Imagine spending your days pushing a stone wheel up a winding mountain path between the rock face and the cliff, only seeing a short distance in front of you and blind around corners – at night. If you keep to the path, you’ll survive. Lean too much into the mountain and progress stops; too far towards the cliff and you’re in danger of dropping off.
Many people still run their businesses this way, merely keeping their wheel turning, responding to the twists and turns in the path, staying off the rough edges and watching their feet. It’s a well worn path that business owners have trodden for centuries, the only things to change have been the tools. This method works, and will provide an income, up to a point. These folks can be blindsided though, by what’s around the corner if they haven’t looked up and out from time to time. Business Planning can be thought of as that process of ‘looking up’ to see what’s changing and responding as needed.
So a Business Plan then? Not so fast:
With the world and our business environment changing as rapidly as it does, there’s no longer a need for the long, thoroughly researched and detailed Business Plan. Authored, bound and shared only with your bank manager, if you needed finance from an individual or institution, it was the gold standard in proving that you had put enough thought into how you’d pay the money back and in how many years. A proven business model didn’t change very often and Business Plans were often enough to get you the dough to start your business. Then they went into the filing cabinet and were never seen again.
With so many different options for people to launch businesses with very little start-up capital these days, the old “plan, then execute the plan” method tends to take up time and energy on plans that famously “will not survive first contact with the customer“. They have almost become irrelevant for starting out unless you need large amounts of capital.
So what then, the fate of the Business Plan? Well a document is still a good placeholder, as a record of a snapshot in time of your business, your thinking and your intentions. The business plan (if you need one at all) is not a heavy tome, or even a noun deserving of capitalisation. It is merely the temporary output of the process. A brief, nimble little document that reflects your changing mindset and goals, the marketplace and your place in it. It can now be (should now be?) written down on a single page and changed as frequently as required. Let me state that again: it’s not the plan, but the planning that is important. The verb, not the noun.
Unfortunately, the skill and discipline of business planning is so often not practiced or done poorly inside businesses that it remains the number one reason for SME’s ceasing to trade.
Experts cite “Running out of money”, “Failing to have a Marketing Plan” and “Poor product / market fit” etc etc as reasons why businesses fail. Yep, all true and examining these aspects is all part of good business planning. Not just once, but regularly, from many angles and perspectives. The process of business planning is a circular, recurring process that has no end state as long as you are in business. It is the constant questioning and re-questioning of your intent, goals, strategy and tactics that keeps your business alive and thriving.
So how does one do that? Well it’s tough if you’re stuck in the mindset of the old ways, but not insurmountable. The mechanics of business planning is a fairly simple set of skills and tools to grasp and use. A pre-requsite though, is to first understand that you don’t know it all. Your perspective contains confirmation bias, and you will always put either too positive a spin on your abilities or be far too harsh in your judgement.
You need trusted people around you to keep your thoughts in order and contribute to your planning cycle. Consider either formal or informal collaboration with others as a way to refine your plan. I like to have a board of advisors helping me. My friends and family don’t know it, though they are all virtual, non-executive members of the board, so are my business contacts and my customers. All contribute to my planning process and are vital to keeping the lights on.
Then you need to approach the planning process from first principles – every time:
- Why am I in business? (mission)
- What do I want to get out of my business? (goals and drivers)
- What set of values to do I hold most dear (guiding principles)
- What is my value proposition? (product)
- Who wants my product (market)
- How will I be the best at what I set out to do (tactics)
- How do I know what I’m doing is working? (metrics)
- What will I do if I’m not meeting my targets? (contingencies)
- What can I do to make my business and this process better (constant improvement)
Ask these questions, every time you schedule a planning session and I promise that you’ll know thyself better and know thy business even better. It gets quicker and easier with practice.
You don’t need to spend weeks preparing a Business Plan, and I hope I’ve convinced you that you shouldn’t unless you need it, but you do need to set aside time (and white space) to think, reflect and refine your strategy, tactics and contingencies. The short document that is the result should merely be another iteration of the previous one that takes into account any new information and considers possible new futures that may need a response.
In the next article I’ll be exploring the mechanics of business planning and how to develop a questioning culture within yourself and your business – it’s crucial to your success.