Failing To Plan = Planning To Fail
This information is designed to give you insight into the benefits of completing a business
plan or, at the very least, detailed ‘action plans’ for the future of your business.
You see, regardless of whether it’s a 120-page document or a 4-page ‘Action Plan,’ the point is, planning is essential to the successful growth and development of your business, your team, and your long-term future.
You’ll discover how and why this is so for you and just what the fuss is all about! You’ll find out how to construct a draft business plan and how to use it to your best advantage.
Positives and negatives—an out-of-balance equation?
When business owners are asked, ‘What are some of the positives about being in business?’ many reply:
- Being my own boss
- Financial reward
- Greater income
- Lifestyle and more free time (often said tongue in cheek!
- Personal satisfaction
- A challenge
- Building a future
When asked, ‘What are some of the negatives about being in business?’ many reply:
- Long hours
- Financial risk
- Personal risk
- Less time for family
- Dealing with customers
- No vacation
- No sick pay
- Feeling out of control
- The ‘buck stops here’
- Full responsibility
- ‘Red tape’: government bureaucracy
- Bad debts
- Fighting day-to-day fires
Interestingly, the negatives always far outweigh the positives.
Staff and customers almost always land on the negative list, and many business owners also mention a sense of isolation.
This is a situation that must be reversed for you to realise your dreams within your business. Business planning can help you do that.
Business planning is designed to MINIMIZE the NEGATIVES and MAXIMIZE the POSITIVES.
It is designed to help give back to you an experience of all the positive reasons why you went into business—a better lifestyle, greater income, more freedom, a sense of confidence that comes with being your own boss, and more—by reducing the negative issues in your business.
Imagine a journey.
Imagine you’re going on a journey. What are the 2 key
things you need to know before you go on any journey?
How you’re going to get there, how long it will take, how much money it will cost, who will be going with you—all are important considerations. However, there are 2 key things you must know:
- Where you’re going.
- Where you are now.
When you think about it, these are the 2 most critical points. A business plan is designed to map out that journey.
In fact, it maps out where you are now, where you want to be, and the strategies to get you there.
Establishing where you’re going involves identifying, say in 2 years’ time, what you want your business to be like. What kind of turnover, profits, number of staff, location, equipment and resources, debt levels, and so on that business will be doing by that time.
Another important question here is, what will you be doing? Will you be still be involved on a day-to-day basis, or will you have replaced yourself with a manager? Or perhaps you plan to sell the business by that time. Regardless, what about you?
To gain greater clarity on these issues, this can be taken a step further. What level of income, profits, and lifestyle would you like to achieve from your business? Once you have those issues clear in your mind, it’s time to turn back and review the business.
Now consider what turnover and profit the business needs to be doing to deliver that. What does it need to be like to fulfil your goals? So, rather than you, as the business owner, giving the business all your energy and resources, what returns would you like the business to provide?
From here, the business plan maps out HOW to achieve those goals. That is, what strategies and ideas will be used in every area of your business to take the business from where it is now to where you want it to be in a certain period of time.
As such, a business plan can provide clarity about your future and the future of your business that most business owners lack. This can place you ahead of your competitors as well.
What does a business plan do for me?
1. A plan gives focus and direction for you, your staff, and your business.
A plan ensures that priorities are set in every area of your business, from marketing and operations to management, personnel, and finance.
It focuses your attention, as the business owner, on the long-term objectives of the business rather than just the day-to-day fire fighting. Then, the plan defines the specific short-term objectives that will lead the business to that long-term future, allowing you to grow and improve the business while still managing it.
2. It’s a step-by-step guide to your future.
It literally provides a map for you to follow. A map of how to get from where you are now to where you want to be.
And that’s because you detail the specific activities in every area of your business that need to be completed to achieve your goals, including when those tasks need to be completed and who is responsible for each.
Many business owners know what needs to be done. Let’s face it, you’ve probably had years and years of experience, so you can see those things you need to do. The difficult part, then, often is knowing what to do first! And sharing that with your team.
A business plan takes this pressure away by clearly mapping out the first, then second, then third (and so on) steps to take to get your business to where you want it to be. It also, allocates who will be completing that task—hopefully, your name WON’T be next to every item and strategy.
3. A plan creates a more successful business by turning your staff into a ‘team.’
A business plan does this by giving you and each team member the same track to run on. Each person knows where you’re going, what you’re aiming to do, how and why.
This motivates team members and owners alike by giving them a ‘brightness of the future’ and an opportunity to affect the outcome for the better. So all of you are working together toward the one direction.
Many business owners complain that team members treat their jobs like ‘just a job’—they roll up at 9:00 a.m., leave at 5:00 p.m. on the dot, stop for breaks all day, never think farther than their work, never take the initiative, and so on. And yet, most business owners fail to give team members ANYTHING other than just their jobs to focus on.
Without a sense of belonging and an understanding of their position in the business and the future possibilities, what else would someone do? If you give people a bigger picture, they’ll be able to contribute more.
4. A plan identifies opportunities and coming challenges for your business.
Imagine if you were asked to review every single area of your business. Do you think you’d find opportunities or coming challenges that you otherwise might have missed?
A plan helps you do this by ensuring that you research the total available market and consider all your strengths, weaknesses, opportunities, and threats. The planning process helps you search for the ‘best way’ to do what you do and allows you to plan in advance for any contingencies that might come up.
This is also important because opportunities can sometimes become challenges and vice versa. For example, let’s say that you know you have to achieve a certain turnover level at some point in your plan. You then know 2 steps before that what you need to have in place, and you can go ahead and make provisions. Compare this to the usual scenario: A business wins a certain sales contract or reaches a surprising sales level and then falls into a mad panic attempting to fulfil those sales. In this scenario, an opportunity can become a challenge. With planning, the opportunity is not only enjoyed but maximised as well.
5. A plan favourably impresses key people of influence.
Like your bank manager. Presenting a business plan is an effective way to communicate your ‘story,’ the story of your business and the potential within your business to attract important people. People who can influence or affect your business, like accountants, lawyers, new and existing team members, suppliers, important customers, creditors, and more.
One important group is your family. This can be a particularly useful tool to share with spouses who aren’t involved in the business or to ensure ongoing success with personal partners who work together. You see, a business plan means that your family will be better able to understand why you’re putting in the hours and the energy. It also means they can support you more readily because they have an understanding of why you do what you do, and what it is you’ve set out to achieve.
6. A plan brings together all the elements of your business.
Including your business profile, products and services, market analysis (who wants what you’ve got), marketing, day-to-day operations, management, personnel, legal considerations, contingencies, and finance. That way, you only have to ‘juggle one ball at a time,’ making the running of your business a much easier task.
Imagine these major areas of your business as balloons in the air or juggling balls. Considering these and all the other day-to-day tasks you manage, keeping it all in the air can be difficult. A business plan ties all of these elements together so that every area, or ‘balloon,’ is moving in the same direction as every other, rather than all over the place.
7. A business plan increases your income.
This is a fairly bold statement, isn’t it?
However, it’s fact. Statistically, of some 500 business owners independently surveyed who had completed the business planning process, 91% said the business plan helped increase their turnover. A further 8 out of 10, or 81%, said that it helped increase their profits—that is, their personal income.
And it happens simply because it’s a lot easier to get to where you’re going if you know where that is!
By planning the future of your business, you can plan your future income. A plan helps you do that simply because you’ll know exactly what your goals are and you’ll know exactly how and when you’re going to achieve those goals. Better yet, your team will know, too, which directly affects your success, cash flow, and profits.
And you can track your results at any given moment so that you can just get on with the job of growing and improving your business with a new sense of security, rather than worrying about the future.
10 pivotal steps to your plan
1. An executive summary
This area provides an overview of the business as a whole and is drawn from the rest of the plan.
2. Your business profile
This area includes a description of your business, the legal structure, the background of the business and the owners, and more. It also includes strengths, weaknesses, opportunities, and threats; business objectives; etc.
3. Your products and services
This section offers a description of your products and services and the benefits customers can expect. It should also outline any limitations and a review of your industry.
4. Your marketing plan
Here, you need to conduct a full review of your current marketing strategies. It’s important to review your customer profile, competitive analysis, and advantages or disadvantages. It should also include sales forecasts, selling and distribution methods, packaging, pricing, and so on.
5. Your operations plan
Here you’ll review your current performance in a variety of operational areas. If you have a service based business, there’s still a production process. At the end of the day, you produce something in exchange for purchase; as such, there must be a process. This section looks to improve the way you do things—efficiencies and so on.
6. Your management & personnel plan
Here you talk about the management style within the business, expectations of the owners in the short and long term, supporting business advisors, all staff details, and training.
7. Legal considerations
Here you review the legal structure of the business. And make sure you’re protected from industrial relations challenges, false marketing practices, workplace health and safety—and that you met any necessary standards.
8. Your financial plan
Historical data—ideally the last 2 to 3 years’ profit and loss and balance sheets—will be used, along with the marketing and sales forecasts, to map out a 2-year financial plan for the business. Profit and loss and cash flow budgets need to be forecast for every month for the next 2 years.
Regardless of what happens, this financial plan will not be out of date as soon as you exceed or fail to reach one target. Rather, it’s a tool to check and correct your activities based on the financial results achieved.
For example, if the goals aren’t met one month, it’s important to review why, correct it, and then take action to compensate for it the next month. Or if they are met, it’s an opportunity to pat your team members on the back and congratulate them for a job well done!
9. Your action plans
This is a specific list of all the strategies and items you’ve planned to take your business from where you are now. It’s a good idea to rate these ideas in order of priority, who’s responsible, and by when.
10. Your risk & contingency plan
This is essentially ‘Plan B.’ This section covers all those areas most business don’t want to look at—partnership contracts, insurance, what to do if the business plan goals are not achieved. This also sets out the amount of risk the business is carrying and plans to compensate or address those issues.
And the results?
In 1995, some 500 business owners, all of whom had been through the business planning process, were surveyed to discover the results of the planning process. The results were astounding.
100% Said their business plan was effective for achieving their personal purposes for completing the plan.
91% Said business planning helped increase their turnover. That’s 9 out of 10 experienced an increase attributable to the process.
81% Said it had meant higher profits for their business. That’s fully 8 out of 10 experienced an increase in profits—their personal income.
79% Had been able to employ more people because of their plan. Again, that’s nearly 8 out of 10 business owners were able to grow their capacity to produce and earn income by adding staff.
76% Felt more secure and confident in the future of the business. An obvious benefit.
67% Increased productivity by up to 3 times. This result has a massive impact on profits.
So as you can see, your business is more than likely to benefit with a business plan or a detailed ‘action plan.’ Without it, you could lack the direction, drive, and strategies.
To discuss putting a Business Plan together, arrange a chat with one of our expert team members.