Free Article – Introduction to Business Planning
Your blueprint for success
Key Learning Outcomes
- Acknowledge Benjamin Franklin’s advice when he said “when you fail to prepare, you prepare to fail”.
- Understand that business planning is vital to your business’s ongoing success.
- Apply the Absolute Best step-by-step business planning process to put your business on the right path for the next 12 months, and beyond.
- Recognise that many companies do not engage in business planning, instead leaving things to chance.
- Learn about the common obstacles in the planning process and how to overcome them.
We are often asked – do I really need to write a business plan every year? The short answer is yes. For a small- to medium-sized business, the plan does not need to look like something that has been produced by a Fortune 500 company, but it does need to have some core elements that will help define your focus for the next 12 months.
In order to be successful at anything, planning and preparation are essential. Imagine an Olympic athlete turning up on the day, without having trained and prepared. Or, the next time you fly, the pilot rather than giving the usual spiel about where you are headed and how you are going to get there, announcing that they will just “take off and see what happens?” These are two extreme examples, but you would be surprised by how many businesses operate with no clear and documented business plan, instead winging it with a strategy based on hope. We hear a lot of excuses for why our clients do not have a current business plan; below are a few of the more common ones.
“We do not have time.”
Writing a business plan for the first time does take some effort and commitment. There is some research to be done and a lot of thought needs to go into the process. However, like most things, once you have written your first plan, you will find that each year it becomes easier and faster, and you will benefit greatly from the actual process.
“We do not know where to start.”
This is certainly a big issue for a large number of business owners. Often small- to medium-sized businesses are started by individuals highly skilled in a particular area of expertise. However, very few owners start with enough knowledge and experience in running and managing the business. Our step-by-step program gives you the tools to produce a business plan that focuses on what you want to achieve and outlines how you are going to do it.
“We did a plan once and it did not work.”
In our experience, it is very rare to prepare a business plan for 12 months, and for everything to fall perfectly into place at the end of the period. One of the key benefits of creating a business plan is the process itself. It forces you to focus on what is important to the business and helps you to produce a vision for the future. The plan can then be used to communicate the vision to others. Dwight Eisenhower once said, “no battle was ever won according to a plan, but no battle was ever won without one”. Time does not stand still and circumstances will change throughout the year. But if you start with a clear vision and a documented plan your chances of success will increase substantially.
“What’s the point – we are too small.”
Even if you are working in a small business, it is essential to spend the time putting a business plan in place. In fact, we believe it is even more important to have a plan when you are working on your own, as you do not have others to bounce ideas off and it allows you to keep yourself accountable.
“We do not need a business plan.”
For many businesses, the only time they think about a business plan is when they are heading to their banker in search of finance. They do it once and then never bother again. We suggest that while it is necessary when securing funding, a business plan written for such purposes often bears little resemblance to the one written with the aim of improving and growing your business. We quote another man much cleverer than ourselves, Benjamin Franklin, who once said, “when you fail to plan, you plan to fail”.
Creating the Absolute Best business plan
We have found that the key to a good business plan is to be committed to the process and to enjoy it. Business planning is quite simply a journey of discovery, when you spend some time working on your business rather than in it. Our step-by-step program will assist you to set clear goals for the business, guide you on how to research your market and current performance levels, and help formulate a work plan for the next 12 months.
If you are writing the plan because you need to secure finance, the plan needs to focus on the numbers. We suggest you enlist help from your accountant for this section of the plan. We have included some basic financial tools that will be sufficient for many businesses; however, we do not profess to be experts in accounting and advocate using a professional.
Our business planning series contains 12 additional learning articles that you can find in this section of the website. Each one has step-by-step instructions and worksheets to assist you. Additionally, we use a case study business throughout the learning articles as a real-life example. The following outlines the format of the business plan and we suggest that you complete the sections in this order to gain the maximum benefit from the process:
3. Research and Analysis
d. Gap Analysis
5. Work Plan
It is likely to take you a few weeks at least to compile all the information. It is essential to allocate time each week to focus on your plan to ensure you maintain momentum. Our articles on creating an ideal week and working on, versus in, the business will help if you find you are getting sidetracked. Remember that work will expand to the time that you give it, so you might find setting deadlines for each section will keep you on track. If you work with a team, you may want to complete the process with your senior members of staff or delegate some of the research. A word of caution – work with a small group and ensure that you leave each meeting with clearly stated responsibilities and deadlines to keep the process moving forward.
Once completed, we suggest that you print the plan with your logo on the front cover and use a quick printing service to bind the documents for you. This final touch gives the plan a professional look and also shows that it is an important business document. The final step is to share the plan with your team. We suggest holding a formal team meeting where you communicate the vision and plan for the future. There is nothing more empowering and motivating for team members than to know that the business has a clear vision for the future. It gives them confidence and allows them to actively participate in the process.
Our case study business
The client’s name has been changed to ‘The Best Beauty Salon’ for the purposes of the case study, and some minor details have been changed to allow the case study to be more generic for training purposes.
The business had been operating for six years when the planning process commenced. While operating successfully in a defined suburban location, the business’s growth rate has slowed. The business owner feels that unless there is a renewed focus on growth, there is a strong possibility that the business’s profitability will decline further over time. Furthermore, the business owner spends the majority of time face-to-face with clients, resulting in little opportunity for the owner to focus on building or improving the business.
The business owner engages an external accountant who highlights the decline in profitability year on year. The owner is now seeking assistance to ensure the long-term success of the business. Not having completed a business plan since the business was first established, there is a need to look at all aspects of the business to create a renewed focus on profitability and to identify areas for improvement.
You will see that the case study adopts the Absolute Best business planning process, so the owner is able to gain significant insight into the current state of the business and can identify opportunities for growth and improvement. Since implementation of the plan, there has been an improvement in the business’s productivity and profitability. Furthermore, the business owner has been able to reduce the number of face-to-face hours with clients, so there is more time to work on the business and achieve a better work/life balance.Did you enjoy this complimentary article?
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