General George Patton once said that “A good PLAN violently executed now is better than a perfect PLAN executed next week.” I would change this slightly to add that any plan executed is far better than no plan at all. The fact is that far too many businesses and business owners don’t see the value in business planning, they see it as a chore that is only required when they need additional finance from the bank or other sources.
Business planning is not just for start-ups. Making business plans is an important part of running any business, setting goals and maximising results.
There are lots of myths about businesses planning: A business plan is a job that’s done once and then followed to the letter; it offers concrete predictions about the future, and it has failed if you have to change course.
None of this is true.
Business plans are always wrong, and yet, they are vital. Planning is a process that involves constant corrections. If you were to set out from LA to New York and were just 1 degree out on your navigation you’d miss New York by several hundred miles, this is why planes have autopilots that correct the course along the route, so it is with your business plan.
Perhaps the biggest myth of all is that only start-ups need to create a business plan.
No matter what stage your business is at you should review progress and look at your strategy every year. Many small firms neglect business planning. Often there is a lot of activity but not all of it is profitable. If your activity is not purposeful, you are wasting time and you could be damaging the business.
Business planning puts you back in the driving seat. If you plan your activity in the right way you can have your best year ever. It’s about regaining control. Planning puts you in charge of your business and it’s a good feeling; you’re no longer just reacting to events as they happen.
Planning in times of change
The only constant in life and business is change, events – such as Brexit – can easily spook small firms that are unsure about what the future holds. As any established business owner will tell you, there are always times of uncertainty. And that’s certainly the case right now, especially if you trade with the EU.
There are ways to plan ahead at times like this. Just like the analogy earlier you need a dashboard and autopilot that keeps you on track. You need to know your own market, watch what competitors are doing and keep doing your research; that way, you are more likely to see things before they happen. You can also plan for different eventualities so that no matter what happens, you know what you are planning to do about it. Use tools like a SWOT analysis to help you.
But while it is important to look at the horizon, you also need to focus on the road ahead. Business planning is about the fundamentals. Is anyone interested in your proposition? Who are they? Where are they? How can you reach them and how can you persuade them to buy? It’s all about finding your niche and creating your unique proposition.
Business owners often confuse tactics with strategy. They embark on a new marketing activity, such as social media for example, but it is not backed up by the foundations. It’s tactical without the strategic emphasis. By understanding where you want to be strategically you can then devise the tactics to get you there.
You have to constantly look at what’s working and what isn’t. Things that you’ve been doing may work for a few months and then they stop working; you may need to find new ways to achieve your goals. Today we have the ability and tools to measure almost everything we do and reviewing is vital.
For an established enterprise, business development planning is about making multiple small improvements. Focus on just five elements – our five-part profit formula. These are:
- Lead generation – getting new customers;
- Conversion Rates – converting leads into new business;
- Average Sale Value – getting customers to spend more;
- Number of Transactions – getting customers to buy more often;
- Profit Margins – maximize the percentage of the cost of each product/service that is profit;
By setting achievable targets and making positive changes in all of these areas, businesses can see a tangible benefit in terms of profits.
Planning for growth
Focusing on these five keys is essential if you want to grow your business. Indeed there are real dangers if you try to grow without planning. If you expand faster than the business can keep up with, you often end up fighting fires and you risk running into cash-flow problems.
But what about those business owners – and there are many – that are happy to stay the same size?
It’s impossible to stay standing still. If you don’t do any planning you will go backwards. You have to constantly review what you are doing and what your customers want, just to stay in business. No-one can afford to neglect business planning; there are many well-known examples of businesses that have taken their eye off the ball.
Above all, a business that is constantly evolving is a healthy business. Don’t call it business development planning, call it managing your business.
Let me close by sharing with you a story by Albert Szent-Györgyi.
A small group of Hungarian troops were camped in the Alps during the First World War. Their commander, a young lieutenant, decided to send out a small group of men on a scouting mission. Shortly after the scouting group left it began to snow, and it snowed steadily for two days. The scouting squad did not return, and the young officer, something of an intellectual and an idealist, suffered a paroxysm of guilt over having sent his men to their death. In his torment, he questioned not only his decision to send out the scouting mission, but also the war itself and his own role in it. He was a man tormented.
Suddenly, unexpectedly, on the third day, the long-overdue scouting squad returned. There was great joy, great relief in the camp, and the young commander questioned his men eagerly. “Where were you?” he asked. “How did you survive, how did you find your way back?” The sergeant who had led the scouts replied, “We were lost in the snow and we had given up hope, had resigned ourselves to die. Then one of the men found a map in his pocket. With its help, we knew we could find our way back. We made camp, waited for the snow to stop, and then as soon as we could travel we returned here.” The young commander asked to see this wonderful map. It was a map not of the Alps but of the Pyrenees!
The moral of the story is that the map gave the soldiers the confidence to make good decisions. A business plan is like a map to the future of your business and a good plan would give you the confidence to make good decisions. To get your 2018 sorted book onto my business planning day here.