When I think of the need for planning, I’m reminded of the husband who volunteered to plan and prepare Thanksgiving dinner for his wife’s extended family. Following his well-meaning plan, he started preparations the evening before including taking the turkey out of the freezer. It was still frozen the next morning when he went to start cooking it. Needless to say, his wife was not happy. But at least his plan included ample appetizers, side dishes and desserts. Imagine what it would have been like had there been no plan!
Businesses are a lot like Thanksgiving dinner. A poorly thought out plan will result in crisis. Having no plan leads to disaster.
Writing it down makes it a Plan.
Plans only exist when they are documented in writing. Many owners tell me they have a plan but when I ask to see the plan, they tell me it is in their head. My next question is “Are you making progress on reaching your goals?” The answer is inevitably “No.”
There is great value in documenting your plans. Here are just a few key contributions to that value:
- The very process of writing down the plan forces you to think it through, work out the details and consider how to improve it and avoid roadblocks.
- Any written plan needs to include clearly defined goals, objectives and a timeline for achieving them. Documenting these provides a consistent benchmark to reference as well as a powerful tool to hold yourself and your staff accountable.
- A written plan is the only effective way to communicate the direction of your business to others including investors, banks and, most importantly, your staff.
The Alternative to Planning
I have written previously of one client who used to point to his head when I asked to see his business plan. The result was an inability to ever reach his goals. Even worse, since he never clearly thought out it’s direction with a documented plan, his operation had become bloated. While revenues were rising, he was being squeezed by ever increasing expenses. This owner came to me on the precipice of losing the company.
When going backwards is not an option.
Every aspect of your business can benefit from planning. Here is a brief list of plans or aspects of planning I worked with clients to develop and document:
“The” Business Plan: A top-down plan of where the company is, where it is going and how it will get there.
Strategic Marketing Plan: Includes a comprehensive review of the company’s past marketing efforts; establishing marketing goals which align with the company’s mission and vision; and developing tactics, objectives and timelines for reaching these goals.
Succession Planning: For closely held businesses, this delineates how to navigate a transition of leadership and ownership in a manner so the new leadership is prepared for the transition, the departing owner(s) are adequately compensated to achieve their financial objectives and the business continues to thrive.
Contingency Planning: The steps needed to overcome an unexpected negative event. Contingency planning in case of the sudden loss or departure of an owner or shareholder is a critical aspect of succession planning.
Benefits of Business Planning
Earlier blogs have highlighted some of the benefits derived from good business planning. This includes reducing owners’ frustration by making real progress towards goals; increasing employee morale and higher profitability; and anticipating and preparing for shifts in your industry. As for the client mentioned above, he experienced and continues to benefit from our working together to implement and update his business plan. His company is thriving. His employees are thriving. And, most importantly he is thriving.
What types of planning have you done for your business? Are these plans documented in writing and include methods for measuring progress toward goals?
