WHY BOTHER WITH A PLAN WHEN YOU KNOW THINGS WILL CHANGE IN AN INSTANT?
Thousands of articles and books have been written on business planning. The main thing to remember is that starting a business is incredibly difficult. You don’t want to hobble yourself getting out of the runner’s blocks. The success of a new business or business initiative is dependent upon a well thought-out plan. It should be considered a living document and improved as new information is gained or circumstances change.
SO WHAT IS IT?
A business plan is an essential roadmap for your success. Most small business owners have trouble setting and maintaining focus on priorities because there is always a new crisis or new opportunity distracting them. Being nimble enough to jump on new opportunities is good, but you need to focus on those that are right for your business.
A plan is a formal statement of your business mission and goals, the reasons why you think they are attainable, and your strategy for reaching them.
· This document generally projects 3–5 years ahead and outlines the route your company intends to take to grow revenues and profits.
· The plan includes short, medium and long-term goals.
· Think of it as a check list for strategy, tactics, milestones, metrics, and projections.
· You need a formal plan so you can objectively evaluate the prospects of the business.
This Plan helps to visualize the concept in terms of market viability, organizational layout, operational structure, and financial feasibility. Secondly, it aids in identifying your challenges in terms of opportunity timing, competition and threats from various sources. Don’t put off writing the plan because it will be the basis of your decision-making from Day 1.
Business plans may be internally or externally focused.
· Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. For this audience, you would focus on what the investor might expect — the return to a shareholder.
· Internally focused business plans target intermediate goals required to reach the external goals. They may cover the plans for the development of a new product, a new service or other major business initiative. An internal business plan is often developed in conjunction with a list of critical success factors. (I will discuss critical success factors in an upcoming paper.) This allows the success of the plan to be measured, so it can be assessed and re-aligned.
WHY DO I NEED ONE?
As a company, you need to know where you are going and how to best deploy the limited resources you have (people, time and money). The plan will help you execute and manage people and cash.
A company I worked with a couple years ago didn’t have a business plan. They spent months and thousands of dollars of the founder’s money, changed directions several times in regard to what services they were going to offer and to whom. One customer would ask for one thing and another would ask for something completely different. With the best of intentions, they tried to serve both, but ended up not serving either very well. I was brought in to work with them to define their strengths and the capabilities that would be required for their success. Developing a Business Plan at this stage (the crisis stage) can certainly be done, but it comes with consequences. Before the plan could even be implemented, they lost a number of employees and missed opportunities with several customers due to the confusion before deciding on a direction that was well thought-out, documented, and executable. So, business plan timing is key. Get it done upfront and stick to it as much as possible.
Another client — a 20-year-old non-profit — was lacking direction. They were chasing opportunities outside their mission that were distractions from their core capabilities, taking them away from what they were good at. They lost money on these projects which took resources away from good profitable business that supported their mission. So, I took on the task of defining the business opportunities they should go after, confirming to the Board that the work met their mission and that they had the capabilities and the right resources to perform the work. Once completed they have a solid direction and use the business plan to set priorities. The plan gives the board, management, and staff confidence that the non-profit is following its mission.
WHERE DO I BEGIN?
Finding executable paths that will lead to your successful goal outcome is the mission. And “missions” and “goals” are different. A mission is the reason for starting the business — the purpose of the business — where you want to be in the future. A goal, on the other hand, is specific and measurable. You will have ONE mission and several goals.
It is critical to define your mission upfront
It is imperative to know the capabilities and limitations of your team and your product upfront in order to set the goals that will accomplish that mission.
Have your top 3 priorities/goals figured out upfront and focus on those.
If you stray from your mission, there is always a way to make a correction, but it may come with pretty dire consequences.
In a separate paper I will go into the details of the PLAN: (What should be taken into consideration and why. How to define your mission and your goals. How to actually structure a Business Plan.)
About the Author:
Mark Mitchell is a strategic operational planning expert for emerging and publicly-traded companies. With an unparalleled work ethic, Mark provides a flexible and affordable alternative for businesses that need access to high-level expertise but don’t want to hire a full-time COO or CFO. Based in Seattle, he can be reached through his LinkedIn Profile at https://www.linkedin.com/in/markfmitchell