Planning is probably the most overlooked and underrated discipline within small businesses. You would not consider building a home without a set of plans. Why would someone consider starting a business without a plan? A business plan is vital to the survival of any business; but before a business owner writes a business plan we insist that the business owner create a life plan.
The following statements come from 40 years of observing small business owners:
“Life planning is the beginning of business planning. If you have a business plan before
you have a life plan, your business will become your life.”
Most small business owners today have almost no personal life because their time and resources are owned and controlled by their business. Many families have been destroyed because the business became the focal point of the dad’s and mom’s life.
“The family’s business should be a vehicle to take the family to their desired destination.
If your business is not taking your family to the destination that you desired, you should get out of the business.”
Business planning should include detailed working budgets that become the financial roadmap of the business. All income and expenses should be projected in a pro forma budget before the business is even started. Once the business is launched, actual results should be compared against budgets and any variances evaluated so course corrections can be made. A well-designed budget provides the road signs and mile markers to determine the progress of the business.
Contingency planning is also vitally important. There are always circumstances and situations that arise beyond the expected. What happens if you lose a key vendor, or a key customer, or the road that accesses your business is closed for 10 days, or a key employee becomes sick or injured, or a major weather event prevents you from delivering your products and services in a timely manner? All these situations require contingencies and need to be planned for. Great businesses have contingent plans in place for most catastrophes.
Perhaps the most typically overlooked planning in any business is exit planning. This is especially true for startup businesses that have not considered any type of exit planning other than failure. No solid business plan is complete without a viable exit strategy. Exit planning may include perpetuation, sale, expansion, merger or dissolution.
There are many business planning templates available. A business plan can be extremely simple or very complicated and extensive. Every business plan should address each of the following topics:
The core competency and value proposition of the business (What do we do and why?
Leadership and management (Who is responsible and are they qualified?
An assessment of the market opportunity (What and where is the opportunity?
A sales and marketing plan (How will we penetrate our market?
A profit and financial strategy (How will we make money?)
A human resources strategy (Who do we need to help us?
A legal and administrative structure (How should be organized?
A business operations and systems (What processes to we need to implement?)
Business plans should be reviewed and evaluated at least annually. Anytime a business owner is considering expanding or acquiring a competitor, the business plan should be updated and amended to reflect those changes.
The downfall of most small businesses is the lack of consistent and disciplined planning. Within Weavers we categorize businesses as “survivors”, “successful” or “significant”. In the area of planning, those businesses in the survivor mode do little if any planning, those in the successful mode do regular planning and those who are in a significant mode do constant detailed planning.
If you expect your business to grow and prosper spend more time planning.