A business plan is a roadmap for the journey that your business will take. Sure, like any other kind of map – it won’t be perfect – there’ll be the occasional detour or diversion as conditions change on the road ahead but without a business plan; how will you know when you’ve reached your objectives or know when it’s time to change course?
Everybody knows that a business plan is a good idea but many businesses never seem to get around to having one at all. Many others write the business plan and then never refer to it again. So, if we can agree on the necessity of a business plan, here’s what you should and shouldn’t do with that business plan:
Do Make it Complete – Don’t Go Overboard
There’s a lot of considerations for what should and shouldn’t go into a business plan. You want to examine as much of the following as possible:
- Competitive analysis – you should be taking a good look at your competition and working out what it is you do better than them and how you might communicate that to your customers. It’s also a good idea to dip your toes in the water and test this with your customers too.
- Contingency planning – what will you do in an emergency? What will you do if your business model doesn’t achieve results? Put some numbers to this and concrete plans for taking evasive action when it’s needed.
- Demographic data – what do your customers look like, think like, act like? The better you know your customers, the better you can manage your business to delight them.
- Employee plan – how are you going to attract, retain and develop employees? The better you know your engagement strategy for employees – the easier it will be to engage those employees.
- Exit strategy – mergers, acquisitions, straight up sales; it’s never too early to think about how you’ll get out of the game and get your money back.
- Implementation strategy – how will you make sure that you actually implement the business plan? This should include a commitment to implementation from all the relevant parties in the business
- Innovative strategy – how will you continue to out perform the competition? What will you focus on to make your products and services more attractive tomorrow than they are today?
- Marketing plan – you need to have at least some understanding of how you will bring your offering to the market and attract the attention of customers. Today for many small businesses much of this will be online; think about websites, e-mail marketing and social media in particular when planning your marketing.
- Prepare for the best as well as the worst – contingency planning takes account of the worst things that might happen but you should also look at best case scenarios. What happens if demand for your product is 10 times your wildest dreams? What are the first steps for dealing with dramatic growth?
However, you want just enough detail to make these things useful and not so much information that they become overwhelming. Your business plan needs to be short and punchy enough to be used in day-to-day operations or it will end up being ignored.
Do Communicate Your Plan – Don’t Make it Top Secret
If you want your business plan to be followed; you need to make it available to people. That’s not just top management but the relevant parts of the plan need to be communicated to those who will execute that plan.
If your marketing team doesn’t know your marketing strategy, for example, it’s going to be an unsurprising outcome when they don’t deliver on it. Treating a business plan as “Top Secret” information is foolish and will almost always lead to failure of the plan.
Do Make Sure Your Plan is Straightforward – Don’t Make it Complicated
You want to set your business plan out in a manner that makes it easy to use and to read. That means you begin the plan with an executive summary; a quick summary that explains the overall objective of your business plan. For example, a computer manufacturer might wish to become the leading manufacturer in their state or country.
This objective should be accompanied by some concrete measures of success; how will you know when your plan has been executed successfully if there are no metrics related to that success? It’s much easier for people to understand that $10 million of sales volumes means that you’ve hit your objectives than it is for people to guess what makes you number one in your field.
Do Your Research – Don’t Make Stuff Up
You want to make certain that the data you base your business plan on is robust. There’s a tendency for assumptions to be made during planning; after all who knows your business and customers better than you?
The trouble is that we are all capable of misreading markets and people – the only way to tell if our assumptions are correct is to test those assumptions. That means reaching out to ask questions of your suppliers, competitors, customers, etc. and it means getting hard facts.
While it might save a bit of time and money to rely on your instincts or to wing it – in the long run; it will cost you far more money and effort to correct responses to mistaken assumptions.
Do Put the Plan Into Action – Don’t Dump it in a Desk Drawer
It’s sad to see how many times a business plan, after all the hard work that goes into one, ends up in a desk drawer. It may occasionally be taken out and dusted off or refreshed to impress an investor but it’s never actually put into use.
Your business plan should provide all the metrics that you want to benchmark performance against; it also ought to give you the direction to achieve that performance.
Do Change the Plan When Needed– Don’t Treat Your Plan as a Sacred Cow
One last thing that many companies get wrong; your business plan is not set in stone. If you’ve found that your plan isn’t achieving results – change it.
It’s your plan and it’s designed to benefit your business. It’s a bad idea to slavishly rely on a plan when it’s leading you astray.
Make your business plan work for you; don’t work for the business plan.