Management June 23, 2015 Last updated June 21st, 2015 1,832 Reads share

A Business Without a Plan Achieves Everything In It

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“Well my dear, if you don’t know where you’re going, any road will do”, said The Chesire Cat to Alice in Wonderland

And no truer word has ever been spoken by any business coach or guru anywhere.

But Planning is Guessing… So why bother?

Nothing useful was ever accomplished by human beings without planning. The ability to plan at a high level is probably one those things that sets us apart from the other animals on earth. But planning is one of those frustrating issues in business that can make us business owners feel like we’re never quite cutting it as budding Richard Branson’s, because we either don’t have a business plan or the last one we produced, 3 years ago, has been sitting in the bottom of a filing cabinet gathering dust ever since. We were pretty proud of it when we printed it, but we’ve not looked at it since and it really feels like it was all an enormous waste of time.

And yet we’ve all nodded our heads at the Chesire Cat quote and we all agree with the headline of this article and all the business coaches, consultants, accountants and bank managers we’ve ever spoken to insist we need to have a business plan… It feels like you’re missing something doesn’t it? But what?

Two misunderstandings

The answer lies in two misunderstandings about business plans.

The first thing to understand is that there are two distinctly different reasons to write a business plan, two different functions, if you will: Internal and external.

What we generally think of when we think of a business plan is what I call an external plan. The purpose of an external plan is to communicate to a third party (such as a bank) what the state of the business is, what the future of the business is expected to be and what the needs of the business are. The reason we want to communicate these things about our business to an external third party from time to time, is mostly to get money. We prepare external business plans to submit to a bank with a loan application, to a potential investor or partner.

Well crafted these external business plans perform an important role. They are prepared so that someone outside the business can quickly come to understand the business in order to make an appropriate decision about a loan application, an investment proposal or a major property lease for example. They may include executive summaries, various sections, supporting documentation, indices, addenda by accountants or other advisers and such like.

External business plans such as these tend to be impressive looking documents and presented in nicely bound folders. They can cost many thousands of dollars to produce and once the loan application has been made they won’t get looked at again until the next time the bank requires it and then it gets pulled out and updated to reflect the state of the business at that point in time.

Templates and sample plans

External business plans as such have little or no impact on the running and direction of the business on a day to day or month to month basis. Your accountant or business advisers and your bank will be able to provide you with templates and samples of this type of business plan and if you have need for an external business plan to apply for a loan or talk to an investor, I suggest you do get your accountant to help you create exactly such a plan.

But you must understand the limitations of such a plan and attempting to use it to drive the business forward is going to lead to disappointment. External plans are simply the wrong tool to drive business direction and engagement in the business.

Internal Plans

The tool to do that, is what I refer to as an internal plan. Internal plans exist to engage people in the business in the operations, strategy and focus of the business on a near day to day business.

business planInternal business Plans are ‘living’ documents and they sit on many people’s desks and they are constantly changed and updated and they have coffee stains all over them.

They are short sharp documents with mostly bullet points or one word descriptions. Ideally they fit on one page If you need more than 2 pages to fit the Plan on it means you haven’t tried hard enough yet (and don’t cheat by going down to 6 pt font with 2 mm margins either).

And that leads me to the other significant misunderstanding about business plans. You see, it doesn’t matter what the actual document looks like. Effective business planning isn’t about the document. It’s about the process of planning.

Planning is a verb, not a noun and we must always be planning. That’s why a business planning document is a document that lives on everyone’s desk and has scribbles in the margin. And most importantly, the Plan is constantly updated in monthly meetings and probably completely rewritten every year, or more often in fast growth businesses.

I’ve seen whiteboards with different coloured sticky notes that functioned effectively as a living Plan, and I’ve seen plans in mind map form on computer screens. I’ve seen really successful Plans that were written out in narrative form and Plans that were all expressed in one word statements.

The most important take-away

If you take nothing else from this article, I hope you’ll remember this: A great plan is one that is started and that is worked on monthly or more frequently.

So let me make it as easy as possible for you to get started with a living Internal Business Plan that will make a difference, a Business Plan that Works.

First this: You’ve already got a business plan, I’m sure of it. You wouldn’t have gotten this far if you hadn’t. You’ve been planning ever since you got the business started. Seriously, don’t knock it, it’s got you this far. Planning is what you do when you lie awake at night worrying about where to find the new staff member you need, or how to ensure you don’t have those awkward phone calls with unhappy customers in the future.… That’s planning… nothing more nothing less.

Remember, Planning is a verb, it’s something we do.

8 Questions

So the next step is to get some of that planning stuff out of your head and onto a piece of paper so that you don’t have to lose sleep at night and most importantly, so that you can communicate your plans to your team to get them engaged.

The simplest process I know to start to create a living internal business plan is to answer a the 8 questions below. Get yourself a piece of paper or a bunch of yellow stickies and a white board, turn your phone and email off for half an hour, make yourself a cup of tea (magic stuff is tea) and have a go at answering the following questions:

  1. What is most important to me in my business (top 3?)
  2. What gets me most excited in my business… What do you get out of bed for every day?
  3. What does my business uniquely exist for and why would anybody else care about that? (Hint: it’s not money and Profit)
  4. Who are our target customers?
  5. What promise do we make those customers?
  6. How do we make money, sustainably?
  7. What are my big goals, 10-15 years, 3 years, this year?
  8. What are the major things to focus on to achieve my goals, this year?.

The outcome of answering these questions and putting the answers together on a single page or white board or mind map is the basis of your living Internal Business Plan.

Answering those questions for yourself and with your team, succinctly and committing to updating the answers every month, will mean your business and your life will never be the same again… I promise you.

Images: Author’s Own

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Roland Hanekroot

Roland Hanekroot

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