There is often a great debate about business planning. Planning is key to business success versus a go with the flow attitude since nothing ever goes to plan anyway.
Benjamin Franklin is famously quoted as saying “if you fail to plan, you are planning to fail”. This can be interpreted many ways but I like to think it means that if no effort is made to map out the road to success then there is no chance of achieving success. There are theories that Benjamin Franklin meant we need to learn from our mistakes and I think there is merit to this as well.
Life has a way of happening and not a single person on the planet can control everything that happens. People get sick, economies change and our customers decide their tastes have changed. So why plan? If we really and truly believe we have no control over all aspects of our business, then what is the purpose of a business plan?
Because you do have control…
The first initial business plan you ever make is a daunting and confusing task but an important one. If a business person has considered everything involved in setting up their business and how they plan to take that business to market they should end up by the end of the year, not too far off what they thought would happen.
You see a good business plan, including your first ever business plan should set out your financial goals and all the steps to get your there and it will look at all the things that may affect your business and develop contingencies around them. The business plan will include what will happen if you get sick or you and your business partner have a blue and decide to part ways or if your business place burns down.
Your business plan will include a good understanding of your customer base at that time and the next year you will look at your customer base again to see if you’re still on trend and relevant.
A business plan has no merit if it is not actually applied to the business. This means actually tracking the results of your business and seeing how it fits with your initial plan. Quarterly is the recommended period of time between reviews but really looking at your financial results weekly is best and mapping it back to your plan quarterly will keep you on track.
If you can see your results don’t meet your expectations in your plan, then that is the time to deep dive into your business and see what’s happening. Are you actually applying to your business what you said you would do in your plan? Is there something in your plan that needs reworking or ditching altogether?
Did your initial ideas about the business and where you are now change at all?
It’s completely fine and necessary to adapt your business plan along the way.
Let’s look back and reflect on what Benjamin Franklin said, ‘if you fail to plan, you are planning to fail’ and its merit. If you decide not to plan out at least your year ahead and where you want to go, your business is being reactive and dragged around theoretically by the hair. There really shouldn’t be a situation you haven’t catered for in the event it arises expectantly.
After the first year your business will have considerably more clarity and direction and your product or service offering will be more targeted and directed to your desired audience. Lessons will have been learnt and incorporated into your business.
If you’ve launched into a business without fleshing out and researching whether or not you actually have a profitable business through a business plan, chances are you don’t have a business.
I sit on a Sounding and Advisory Board with a TAFE Institution here in Melbourne for Certificate IV Small Business students. On these Boards we advise and direct students and assess their business plans at the end. By the end of their course students will have a solid business plan they can work from and take to financial institutions when applying for loans.
Often by the end of the course many students have left because they’ve worked out through the process, they don’t in fact have a viable business idea. Many haven’t thought through or considered many aspects of building a business and realised through the process of building their business plan that it is, in fact, a very complicated thing to do.
Consider the consequences had these students not gone through the planning process. Imagine if they had taken the attitude of just going with the flow and seeing what happens. Chances are, not much except perhaps losing their money as well as their pride.
For those who have determined they do in fact have a viable business through the planning process it will absolutely help them as their business grows and prospers.
Nothing should be left to chance…