As a business coach, I work with business owners and entrepreneurs at different levels of business maturity. While the issues to tackle vary from client-to-client, I’ve been seeing what is, in my opinion, a deeply concerning trend – the lack of a business plan in many small / medium size businesses (SMBs). When I ask why a business plan hasn’t been developed, I usually get one of two answers; “We’re not seeking money from any investors / lenders” or “Writing a business plan is way too complicated a task for a company of this size.”
A business plan is more than just a path to funding, and the process of creating one doesn’t have to be complicated. Whether you’re a bootstrapping solopreneur or a company of 100 people, writing a business plan is something you should do. In my opinion, it’s not a waste of time.
In its simplest form, a business plan is nothing more than a written plan that defines your business both today… and tomorrow. Think of it as answering the following six broader questions.
(1) Why are we in business ?
(2) What do we offer ?
(3) How do we behave ?
(4) Where will we find customers ?
(5) Who should be doing what ?
(6) When will we know if we were successful ?
By answering these questions, you’re essentially developing a resume for your business. You’ll also be establishing guidelines for how you’ll operate the business. Some benefits of business planning include the following.
Better Clarity: Working through a business plan will allow you to clarify what’s important to the business at various levels and flow that information down to different operational areas. With this clarity, you’ll be able to strategize on how to address your most important issues, develop the necessary tactics to tackle them, create plans to accomplish your goals, and define the specific actions to do next.
Prioritization: Clarity leads to better prioritization when you and your employees are making decisions on a daily, weekly, and monthly basis. Your actions should be tied back directly to the strategies and priorities you’ve defined. By focusing on these items versus others deemed lower priority, distractions can be reduced and decisions made more quickly and easily.
Increased Engagement: Dale Carnegie said “Knowledge isn’t power until it’s applied.” How many of your employees are engaged in the business ? The first step in getting them engaged is through sharing knowledge. Regardless of the business size, many employees feel that there’s always a withholding of information from their superiors. This can lead to a distrust of Management. Employees want to contribute to the growth of the business and feel empowered to do so. Sharing elements of your business plan with your team and empowering them to tackle the issues you have will lead to better employee engagement.
Defined Measures & Milestones: Part of the business planning process requires goal setting and tracking progress against those goals. Too many times, business owners are caught up working “in the business” instead of working “on the business”. Setting deadlines will force you to think about the actions required to reach your business goals, and help your teams prioritize their activities.
Cash Consciousness: Is your SMB financially stable ? A business plan will force you to develop a financial picture of your business today… and tomorrow. Sales, product costs, overhead expenses, new resources, and scrap costs should all be considered. I also suggest making 3 financial pictures of your company… a bullish or best-case growth scenario, a bearish or worst-case scenario, and the most likely scenario.
These are just a few of the benefits of writing a business plan. Those who have completed the process can offer up many more. And speaking of those business owners who have written a business plan, when was the last time you looked at it ? Did you share it with your employees ? Does it sit on your desk or on a shelf under a pile of other paperwork ? Do you have a schedule to regularly review and update it with relevant information ? Remember that a business plan is a living document, and not a “one-and-done” event.
For those of you who think that creating a business plan means writing something equal in size to a volume in the Encyclopedia Britannica… think again. Sure you’ll be required to produce a more detailed view of your business if you’re seeking SBA funding versus initially having a start-up in your garage. But just as there are millions of businesses in the world, there are millions of different ways to present the business plan data. It doesn’t matter whether you like working in Google Docs, Prezi, or with a mind-mapping tool… begin taking action to creating a business plan for your company. Get your thoughts and ideas out of your head and on to paper. You begin the journey of improving your business by first defining your business.
Finally, don’t be intimidated. You don’t have to go it alone. If you’re seeking funding for a SBA loan, on-line tools are available with many lenders and directly at the SBA site itself. Almost every community has a small business or economic development center where you can go for some face-to-face training. And talk with your local Chamber of Commerce where you’ll find member business coaches who can either help directly or offer training in the process.
Wishing you success in your business.