Create a definite plan for carrying out your desire and begin at once, whether you are ready or not, to put this plan into action. Napolean Hill.
Writing a business plan is time-consuming, and time is not something we believe we have to spare. So, we will give ourselves all sorts of reasons why writing a business plan is an unnecessary activity or will take time and energy we don’t have the luxury to spare. How strange.
Who would set out on a journey, build a house, have a wedding, create a meal, run a event without a plan?
Let’s be clear here. If you want to have a successful business that’s going to survive the startup phase, or beat the odds of established businesses by being one of the 20% that survives beyond 7 years, then you need a plan.
Part of the issue maybe our perception of a plan so let’s be clear here what we mean.
A business plan is the blueprint for your business. It should set out your vision, values and purpose, engage and inspire and inform your practical and strategic decisions on an ongoing basis. It should be adaptable to the changes in the business and the business environment. It is therefore going to be live, updateable, strategic and operational in nature if it is to be useful. It serves both to remind you where you are going and assess your progress along the way. It sets out the goals and milestones alongside the strategies for growth and development. It is both a map and a tool, provided the implementation and evaluation is structured into your business processes.
It is indeed, an essential and powerful “thing”.
So why do so many business owners happily share that they either have no plan, or that it is in their heads? The house building analogy is a good one here. You wouldn’t either start or extend a house without one. It is just plain foolish. Yet unlike a house, a business isn’t static. We often make the mistake of thinking of a business plan as a single document that you just put together when you’re first starting out and then set aside. Something to check off the to-do list and be done with.
The business plan, for any business, will change over time as the business grows and develops. Key staff, key products and services, prices and roles may change. Looking forward for five years on the basis of current and recent performance, taking into account your objectives and intentions, aspirations and circumstances, will help you forecast far more accurately (than not doing it) your revenues, profits, cashflow circumstances, and performance against other key indicators.
Here are five key reasons for writing your business plan:
- Map to The Future: Committing your thoughts helps you understand your business better and is more likely to mean you will follow through on your intentions and aim for those goals you have set yourself.
- To Support Growth and Funding: Make the case for investment, borrowing and support even if you don’t intend to follow through just yet. Making the case reassures you, your team, your clients and prospective investors and lenders that the business has good potential.
- To Develop and Communicate a Course of Action: Assess opportunities, focus on key activities, select the growth strategies and set the milestones against which the plan will be implemented.
- Financial Management: Plan forward based on historic numbers and expected income your cashflow, P/L and balance sheets etc. Most businesses fail. (yes there is meant sadly to be a full stop there). Most businesses fail not because of profitability issues but cashflow.
- The End Game: To support a strategic exit. A plan helps get in place all that is necessary for an accurate valuation and may point owners in the direction of value enhancing strategies.
So our call to action business owners is “let’s get planning”.
Gavin Bellamy & Marian Hackett