Several of my blog subscribers have written to me lately asking whether their small business should have a business plan.
Some of them made the case to me that since they are sole proprietors and only have a few staff working for them, they didn’t feel the need to have a business plan for their business. They thought their business was too “simple” and they figured out what to do on an “as needs” basis. Others told me that they felt they were not confident in trying to prepare their own business plan and weren’t sure any benefit would outweigh the effort.
My first answer to them is to show them that statistics show 80% of small businesses fail within the first 5 years, and of those who survive, most still reported themselves as “struggling.” Only those few who reported themselves as “successful” had prepared business plans to guide their businesses. If nothing else, this shows what a powerful asset having a plan is for your small business.
Then I asked them whether they felt they were getting to their ultimate goal – the one that they had set, or at least had in mind when they started the business.
All of us started our businesses with a purpose, or a goal we wanted to achieve. I wanted a business that would lead the field in helping small businesses to thrive and grow, helping people to build strong, successful businesses themselves. I wanted my business to be successful so that it would provide me with intellectual challenge, the feeling that I was helping others, and the ability to fund a balanced lifestyle for me and my family.
No matter what your purpose was when you started your business, do you think you are getting to it as you work in your business every day? Or are you, in fact, going home tired from a hard day at work but feeling frustrated that it doesn’t seem to be getting you to your big picture? Are you reacting to situations as they happen to you, not sure of what to do next and making decisions that weeks or months later have to be overturned or that you regret?
Without a plan, you don’t have a single cohesive direction in your business which you can measure all kinds of decisions against, so that you can make the decision that can best get you to your ultimate goal, rather than flip and flop direction every now and then. That’s what “figuring out what to do on an “as needs” basis gets you – you end up making decisions based on what’s happening now rather than on where you want to go.
As for those who think they don’t know how to put a plan together and wonder if it’s worth the effort anyway, I ask them if they make plans when they go on holiday? Don’t they go through a process? Don’t they ask themselves what they want to do on holiday, or where they want to go at the start? Then having made some decisions, don’t they then work out when the best time is to go, and make sure their time at work is available? Don’t they then check prices and book at travel agents? Don’t they then work out what to pack and what currency to buy and how much they need? When they are ready to go, don’t they make sure their passports and tickets are in one place, and a taxi to the airport is booked?
If they can do this, they can write their own plans because they know their business better than any expert, and all they need is a process to follow, and if necessary a coach or mentor to help them follow the process. As for whether it’s worth it – see above and read it again!
Watch this week’s video explaining why you need to write your small business’ Business Plan.
A Business Plan Guides You
It’s a simple statement but so true.
Without a business plan, you would not know what to do next.
A business plan allows you to set a clear strategic direction, then break it down into long-term and short-term goals, and to break the short-term goals into step by step action. This guides you on your day to day activity and decision-making. Knowing what to do next, every time, you get organised and when you go to work every day, you go to work with a specific purpose in mind.
A Business Plan Gives You Focus
When you write your business plan, you have to analyse what your ultimate goal actually is. You describe the business you really want to build, and the purpose that it achieves once you’ve “got there.”
This means that it gives you a focus for decision-making. Without that clear direction set in your business plan, every idea has to be analysed and measured as if it were the next best thing, wasting time and energy.
With the focus a business plan gives you, you know what you want to ultimately achieve, so any idea is easily measured against that target and any ideas that don’t meet the criteria of getting you where you want to go, no matter how good it sounds, can be discarded. Focus saves you time and allows you to work on your business, instead of micro-managing every decision.
A Business Plan Avoids Daily Chaos
Two things can derail the direction and growth of your business.
Firstly, small business owners without a business plan are faced with “what do I do next” syndrome. What major initiative should I undertake? In what order?
Secondly, small business owners are faced with a hundred good ideas every day. Which one should I action first? What steps do I need to take? How do I fit them all in?
The focus and sense of predictability that a business plan gives you allows you to treat both scenarios in exactly the same way. Instead of going from one project to another without real benefit, your business plan would have set out what actions you need to take in the long-term, the medium-term and the short-term in order to take you where you want the business to go. This means that you know every time what to do next, it’s been programmed. You know how to fit all your great ideas in, and in what order, and, you know which of your ideas are not so great at getting you to your goal and you can discard it without grief.
You treat both scenarios the same way by asking whether a project or idea gets you to your goal faster? In following this idea right now, will it allow me to follow the direction I want to go in any faster? If I had two choices of what to do next, which one will get me to my ultimate goal faster?
If you can measure all the things you think you have to do every day against the action plans in your business plan, and ask these questions to clarify your choices, you will pull yourself out of chaotic decision-making.
A Business Plan Lets You Deal with The Unpredicted
It’s happened to us all, whether or not we have a business plan – here we are going along nicely, then BAM, something you could not have predicted happens. What do you do now?
The beauty of a business plan is that it is flexible, as long as you stay true to your chosen strategic direction.
As well, in preparing your business plan, you should have analysed any threats that might happen to you and the effect these may have if they took place. This means that in some distant way you are actually prepared for bad things to happen.
If something unpredictable happens, you can look at your business plan and assess how to get back on track. What do you need to do to stay along your strategic direction rather than merely react to the bad thing happening? With a business plan, the remediation for something unpredicted is provided with a context. You adjust and move on. Alright, you may have lost a major supplier, but because you know that your ultimate goal is to keep providing similar products, you look for that supplier’s competitor. Perhaps the cost is more, but maybe the quality is better – you adjust your marketing and servicing plans in your business plan and you move on.
If you really want to know how a business plan can help your small business grow in the way that you want it to grow, to provide you with what you wanted when you decided to start your business, then get my free eBook called How To Plan The Best Future For your Business. It is absolutely free and walk you through: –
- Why you need a business plan and what it can do for you
- The different types of business plans and which is right for you
- What should your business plan look like?
- The business planning process that you can follow to write your own business plan
- Business planning FAQ’s