Would you begin a coast to coast trip without deciding on a destination? Doubtful. If you knew where you wanted to go, would you take along a road map to help keep you on the appropriate course? Surely. Yet when it comes to business owners driving their enterprise, many fail to establish the best course, let alone a clear destination. The fact that 85% of all businesses that fail (file bankruptcy) did not have a business plan underscores this reality.
Many entrepreneurs and founders resist the idea that business planning adds value. Frequent comments like, “planning takes too much time” and “things change so fast around here that planning is impossible” (a little like saying there are too many turns in the road.) or “I have a plan in my head” (an excuse) are warning signs of danger ahead.
Business planning does not have to be complicated or time consuming. For some, detailed plans can be developed in as little as two or three days. Others, may devote an entire department of the firm to massage and update the business plans and key actions. For most, however, business planning is an ongoing process, one that is periodically reviewed, questioned, debated and modified as new information and circumstances occur.
When you begin working on your family business plan, consider the following:
- Analyze your situation: Know where you are now. Look at industry trends and analyze the competition. Look at your own resources. Understand who the customer is and why they do business with you. What are your firm’s competitive advantages?
- Determine your destination: What outcomes do you want the business to produce, and within what time period? What is the future of the firm, the vision? What do you want your business to become? The answer to these questions will become the foundation for your business mission statement.
- Decide on primary objectives: Be specific. Objectives are best achieved when they are broken into small steps rather than giant leaps. Ask questions like, “Who do we want to sell to? What products will we offer? What geography will we market? How many locations should we have? What technology changes will we make?” Commit to objectives that are within two years. These objectives will become your strategy.
- Decide on specific goals: Get in the habit of a rigorous performance evaluation on an annual basis. Consider the practicality of your annual goals. Are the firms resources adequate to achieve next years goals? What progress will economic and competitive conditions allow you to make? What short-term goals are most important right now?
- Decide on specific actions: It is vitally important to get your key people involved in the planning process. If you are uncomfortable with divulging all company financial information, use ratios and percentages to give your key personnel the necessary financial road signs to monitor progress.
- Assign one person the responsibility: Lots of people may be involved in the planning but each firm needs a “champion” of the cause. This person becomes responsible for coordinating each specific action plan and completing that action and works to coordinate information between departments. If the “champion” is not the owner, make sure and assign target start and completion dates.
- Estimate the costs and benefits: Weighing costs and benefits helps set priorities and establish budgets. Test your action plans against the realities of expected cash flow and past performance. Planning uses resources and does cost money. Keep asking the question, “How is this going to benefit the bottom line.”
- Establish a control and monitoring system: Be sure to capture the information you need to measure progress. New or restructured information is often needed. Schedule dates for review meetings with all people responsible for action steps. Brief and frequent meetings are best. You might want to review the performance of the actions each month to help keep the organization focused on worthy goals.
- Be prepared to modify your plan: As actual results vary, up or down, you may want to modify, postpone, or accelerate some action plans to match the resources available. Don’t modify without a thorough review, but flexibility and realism is important to “best success.”
- Get assistance with planning: If your team is not experienced in building effective business plans, help is available. Outside facilitators provide an independent, objective perspective and a structured planning process. Once mastered, the process can be repeated and streamlined to fit your management style. The residual benefits of outside planning assistance can continue for years.
Planning is like a game of darts. If you come closer to your objectives more often than your competitors, you win! You win even if you fail to make a “bullseye” with every throw. Planning (proactive) your actions and options in business becomes a road map. This gives you a predetermined route to follow. Although you may experience a few detours, you will still know where you are headed, and you will know when you arrive!
|Have you stated a vision for your company so all know where you’re headed?||Yes||No|
|Have you established a mission statement to help steer your company into the future?||Yes||No|
|Have you decided on your primary objectives for the next two years?||Yes||No|
|Do you have specific, measurable goals for the next twelve months?||Yes||No|
|Have you established action plans to accomplish your goals?||Yes||No|
|Do you have a written plan for the capital expenditures needed?||Yes||No|
|Do you know what your outside financing needs might be and how you will handle them?||Yes||No|
|Have you determined future personnel needs?||Yes||No|
|Are your key personnel involved in your business planning?||Yes||No|
|Do you have the in-house know-how to develop a written business plan?||Yes||No|
|Should you invest in developing a written business plan?||Yes||No|