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Why bother writing a business plan?
That’s what an adviser asked me recently.
A good adviser, with a really good business. He told me he’d never done one – ever.
It’s a good question.
As I explained to him, if you’re happy and fulfilled then carry on. Why change a winning formula? That’s one option.
However, I think there are plenty of reasons to consider bothering with the time, effort and brain-ache that creating a good quality business plan will involve.
What are we talking about here?
It’s important to be clear on what I mean by a business plan.
If you’re thinking of some of the templates and examples you can find in a Google search, forget it. I’ve used these in the past. You end up with 50 pages of financial forecasts and crap.
That’s not what I’m talking about.
A business plan is a clear and concise capture of the most important information for your business:
- Your values
- Your vision (medium and long-term)
- Your operational actions for the next 12 months
Once you know these things, you’re in good shape.
The big picture reason
Why bother with a business plan?
Let me give you a quick analogy.
I play the guitar. Here’s a picture of my 1996 Custom Shop Fender Strat.
What I’ve discovered is that when I have regular lessons and try to improve, every so often I reach a new level.
Each new level opens doors to a place that I didn’t even know existed.
It’s not that the level before was bad – it wasn’t. But this new level is amazing and exciting and re-ignites my passion for playing.
I think the same is true for you in your business. Doing the work to create a great business plan helps business owners move to new levels they didn’t think they could find.
Specific reasons
There are plenty of other benefits that flow from a well-crafted business plan too.
1. Sharper thinking
Taking yourself through the extra ‘think work’ that a business plan entails, really sharpens your thinking.
And getting even a few extra percentage points of performance can make all the difference.
If you can run the 100 metres in 9.99 seconds, you’re very quick, but you’ll earn £80,000 a year and live on a government sporting grant.
If you can run the 100 metres in 9.58 seconds, you’ll earn £30 million a year.
A small difference in performance, but a big difference in the results.
2. Enlist the support of others
Once your thinking is clear, you can explain your vision, mission and goals to your team. That will really help them.
You know what’s in your head, but they don’t.
When they understand the goal, they can do more to help you achieve it without having to be told what to do.
3. Simplification of decision making
Once the plan is created, decision-making gets easier. Making choices about…
- Staff
- Clients
- Partners
- Introducers
- Mergers and acquisitions
- Technology
- Pricing
…all gets easier when you know where you’re headed.
For most business owners the biggest challenge is not a lack of ideas, but too many ideas.
A business plan helps you to say no to ‘seemingly’ attractive opportunities that are not going to get you to your goal.
A word of warning
In smaller firms, owners often want to include the whole team in the business planning exercise. I’m sorry, but I’m not a fan.
At this early stage of creating a vision for the future, it needs to be the owner or owners that do this work. You can’t delegate being the owner of your business.
If you’re a larger firm, you might include some senior managers in the process, as part of their leadership development.
Is it time?
Maybe it’s time to create your first business plan, or re-visit the one you did a year ago.
I’m off to have a look at my own business plan.
Let me know how you go.