because you don’t have enough capital to expand your operations?
Understanding today’s picture in terms of what you want to get to identifies the gaps as well as the issues you have to fix.
Bridge The Gap
In this stage of business planning, you look at the gap identified and the issues why they exist, and you create strategies to bridge the gap.
Remember, you are focused on the vision – where you want to go – so all the strategies have to be aimed at getting there, not somewhere else because it’s easy or attractive.
If the gap between your current sales and the vision is caused by poor product quality, you can improve product quality, or you can change your product, or you can increase the range of products you carry from cheap and nasty to expensive quality products. Which of these options will get you to the vision of your business when you are done? Increasing the range of products may look attractive because it is easy to do, but will it get you to the type of business you want? Not if your vision was of a business supplying quality products, even though you may have met your $10 million sales objective.
Finally, once your business plan is nearly complete, you need to make it practical, implementable and truly actionable.
You may have set out detailed action plans alongside your strategies in step 4, but as we have all experienced, having a resolution to do something is not the same as getting it done!
In the 5th and final stage of business planning, it is important to create systems to keep yourself accountable. This means creating reward and “punishment” systems, scheduling key steps, monitoring key milestones, and ensuring that you schedule regular monitoring and evaluation sessions to see what has worked, what has not and why not, and to change methods that have not worked.
Let’s get going!
You need a simple, practical business plan that is aimed at your long-term vision of what type of business you want to create. You cannot live any other aspect of your life without planning so how can you live through your business life not knowing where you want to go or what you need to do to get there?
I’d love for you to go to my Facebook group and tell me if you have a business plan – or not – and what your experiences are either way. What was your experience of writing your business plan? I’d love to help you with a few pointers if it was not a positive experience because I truly believe it is something you can do and find benefit from.
I also have a simple step by step process to write your own business plan. I have designed a one-day workshop-style training where you work through all the stages of preparing your business plan, and end up with a fully documented business plan at the end of the day – why don’t you find out more about it here?
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