Every business needs a plan. Although trying to convince an owner of a successful, 30-year-old business, who has never had a formal plan is not easy. Here are four ideas to help you understand the benefits of a business plan using my favorite “going on holiday” analogy.
Strategy and a Road Map: Would you wake up tomorrow and say to the family, “OK, let’s all get in the car for our vacation” without having chosen a destination, made a reservation, arranged transportation, lodging, meals, and gotten the cash ready? Then why on earth would you wake up every morning and run a business without a plan? Sounds a little scary to me, and frankly, a little stupid. A business plan helps you determine what you want to accomplish and how you will do it. It gives you “business clarity” and helps shape your future. It helps you identify potential problems and how to handle them. A business plan also helps you see new opportunities and how to take advantage of those. It can also help you avoid big mistakes that cost you time and money, and if you’re unlucky, the business.
Reduce decision time and increase decision certainty: Your week-long vacation by the ocean suddenly runs into a few days of rain. Do you panic? No. You have planned your vacation and being the smart traveler you know you cannot control the weather. Before you left you found a few nearby, local museums, brought along a few board games, and even found an indoor miniature golf and arcade. No panic, no gathering the family together to discuss and decide, and no worries. Miniature golf it is. The same is true with your business. The planning process causes you to think through various scenarios, attempt to account for changes that can affect your business, and then map out the possible solutions. Having a plan saves you time and money, giving you additional confidence in what you are doing and whatever gets thrown in your direction.
Succession Planning: Most business owners do not know the end game. How will they know they are finished and what do they do next? A business plan helps owners think through possible exit strategies. Should we just walk away, do we find someone to run the business and remain on as an advisor, or should we just sell it outright? What triggers should we define or look for to know the end is near? Vacations are over when you are out of time, or maybe when the money has run out. How will you know when your business is over? Unfortunately, even most companies with a plan forget to write a succession plan.
Money: If you need to borrow money or raise capital, you will need to communicate why and how you will be successful. “I have been successful for 30 years” is not the kind of statement that gets people to open up their wallets. Investors want to know what you sell, why you are successful, and how you plan to be successful tomorrow and the next day. They want to know you have minimized risk by thinking through potential opportunities and threats and if anything were to happen, you are prepared to take corrective action. Would you spend $5,000 or $10,000 on a vacation without knowing where you were going, where you were staying, and what you were going to do? If you didn’t plan out your vacation, seems to me it would not be very relaxing or fun.
The internet is filled with guides on how to write a business plan, what to include, how to organize it, and how long it should be. You can find sample plans and use any number of software packages to help you assemble a plan. Take time away from the day-to-day operations to think about your business and think through a plan. Your business, your confidence, and your vacation plans will thank you. Has anyone developed vacation planning software? Just a thought, but don’t start writing code until you have a plan.