I was asked by an acquaintance once why they needed a business plan if they were getting all the funding they needed from friends and relatives. It sounded to me as if they were thinking of a business plan as just a fund-raising tool.
In fact, a business plan is much more than that: It’s a tool for understanding how your business is put together. You can use it to monitor progress, hold yourself accountable and control your business’s fate.
Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan. You’ll end up spotting connections you otherwise would have missed.
For example, your plan may project a reconfiguration of your holiday park to enable an increase of sites but no consideration has been given to the current amenities and if this is adequate to cope with increased patronage. This brings up the issue of having sufficient budget allocation to cater for any refurbishment needed.
As part of your operational plan, you’ll lay out major marketing and operational milestones. When you’re the owner, the only person holding you accountable to those results on a daily basis is you. So your plan becomes a baseline for monitoring your progress.
But even more than a tool for after-the-fact learning, a plan is how you drive the future. Your plan should lay out targets in all major areas such as occupancy numbers, expenses, employment and financing goals. Once laid out these targets then become performance goals.
So viewing your plan as a fund-raising tool is just the beginning of the story. You’ll use the plan for so much more, for managing yourself, for operating the business and for recruiting. Before deciding to skip your planning phase, consider all the implications and what they mean for your future success.
Plan your plan – What are your goals and objectives?
Close your eyes. Imagine that the date is five years from now. Where do you want to be? Will you be running a business that hasn’t increased significantly in size? Will you command a rapidly growing empire? Will you have already cashed out and be relaxing on a beach somewhere, enjoying your hard-won gains?
Answering these questions is an important part of building a successful business plan. In fact, without knowing where you’re going, it’s not really possible to plan at all.
Goals and objectives checklist
If you’re having trouble deciding what your goals and objectives are, here are some questions you should ask yourself:
1. How determined am I to see this succeed?
2. Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?
3. Do I have a plan to raise the necessary finances?
4. What’s going to happen to me, my family and my investors should this venture not work out?
5. If it does succeed how many employees will I need?
6. What will be the annual revenue in a year’s time and then in five years’ time?
7. Am I going to be a hands on manager or will I delegate a large portion of tasks to others?
To sum up, planning your plan will help control your degree of accountability and reduce time-wasting indecision. To plan your plan, you’ll first need to decide what your goals and objectives in business are.
As part of that, you’ll assess the business venture you’ve chosen to start, or are already running, to see what the chances are that it will actually achieve those ends.
Finally, you’ll take a look at common elements of most plans to get an idea of which ones you want to include and how each will be treated.
Managing major revisions
The business planning process involves an important paradox. Strategy works only when consistently applied over a long period, which means that you can’t implement strategy without following a long-term plan. However, blindly following a long-term plan can also kill a business that stubbornly insists on following a plan that isn’t working.
How do we fix this paradox?
It involves judgment. The owners, operators and managers of the business have the responsibility of distinguishing between consistently applying long-term strategy and blindly following a failing plan.
There are no easy rules for this, but the first place to look for clues is in false assumptions. Has the real world proven wrong the assumptions on which your strategy is based? This kind of subjective judgment is what makes business management so important. The planning process, with its regular review, is critical.
Every business plan is wrong
You have to realise your business plan is wrong. All business plans are wrong. Plans are about the future, and nobody gets the future right very often, so keep the plan fresh and watch closely as reality moves forward.
A planning process constantly watches the difference between the plan and actual results. Reality swallows our assumptions and we need to keep track of where, why and how we were wrong. This kind of tracking becomes the key to management.
A good business plan is never done.