I think Business Plan are like "goals", a great way to analyse the situation and get passionate about the future, but if you believe that everything will happen according to plan then you aren't paying attention to reality. The secret of success in most fields is flexibility.
If people prepare a business plan with the belief that things will turn out according to plan they are misguided. However this doesn't mean that that it isn't a worthwhile exercise.
Many business owners are so bogged down with day to day issues, that business strategy can play second fiddle to day to day issues. However failing to look at a business strategically can lead to missed opportunities or threats. I believe one of the most important aspects to business planning is looking at the Strengths, Weaknesses, Opportunties and Threats in the business. It can provide a real focus for addressing the big issues faced by the business.
Also a business plan can provide a benchmark to montor performance against and where necessary respond to changing circumstances.
I don't agree with the argument, don't plan because things always work out differently. When going on a journey people start off with an idea of how they are going to get to their destination (they don't head off in a random direction), if there is a traffic jam or a rail problem they work out an alternative travel plan - this doesn't mean that it would have been right to not plan the journey (and head off in a random direction) in the first place!
I think that you have taken Craven a bit too literaly. He is simply challenging our assumptions about the wretched business plan. While there is no way to replace the BP then we have to make do with it, warts and all!
Well, sarcasm aside, you do need something, ideally a bit ore than a sketch on the back of a fag packet. I imagine you might get a few reaponses from this one.
Robert, "great" is likely not appropriate. However a business plan is useful, it helps focus the mind and appropriate action and will demonstrate where revenue and profits will come from and when!
Agree with Michael - also the sharing of the plan with employees helps them to appreciate the aims of the company and to feel part of the plan and thereby contribute in a positive way that in my experience many do want to do. Any plan,of course,needs a regular review so that it may be adapted to improve performance and results.... especially Robert if the plan is to achieve "greatness" !!
Where are you now? Where do you want to be in X years time? You need to know those two things to grow your business into what you want it to be. And a Business Plan is the route map to ensure you get there!
A business plan provides the yardstick against which the efforts of everyone in the business should be measured with all forms of measurement hanging off it, so that there is transparency around the changes that will occur as the plan meets reality through the year.
A Great Business Plan will go a stage further and help the people in the business to be clear about how the organisation will be run and how their efforts are connected to success. This is important as it allows everyone to act independently and with confidence that their actions fit the intended plan and to be clear when they are outside what was intended.
Of even more importance is the process of planning itself......
" planning is everything, the plan is nothing" D. Eisenhower
I agree you should have a plan to have something to work towards. The secret is knowing what you are trying to achieve and doing everything you can to succeed. Success is not in the plan its in the outcome. A business plan is words . Business success is action.
A plan can be very restrictive and maybe cause you to miss opportunities due to "It's not in the plan". A goal is a better option. So many businesses sound great because their plan says that in year x they will make this much and in year y this much. Often figures plucked out of the air and will have no relevance when 'reality' kicks in.
I agree Roland. Business plans like cash flows are wish lists. On what basis can you draw up a business plan or cash flow for a new business other than what must be achieved to succeed.
Well an interesting point and as a seasoned strategic and business plan compiler I can say that most I read have little or no substance, you can drive a truck through them. All because the focus is borrowing or credit, banking facilities not building a strong business.
A business plan rarely looks like the document produced for public consumption, it is well structured and offers insight, contingency and is a resource for the company. The financial guess really annoy's because it is a legacy of Business Link (How to get paid whilst doing no work - write a business plan and get a £5,000 grant to fail).
My business is to pick up the pieces, create living documents that work at three or four levels.
So if you are asking do businesses need the current excuse for a profile document with best guess and dreams the answer is NO!!! but do they benefit from a well researched and rehearsed business structural document with planning resources the answer is YES!!!
Most good business plans don't involve credit, loans or grants, it identifies the work you are going to do.
Business plans are good for many reasons albeit that they are a form of guidance rather than goals set in stone. Moreover, the sheer act of writing a business plan has many benefits. From helping one equate ideas, vision, processes and procedures to aiding one to think about certain aspects that they may not consider.
I believe start-ups do need a business plan but existing businesses may not. However, if there is expansion, growth or company culture change then planning these are essential to success.
I still refer back to my original business plan when I get close to fulfilling some of that vision I had years ago so there must be some merit in it. But planning, like design, has an organic nature about itself so will change over time.
One of my favourite business guru’s Sir John Harvey-Jones said “Planning is an unnatural process; it is much more fun to do something. The nicest thing about not planning is that failure comes as a complete surprise, rather than being preceded by a period of worry and depression”. Perhaps this may be the reason why we may shy away from business plans?
In each business plan we know there are other plans such as marketing, cash flow, etc. These in their own right are very essential to the success of business so as part of the mix business plans should prevail.
I have always thought that "action" is the vital missing word when developing, analysing or presenting a Business or Marketing Plan. You may know or think you know where you are going - but, without a map you're not going to make it anywhere!
'A Great Business Plan' is just a plan for your business that works for you, and I would say you certainly need that. Some entrepreneurs are natural planners: they seem to carry their plan in their heads and that works for them. Others need help - mentoring - to articulate their plan and get it down on paper. This is one of the services we offer.
We firmly believe you should have a plan for every significant development you make with your business, e.g. • starting up a new business • a long-term plan for the business as a whole that could include an exit plan; • a financial-year plan for a business or a department; • 90 day plans for a seasonal business; • a plan to grow market share by improved marketing; • a plan to grow sales by developing and launching a product; • a plan to achieve cost reductions; or • a plan to expand by acquisition or to integrate an acquired business.
We focus on what is behind and in the plan, and we try to get that down in 1 page of A4. This is a great way of focussing the mind, and it can be quite re-energising for a business, especially if it has lost its sense of direction.
Hi - Essential in my mind, yes, of course it is just a PLAN but without direction and pre-thought, its mighty easy to get lost. All plans should be flexible?? and revisited...
I'd always understood that 'plans were nothing, but planning is all'. In other words, the best plans in the world fail through poor implementation - particularly if the process of planning is flawed.
In our research (which I hadn't realised was a while ago) we discovered that the top six reasons why plans fail have to do with poor training.... the findings are copied here for interest.
Top Six Implementation Problems: 1) Implementation took more time than originally allocated (76%) 2) Major problems surfaced during implementation that had not been identified beforehand (74%) 3) Co-ordination of implementation activities was not effective enough (66%) 4) Competitive activities and crises distracted management from implementation decisions (64%) 5) Capabilities of employees involved were insufficient for the task (63%) 6) Training and instructions given to lower level employees were inadequate (62%) Adapted from: Alexander, L. (1995), Successfully Implementing Strategic Decisions. Long Range Planning, 18 (3). pp. 91-97
I wonder if much has changed in the last 15 years?
If I understand Robert's challenging question correctly I believe that he is referring to the need for adabtabilty (often shown in surprise acquistions in the big corporate sector). If so I agree that a lot of the headline names seem to be run by a core benevolebnt dictator who allows a great degree of freedom within the operation. Is that model replicable for all? Can it be modified to fit fr 'many' or 'most'.
He could be talking about logical incrementalism, or is that another word for sloth?
BUT. Somewhere somehow there must be a plan (or without getting too hung up on words a 'communicable vision' ). It is easy for us to look back in hindsight and say 'w*******s' lost its way but who at the time new what its way was supposed to be? Was there a plan or just a set of accountants' projections?
Sub-notes: 1) I always thought the best business plans could be summarised on the back of one or two beer mats. (Trendy bars don't have them anymore...). They were ideas based rather than Excel derived. 2) re: the communicable bit I once persuaded IiP to accept that THE business plan for a company was actually in the form of a powerpoint ! 3) reference another debate about the role and failings of the CIM. Don't you feel gutted when the Finance dept. take the lead on creating a business plan?
I use a mind map and a spreadsheet for the companies I work with. Fast efficient, cuts to the chase whilst leaving easily amendable documents for the client to work with. I recently used mind map on a client's ipad - that was great as the client did all the work and had distributed it to everybody before we had even stepped out the door! The spreadsheet then brings together all the financials and assumptions plus with the use of variables you can do a range of scenario planning.
What about the old adage - fail to plan, plan to fail, I think it still very true! As Gill says, you do need a plan of some kind ....Maybe the word Robert is trying to explore is 'GREAT' - a plan certainly needs to be as realistic as possible and cover all angles of the business model.
Its very easy to 'over-plan' I think, spending months and months honing a document but never actually doing anything - or (possibly worse and I've done this :-) ) - writing a plan, putting it on the shelf and ignoring it once you get started! If a plan is to be of any use you need to refer to it to check how you're doing and if necessary come up with a new plan.
No doubt everyone needs a Business Plan, but what do we mean by a "Great" Business Plan. I am a strong believer in the one side of A4 Business Plan. Just enough to give some focus, to identify priorities and to enable you to monitor progress. For small businesses in particular, this is really all they need; the challenge being to get the thoughts and ideas out of the bosses head and on to paper.
LinkedIn Groups Group: Business Link Networking Yorkshire Discussion: Business Plans - over-rated?! I think a business plan that is regularly updated is absolutely essential. Without one a business can lack focus, simply drift along and not achieve its full potential.
As is often said, you need to step back, look at your business objectively, work on the business and not in it - and a business plan is part of that. You can then measure your results against the plan and make adaptations as necessary. Yes, it will change over time - but isn't that the point - adapting quickly to changing economic conditions?
Marketing methods come and go - some are flavour of the month for a while then fizzle out. Carry on with the same old methods and results can begin to suffer. I wonder where new media will be in another 5 years?
A mentor I know and trust claims that all business owners are maniacs - good at their jobs but less so at strategic planning. They are so involved in the day to day running of their business that they never step back to plan and measure properly. I'm sure he's right!
I'm not sure you even need a business plan - I think that there are only 3 reasons that its worth spending your time on them rather than getting out there and doing more fun stuff (and encouragingly the Institute of Small Business and Entreprenurship seemed to like this idea)
Hi Robert - I agree with you. A business plan is NOT essential unless you need funding and everyone screams out for them. As a business owner of nearly 30 years I also assure Rod I am NOT a maniac. (Nor I would suggest would be Lord Sugar, Sir Philip Green, Theo Paphitis, etc.)
I also have relevant qualifications both technical and in business management, so I do know about business and strategic direction. I consider a business plan to be like a photograph at a wedding - the minute you have taken it someone has moved. It is only an overview at best of a particular point in time and once produced is out of date.
Tell me any entrepreneur that runs his business via a business plan! Rather than being a plan for the future it can actually turn into a straight jacket! Show me any business plan that has a section on 'spotting new opportunities and acting on them'. Infact if you should even mention that you are "keeping your options open in certain areas" the plan will immediately be marked down as 'lacking focus'.
I was of the same opinion untill recently -spent hours doing a business plan as part of my "Coaching Homework" I was then asked for a business plan by one of our potential suppliers and due to the professionalism of the report we got the agency agreement- Result! I used free Sage business plan software http://www.sage.co.uk/lloydstsb/default.aspx (You will probably get a sales call from LLoyds TSB if you use it )
Nicely done Steve! I think to run a business without any idea of where you want it to go, or assessment of risks etc is unwise. However, that plan shouldn't necessarily have to be a huge exhaustive document as it is impossible to plan for everything. At the risk of sounding very Buddhist, I would advise a middle way with business plans, and that it depends on the type of business you are running (or wanting to run)!
Unfortunately, the very term "Business Plan" has fallen into disrepute because of the way it is used. Also it is seen as filling in a template and passing an exam! When a client says to me, "Do I have to do a Business Plan?" I tell them an emphatic NO. I then go on to tell them they need to plan their business. This turns it from an imposition into a positive act.
The two oldest illustrations in the book still hold true - you wouldn't set out on a journey (especially in this weather) without some planning [where am I going, how am I going to get there, what do I need to take, etc], or you wouldn't go on holiday without some planning [what will it cost, etc].
The problem with Business Plans submitted to a bank, especially on their own templates, is that they are given 'points' and points don't necessarily make prizes! To simply score a Business Plan remotely (i.e. by computer) rather than discussing face to face to proposition with an experienced (real experience is essential) business banker is ridiculous.
Speaking as an individual not as a professional adviser, I have drawn great benefit from sitting down and getting my thoughts into some kind of plan. Whether this ends us looking like something I downloaded from the Business Link website is a different matter. The point is it helps me to gather my thinking together.
I do this on a frequent basis by journalling which is a way of using reflection to inform future action. I have found this very powerful as a means to aiding my own personal effectiveness.
In time management terms for the individual this is called a brain dump. Sounds a bit raw but it is a way of uncluttering your head to begin to start to identify your priorities and plan your time effectively.
like many of you I believe a Business plan can have it uses, having said that the following quote came to mind Vison without action is just a dream, action without vision passes the time action AND vision ( in a plan!) can change the world. we may not want to change the world with our business plans, but we may want our bsuiness to grwo, change , evolve etc
I agree Neil every business needs some degree of planning, in order that you are in control - I think the comprehensive business plan templates can sometimes frighten people, and often a large percentage of requested information on these templates may not be relevant to your business. Pen to paper with common sense is best!
Whether you like it or not some form of planning is necesssary. It shouldn't be regarded as something only the bank or investor requires, first and foremost every business owner should appreciate the importance of asking themselves some very searching questions. As the old saying goes "fail to plan and you plan to fail" I agree with Linda Knowles final comment - a plan requires action.
Why not? Don't you think there's value in writing out: a) this is what I do, and how I do it; b) this is where I want to get to; and c) [the part that takes up most of a business plan] this is how I am going to get there.
Even if no one else sees the plan, I believe that the act of writing it helps you to crystallize your idea.
Neither am I anymore sure that a great business plan is benificial, the banks are NOT lending, last week would have thrown out all your numbers out anyway and in this market when prices are being driven down only the nimble change managers survive. unless. Please NO MORE SNOW!!
I totally agree. As the previous owner of 14 different successful businesses I have never had a business plan. As long as I had a clear vision, mission, CVP and strategy I was away.
I'd say so, If not and you have a team of people developing and building the business. How do they do it? Jut one person dishing out the orders every morning. If you are a one man band you could possibly do it. But to build a business good enough to sell Surely a plan helps. It ensures you find our about your customers, who to target, competition, how they price, Of course a SWOT analysis. I know a business who want to sell out in 5 years time for £6million but have no idea how to get there? The business plan helps break it down, the steps on how to get there.
If someone make there business work without one fantastic good for them but companies who are looking to grow rapidly need one.
How much money will it take to get the business off the ground.
A) We'll chuck £50k in and see what happens.....
B) We'll chuck £50k in. And its for this, this, this and should generate this in return.
Also marketing campaign, you had worked out in the head, costs £3500.00 after researching it as part of the business plan it will cost £7000.00
That's my opinion. I suppose I can say that as I have a business plan
To be fair though thinking about it. A business plan is usually requested by the banks in order to lend. I am not sure why, as they don't bother reading it as it costs them to much time? and they ain't lending anyway. So on that front you don't need a business plan
I reckon that the "bulk" of the content is quite useful, in terms of getting disciplined and "real" about what the business could or should afford as it evolves (like is that fleet of shiny new beamers "essential" from day 1?).
But the killer line is, inevitably, the top one....."Sales".
And that can range all the way from super-cautious, through beer-goggles and rose-tinted specs and up to the utter fantasy/fiction category. And that in turn, of course, makes all the difference in the world to "the bottom line".
So the bottom line is - Is your sales forecast over-rated? And from which we get the supplementary questions about whether anybody knows what good, professional, reliable, trustworthy, honest, realistic, intelligent, informed, optimistic and ambitious selling is all about.
In my humble opinion, that is! ;-)
Kind Regards - Neil
Publisher - ModernSelling.com (e-Magazine for UK Sales Professionals & Managers) Twitter: @ModernSelling1
Ignoring the slightly facetious point that a business plan is needed to persuade bank managers to lend money; it is common experience that the sitting down and thinking part of producing a plan of any kind is valuable. A fixed written plan also lets others into the process, not just the bank manager, but partners.
It's also an old adage that 'no plan survives first contact with the enemy' - plans should not be set in stone but be able to be adaptive, flexible and cover contingencies. Situations very rarely unfold exactly as you expect and plans need to be living documents.
It depends on what you mean as 'great'.m In some businesses ( I've work as a consultant with SMEs) any plan would be 'great'. Not wanting to trade semantics but my view is that a good business plan gives direction, focus and, most importantly and measure that allows the business to know the direction of the business and what 'success' will be measured against. More import than 'good' maybe we should be looking at realistic, achievable and flexible - responding to ever changing market conditions. I will be interested in the comments of others! DN
Hi Owen, I think much of the reason that the lowly business plan has fallen into disrepute is sadly the work of 'expert' consultants who produce great snapshots or 'photographs' as you so rightly put it, of a business for the purpose of raising financial backing or gaining buy-in from stakeholders.
Plans that are static are relatively worthless although if the process of producing a plan is a collaborative one involving a minimum of the key players in a business, the process itself is often immensley beneficial. In the work I have done with my clients top teams have had the opportunity to work through their own versions of the plan and begin to create something which results in a greater degree of shared understanding and ultimately priority and focus.
It is therefore 'planning' that is the beneficial process not the outcome of a 'plan'.
The world is changing very quickly so the ability of businesses to learn quickly using planning as a means to adaption and change is I believe essential.
No plan is a substitute for Leadership within a business. Neither is a 'plan' a 'strategy' by definition. The two are NOT synonymous.
https://www.box.net/shared/n8zkss9nnk - This is a link to an insightful article on the area of planning which is very relevant to the 21st century business. It's worth a read.
In essence you could make the same argument about mission and vision statements. They are intended to reflect purpose provide direction for a business and in many cases they do. Having one is by no means however a true indication that a business has either purpose or direction.
I am quite sure that Sir Philip Green et al and, indeed, every other successful business does have a plan. I am equally sure that these plans will differ greatly from each other, because the needs of the business and the stakeholders of that business will have widely differing needs and expectations. In reality the newly opened sandwich takeaway catering for a primarily lunchtime trade will have decided on its wares, its inventory needs, opening hours and premises based on the demands that meeting that primary objective. This is a plan - it is not simply the process of planning, as Colin puts it, but the outcome; a substantial plan.
The owner of that small enterprise may not have committed the plan to paper, but instead may reasonably have retained it in his or her head, but it remains a plan.
The likelihood that a business with many divisions, employing huge numbers of staff could operate on the same basis is doubtful in the extreme - where many people are actively engaged then the plan, its component parts and the monitoring of its success will need to be communicated - so it becomes a more structured and detailed written document. Yet, even then it is not carved in stone, it is a dynamic work that through the continual process of monitoring and reflection (processes that may only happen subconsciously in the minds of entrepreneurs of micro-businesses - yet they still dohappen!) along with the caveats of risk and contingency taken on board, the business will utilise the 'plan' as a working document - a road map for the business and not a constriction.
I have no idea if Owen employs people in his business, I must assume not given his comments; otherwise his employees would have no idea where they were going, or what they might do to add value to the business; "It (a business plan) is only an overview at best of a particular point in time and once produced is out of date." If that is his idea of the fundamental purpose of a business plan then I can understand why he is dubious of their value.
"Tell me any entrepreneur that runs his business via a business plan!"; OK, how about..."Lord Sugar, Sir Philip Green, Theo Paphitis, etc."
"Rather than being a plan for the future it can actually turn into a straight jacket! " that would certainly be the case were the plan badly devised and irrelevant to the needs of the market, the stakeholders. I would be the case too if it were one which foolishly neglects to have a section that might be entitled.." 'spotting new opportunities and acting on them'." I know of few investors who would take a second look at a plan that neglected to have in its vision a route to developing markets and opportunities. The final comment "Infact if you should even mention that you are "keeping your options open in certain areas" the plan will immediately be marked down as 'lacking focus'." illustrates best, I believe, of Owen's misconception of a business plan.
Simply keeping options open is a lack of focus and the antithesis of a plan, but it is the context of this statement that I want to comment upon. The plan is not for someone else's benefit, it is for you, the manager of the business. So who is it that is going to mark the plan down as lacking focus?
In the new businesses that I have started and which I have then managed I have been grateful for the existence of a plan on two very important grounds, especially during the nascent period. The enthusiasm with which I pulled the plans together prior to the actual start-up period was matched by the amount of time that committed to the consideration of the detail and the ideas that eventually became the business. Once the business was started, I was very busy and working to ensure that the business was secure and moving forward - I needed that plan to remind me of direction and resources; and essential tool.
Whether written down or not plans are evident in business. The question referred to a business plan (my assumption here is that Robert is referring to the written form). Every business needs a plan, clear direction, shared vision, and so on. There are certainly benefits in writing down the plan as you rightly pointed out although all too often written plans are not used to guide the process of development in the way you suggest.
Depends what you might need the business plan for.
Funding - yes, but don't use one of those useless business plan software packages. Start from scratch and build it up, that way you can answer questions posed to you by a would be lender.
Again, remember with funding you'll be asked: how much do you need and what do you want it for - obvious questions? It's surprising how few can answer those well.
Also, your financials must demonstrate that you will generate enough cash to cover loan/interest payments if (as Neil points out) your sales forecast is too ambitious..
Business planning - a good idea if you want to set a medium term plan, perhaps for exit and/or succession planning.
Just remember if you do a business plan, use it. Don't do what I have seen loads of businesses do with annual budgets and business plans - finish it and file it. The document should never be out of reach, if it becomes out of date or obsolete then its probably time to re-do it, if you're going to use it.
Hi Colin I accept that your comment was probably based on the assumption that you say, but there was nothing explicit in Robert's question about the nature of the plan. I think that this last point is very important because business planning and the creation of a business plan does not necessarily involve the creation of a long and detailed document; rather the scale, scope and nature of the business will dictate how the plan is created and implemented. I would not produce a written document for a morning's activity at a car boot sale, but if I intend that it is profitable then I would plan for it. I would measure the performance on the day so that I might learn by it; these lessons would then be incorporated into my revised plan for the next sale - all without the need to produce a tome.
I do take the point that sometimes businesses do formulate plans that they then proceed to ignore; I guess that this must also be Owen's experience, but that is to misunderstand the process of planning and the process of management. A plan is a management tool; if the plan is effective then it will signpost when and where decisions need to be made dependent upon the circumstances that arrive at the door of the business. The effective plan will also provide evidence of the success or otherwise of the business and from it ought to be derived the data that will be needed to identify problems for which revisions of the plan are required - it is a dynamic tool!
In successful businesses the plan will have been followed, albeit the plan in place a year or so down the line may not bear more than a passing resemblance of the original. Can you imagine the reaction of Alan Sugar to a member of his team whose contribution was not in full accord with the plan or its improvement? I really think that the words "You're fired" might well be heard. That does not mean that the idea generated by that team member would not be valid; I would expect that the idea would be heard and, if appropriate, be then incorporated into the plan in such a way that it does not create a hiatus elsewhere. That is planning as a management tool!
I think that in essence we agree on many things. I certainly no not disagree that planning is an essential management tool this being my first assertion. I think the brevity of the question and its openness to interpretation add fuel and breath to this thread and allow people to air their experience and their views. You could read the question differently still and focus the the word 'great'. Clearly this is a subjective word with no way of measuring it. Not an appropriate management word then. What is great to one business may be average or poor when placed in a different context. That is why it is such a good question.
think that in essence we agree on many things. I certainly no not disagree that planning is an essential management tool this being my first assertion. I think the brevity of the question and its openness to interpretation add fuel and bredth to this thread and allow people to air their experience and their views.
For example, you could read the question differently still and focus the the word 'great'.
Clearly this is a subjective word with no way of measuring it. Not an appropriate management word then. What is 'great' to one business may be average or poor when placed in a different context. That is why it is such a good question. For example the business owner may think they have a great business plan but Peter Jones may have another view (just thought I would throw in another reference to a reality TV show).
For me 'greatness' is ultimately measured in the result rather than the input. So is a great plan? Technically it may be. It might even be conceptually 'perfect'. Will it work? That depends on a whole range of other factors.
If I were to differ with you in any way John I would probably not share the degree of your fervancy given the complexity of the simple question and the many different applications for plans and planning in organisational life.
For example, 'the plan has to be followed' simply doesn't happen in reality in every type of plan. Depending on the level of the plan within a business this may or may not be true, but in every plan there has to be inbuilt flexibility in order to account for the fact that our foresight is far from perfect and that we are not in control of everything around us such as thebehaviour of currency, the economy, our suppliers' businesses, the price of raw materials, the pace of change, the rate of technological advancement, societal expectations, the loss of key staff, the availablility of finance, new statute, and most noteably of late, the weather (to mention just a few
If we don't know where we are going, how do we know when we've got there? The lack of some sort of plan / or vision greatly impacts the operational ability of those sitting at the lower levels. As a marketeer - without knowing the higher level plan, it's impossible to direct marketing activity or dollars and we likely devolve into random acts of marketing on whatever takes the fancy of those who own the budget. If we know who is being acquired, if the plan is to grow X share, go for X revenue then we know where to direct operational activity and what to measure success on. But you are right some of the best business plans I've seen have been powerpoints or a one pager. Some of the worst are long rambling research documents with no end goal.
I'm not sure either, i seem to spend TOO much time currently adjusting mine which has a good line and bad line. Lets hope next year is better than this one but i'm planning for a lift in 2012 !
What a good topic! But it's probably a bit too broad to be able to prove or disprove anything about the usefulness of business plans.
A bit like saying, for example, "do you really need 'A Great Haircut'?" - Well yes sometimes I'm sure a great haircut is really important - but the rest of the time it's not.
Business plans, how they are written, who reads them and what they are used for covers a very broad range of variables ...
But, I think we can say that (like haircuts) in many situations a great business plan is crucial but that for the rest of the time (most of the time?) it's not.
What is tricky is being able to distinguish between the two and act accordingly.
By the way, I don't have a very good haircut at the moment...
Those which are sales documents for banks and which do not become part of the central fabric of day-day management have limited value. So many business plans lie on shelves gathering dust after the first flush on enthusiasm.
If business plans are underpinned by a vision and strategy that the stakeholders are truly committed to, then the plan can be central to the alignment of processes and people that will drive the vision.
The best business plans are those which are tools for strategic execution.
The answer is "Yes, ...but only when you need to convince investors to part with their money!" Nobody gives away their kids inheritance without seeing a "Great Business Plan". On the flip side I've seen some remarkable bits of "business pornography" masquerading as business plans intended to do just that. Seemingly attractive but totally unrealistic....
You are right, Richard. I had the 'misfortune' to be involved in a stem-cell business that had a CEO and COO who could write brilliant plans, attract many 'mom and pop' investors (as well as a few 'wise men and women') then burnt the lot in less than a year. They had good IP and technology (a better mouse trap) but couldn't 'get the world to beat a path to their door', which is now firmly slammed shut. They needed (and had) a great business plan but couldn't implement. They left many creditors high and dry (but at least I wasn't one of them).
I've just spent two days training various levels of lawyers in management.... none attending (a few years qualified but not yet partners) had seen their firm's plan; this was either because there was no plan or becaue they were not party to it's publication. Employee engagement? Huh! All they knew they had to do was to keep earning the fees...
Just as a final comment to John - yes I do employ people (16 of them) and yes they do know exactly what is expected of them - daily and weekly team briefings see to that and yes we do have a plan for the business and it is currently exceeding all projections. However, it may not be a 'formal' Business Plan in the sense that Robert's question posed and yes it is dynamic and can change daily - it did yesterday after a trip to London for instance - but I do have a 'plan' for my business.
LinkedIn Groups Group: Business Link Networking Yorkshire Discussion: Business Plans - over-rated?! Hi Owen
I am glad to hear that the business is doing well. I am especially pleased to hear that you do not subscribe to your own previous comments that a business plan is unnecessary. It matters not a jot how formal it might be, as long as it is relevant and, above all that it works.
Perhaps your initial comments were about simply having a process called planning that has no real enagement with the reality of business. It certainly happens, but rarely in successful businesses. Colin mentioned about my apparent fervency; well I suppose that it is true that I get a bit of a bee in my bonnet over this particular issue and that is simply for two reasons.
The first is that far too many comments are made in public groups by people who claim to be experienced business people who cast doubts on the whole process of business planning - usually with the sort of bravado that might be expected of those who actually have no real experience of actually running a successful business. The second is that new start-ups can easily be influenced by the sorts of inane claims that suggest that success is easy and apparently offering a work-free panacea to a viable business.
My mission in these things is to challenge claims such as you appeared to be making and to put across an alternative viewpoint supported by the relevant arguments.
Thanks for the comments John, I have been running various businesses now for nearly 30 years and am still learning. However, my method of business planning is exactly that 'my method' it works and it doesn't involve reams of paper with Venn Diagrams, Graphs, Pie Charts and pages of financial forecasts, which seem to be the major components of those that I see far too often produced by consultants.
Owen, it is always a pleasure to hear of success stories. In what I intend to be my final comment - I remember well a phrase that one of my former bosses kept repeating to me way back in the early 70s, "horses for Courses!" he would mutter in his rich Galway brogue.
It has to be said that the comment was very often, from his lips at any rate, entirely inappropriate and banal, debased and cliched through overuse. But in this case it fits well. If you employ me as a consultant, I do not carry with me the inherent enthusiasm and the prior knowledge and history of the business, I could only tell you about what is available for me to see, measure and understand. It would not be my business, but as a consultant, I would have been given a brief, and I would have my own reputation to uphold (not to mention to defend in the case of a contested outcome).
In those cases I would feel entirely justified in presenting to you, the manager and owner of my client business, a full digest of the proposals, the reasoning for the proposal (supported by whatever visual aids and diagrams that were appropriate) and the full plan with intended road map and outcomes; only by this means could I ensure that you, my client, were fully briefed about what I planned for YOUR business.
Only through that means, I believe, would you have sufficient insight into my methods and ideas for you to apply your prior knowledge to challenge them and therby between us to ensure that we got it abslutely right. If, on the other hand, I were the owner manager, then I would use 'my method'.
Hi Robert, The BP is like a route map. It helps you decide which direction you want to go and shows some variations on how you might get there. It shouldn't be set in stone, but if you borrowed money on the strength of it it would be wise to discuss significant changes with the funder,
Fail to plan, prepare to fail is my opinion. However, the format does not need to be 199 pages long. I think the key is communicating the vision to employees or those who have execute the plan.
Planning is often undervalued and in many cases execution saves the plan.
Some great points, I think the process of planning is essential to get the understanding of what needs to be done, and what is possible to achieve and some targets to aim for, and when. But I also agree that they should be as succinct as possible so they are easy to read, understand, follow and implement - that is the best way to get employee (and senior management) engagement.
And on a slightly tongue in cheek note, of course they are essential otherwise 25% of the CIM Professional Diploma is unnecessary!
Hey Andrew.. like the tongue in cheek comment. My fail to to plan , prepare to fail mantra is commonly used by me and also a succint way to remind me of the fundamentals of how to get things done. You made me chuckle.
I'll do you a special - you understand that normally I'd charge about £1897 for this service but, until 31 December, I'm happy to offer it for a paltry £1391. Can't say fairer than that can I. By the way, never mind the quality, feel the thickness, it must be a great plan because its heavy and costs a lot. Oh, right! That was the nature of our earlier debate wasn't it?
Some valid points specifically around the process, implementation, employees engagement etc. I think I would add regular review and update of the plan. Of course with all checks and balances techniques available to us if we do not believe 100% in what we are trying to achieve then the plan could fail!!
Going back to the original question, it's more likely that you'll create the future you want for your business and for yourself if you can (1) articulate it clearly and (2) put together a clear, comprehensive and robust plan of what you will do to get you from where you are now to where you want to be. So, planning is a valuable thing to do.
At the same time, the only thing that can be guaranteed about a plan is that reality won't work out quite like the plan! The point is that it's the process of planning that is valuable rather than the document itself.
And, in my view, it's more useful to have a plan for your business (ie. a plan that works for YOU) rather than to follow a formulaic standard set of contents for what a business plan is meant to be like.
The very process of writing down your plans for your business increases the chances of achieving your goals. If you don't like what the plan is telling you once you have prepared it, you can rip it up and start again. You can explore different scenarios in a risk free environment.
I have worked on plans with experienced business owners who have become jaded. In discussing and preparing the plan they have become re-energised and they are reminded of why they went into business in the first place.
All businesses should be planned for, otherwise you leave it up to chance - a precarious strategy.
Sadly, most Business Plans I've looked at are 'Works of Faction' - a combo of fact and fiction - and rarely survive contact with reality aka. the competition.
RobertC - the business planning world needs you now!
As Churchill said 'Plans are nothing, planning is everything'. It's not the bit of paper but the thought process. As I said to a contact at the BBA banks should really produce a form that seeks the information that their credit scoring requires to try to get the Business Plan back to planning the business not satisfying the 'tick box' part of funding.
Business plans started for the right reasons but have become hostages to fortune. The more detailed and honest the plan the more likely it is that it can be endlessly interrogated for reasons not to support it and its underlying proposals.
Consider the most famous weasel words in the English legal lexicon: "anything you say may be taken down and used in evidence AGAINST you".
This is what you do when you give a cynical, half-witted bank employee a well-written business plan. You provide the half-wit with all the evidence to hang you because, as the words say, it may be; probably will be, used against you: not for you.
Today, it is probably better to set out a statement of intended outcomes to your project proposal and let them judge if you and your team are capable of carrying it out. The big, set-piece business plan concept has been corrupted by the very people (banks) it was intended to assist in deciding whether to support you.
"A good plan today is better than a perfect plan tomorrow" General Patton.
Business plan are essential. The trouble is that they normally live on a shelf collecting dust. You should review your plan regularly. They should be a business action plan.
I view a business plan as essential in order to run a business well. You can run one without a plan, but it's like working blindfolded with one hand tied behind your back.
But they don't have to be complicated. I believe that a lot of SME businesses don't have a business plan simply because they view putting one together as an onerous, time consuming and complicated process, but a simple plan is better than no plan.
All you need is one sheet of paper onto which you note who your customer is (or who you want it to be), what product or service you are going to sell to them is, and how you are going to sell it, and just that immediately give some focus. And I agree with Paul (or is it Napolean) that the process is the valuable element as it forces you to think strategically about the business - particularly with SME's who are usually running around frantically running the business on a day to day basis.
And this is the other reason why simplicity is best. A business plan is a living, breathing plan and so it needs to be reviewed and updated regularly - I would suggest every 6 months or whenever there is a significant change in the business or the market. A simple plan that addresses the key drivers to the business updated twice a year is far more effective than tomes of cerebral strategic thinking once every 5 years.
Consider risk. If you really identify and attempt to analyse risk elements then you provide the complete reason to reject.
Although risk exists and you are expected to address it and set out how to manage and reduce it, this exercise is anathema to a (UK) bank that is probably completely risk averse.
The "risks" banks take in the commodity, currency and futures markets are entirely underwritten by their customers and, in the case of the UK, by the Government via taxes pledged in advance.
These are the operations that attract the big, risk-free annual "bonuses" that are about to be announced in the New Year.
What the average British banker knows about risk could be written on the back of a small postage stamp.
The bank will want you to state that there is no risk, and thus accept all responsibility if there is any, or it will look at your logical reasonings to recognise and manage uncertainties and risks and try to force you to pledge your entire fortune, life and belongings now and into the future to them for not accepting your well-thought-out proposal and its attendant risk profile no matter how small or unlikely.
I strongly believe that a business plan is absolutely essential for most businesses.
A good business plan must cover a lot more than just sales, and is useful for far more than just raising funds. When I produce business plans with (not for) my clients they are struck very quickly by how little they actually understand about their business, industry, competitors, margins, strengths & weaknesses etc etc.
The business plan production process always throws up issues and concerns, as well as opportunities that the business owner had not even considered, In my view the main purpose for producing a plan is to ensure that every angle of the business is looked at, that there are clear and quantifiable goals in place, together with a well thought out plan, or staged road map, in bite sized pieces, showing how and when these goals will be achieved.
This will include monthly and annual budgets that must be reviewed regularly.This is a discipline that most businesses in my experience do not work to, but that can make the difference between success and failure.
All the other issues such as realism in sales forecasts, funding requirements etc are essential but would form an integral part of the business plan in any case.
This is why it's always a good idea to have someone outside the business involved, so that these things can be challenged.
I'd agree absolutely with you there Nick, only you're getting quite close to actually running the business for whoever it is.
And the "adjustments" that need to be made if the top-line, Months 1 - 6, is coming in at £0, £0, £0, £0, £0, £0 can be rather profound, and time and money consuming. ;-)
Why does everyone think a business plan is for the Bank?? I agree it's for your Business, fact, it's not even looked at like it used to be 15 or 20 years ago, back then you sat down with your Bank Manager and discussed you business plan. those days are long gone, now it's all Analytics and your credit score, but without one you can lose your way, far better to have one.
Peter, could not agree more, it is the act of planning not the plan itself that is so important. So few businesses ever really stop to take stock of where they are now, where they want to go, and how they are going to get there. With no destination in mind, how do you know if you are on the right road, or even if you have arrived!
If the need for a Business Plan ensures business think about planning then it is worthwhile.
Incidentally ...I think it was Eisenhower who is credited with the quote not Churchill!
Banks in Britain are simply another burden on the backs of those obliged to use them. The days of an autonomous manager with some powers of decision are long gone. Such figures were of the Captain Mainwaring generation. Look at the way a bank manages your account and see whose interests are being served. It is definitely not a professional, client based relationship of equals and based on mutual goodwill.
Ask the question what use is a bank to the business or individual relationship and could it be done better? Our banks are part of an unholy establishment alliance against the rest of us.
So Robert, what did the bank manager think of the 'plan'? Was it developed for him/her or is it the tool that you will manage the business through or something else entirely?
A plan is probably more important for the people inside the business than those outside of it ... and the planning process is probably more important than the plan itself ... done well it can lead to inspiration, motivation, alignment and drive (done poorly, the writer ends up frustrated as the document gathers dust on the shelf and those who it is aimed at continue to ignore it) ... arguably the most important parts of the plan are the higher level objectives, outcomes and principles ... the activities will need to change consistently as you face new challenges ... no plan survives first contact with the enemy, so imagine all possible scenarios and plan out your likely response ... I have no doubt you need to plan for your business (otherwise I wouldn't work with and support Your Business Your Future and the Better Business Programme) ... however, having once written a 60 page business plan, with 5 years of financial projects to get funding for a business that eventually failed, I am not sure a business plan (in its traditional sense) is critical for the success!
As Gerard says 'it is a plan for your business and needs to work for you'
Yup! Behind every plan there is a 'vision', but what do we mean by 'vision' exactly?
In terms of a business plan for a company, for one that is large enough to have a board, it is where the board wish to take the company and on what timescale, in order to deliver their promises to shareholders and stakeholders.
For a small business run by a Managing Director Owner, it is essentially what he (or she) wants out of the business himself on his timescales, and where he wants to take the company in order to deliver that.
But you can also have visions for any significant development you wish to make with your business. The key here is that these 'visions' should be aligned with the company's vision for itself.
Where business plans are only prepared for banks, it has the potential of becoming a box ticking exercise this implies that the owner sees little or no value in having a business plan.
Many business owners are so bogged down with day to day issues, that business strategy can play second fiddle to day to day issues. However failing to look at a business strategically can lead to missed opportunities or threats. I believe one of the most important aspects to business planning is looking at the Strengths, Weaknesses, Opportunties and Threats in the business. It can provide a real focus for addressing the big issues faced by the business.
Also a business plan can provide a benchmark to monitor performance against and where necessary be a trigger for response to changing circumstances.
Greville, I agree with you AND even an plan written for internal use benefits hugely from a critical read from a third party ... someone who is not emotionally linked to the business and can provide a balanced view ... that's why we use coaching groups and presentation panels on the Better Business Programme and why I encourage any business owners that I work with to share their plans with people outside their business (preferably other people who run businesses) ... the more times you articulate your plan to outsiders, the more you take on (or ignore - no one person is an expert) their feedback, the more robust it becomes, the more you believe it, the more likely you are to make it happen.
Yes, you see the obvious advantages in sharing a complex task and letting others savage it as an act of creative destruction. It is easy to put the bits back together when you recover your pride and composure. Old Schumpeter the poet, philosopher and sometime economist worked on this sort of thing back in the forties. Creative destruction and reinvention: it works!
Whether it's 'great' or not is debatable, however I think most businesses would do better with a written plan of action. You wouldn't set out to climb a mountain without the necessary provisions, map and compass, likewise with business - how do you know where you're going if you don't know where you're heading; asos you won't know when you've got there!
A plan acts as a guide a benchmark and in that sense if useful where it falls down often is in execution however I do think one vital part is cash flow projections that help to keep you mindful of the need to be paid on time. I have tried many versions of the plan over the years bowdays I set myself a long term destination a yearly forecast an activity sheet and then 3 months max of detail but the key thing is putting it into action at the right time. Reactivvity especially for a small business is workable so long as there is something to work against but when times get tough using a business plan as a benchmark enables focused flexibilty.
Robert - I had you at one of our ACCA seminars - I think you are great! Business plans...the banks and those with the money swears by them so I think we are backed into the wall here...
Maybe great for an existing business with measurable results but ludicrous when you're making figures up as a start-up so you can get a puny overdraft out of a bank. And talking of measurable results, in over 25 years as a mortgage broker, nothing I've tried by way of marketing, advertising, promotion or PR on a virtually non-existent budget has every produced a measurable result meaning I haven't dared gamble larger (borrowed?) sums when no-one's been able to prove to me that 'their' magic formula has worked or anyone else.
agree with Rod. As a mortgage broker I think there is some truth there. I have not yet seen in my experience (albeit not as extensive as many of you), where a business plan for a new business brought about the financial results. It is something the banks and other lenders foist on small business some of which are struggling to make sense of their raison d'etre whilst they try and get their business off the ground. I have seen the opposite where the business plans have gone up in smokes - with the business! I think it is appropriate for more established and certainly larger small businesses.
I learn't the hard hard way that 'flying by the seat of your pants' - whilst being rewarding on the 'material' and 'daily champion' fronts - eventually becomes a chain too heavy to service.
A 'plan' of your business to me is simply a clearly defined set of goals and targets that are visible to the whole organisation.
I'm a great believer that having a 'roadmap' now is actually a comfort and acts as a 'horizon' or 'altimeter' gauge.
Like a traffic light - when you check against your roadmap and it's green - GO GO GO, when it's amber - time to review, refine and prototype and when it's red - you've stopped! :-)
Yes, you can over plan. The key to a successful business is not having a good plan, it's having a good business model (see Doug Richard talking about this at http://www.schoolforstartups.co.uk/entrepreneurs-guide-to-creating-testing-business-models/). If you don't have a good business model, no amount of planning will make you any money.
'Business Plan' conjures up many different things for different people and because of that some treat it as a chore and some thrive on playing with figures.
To those I have worked with who have no apparent Plan I ask simply - "Where do you want to take your business? What will you then look out for that tells you you're getting there? How will you make sure you do get there?" The answers come in varying degrees of form and detail, but they all have a common conclusion. Getting this base clarity of thought unlocks their energy to make things happen.
They don't need a great Plan as such, but they do need help in creating the clarity that works for them. Indeed some of them think of their new clarity as a Plan: others need to write it down in detail.
I see the value of a plan (and any other 'strategy' type documents) for the value of the thought process, and for the fact that a well thought out plan / strategy / whatever gives confidence - to you, to your people, to potential investors or anyone else it may be needed for.
Confidence is the intangible factor that will keep things running - particularly commitment - when the real world intervenes and you need to know how to adjust to accommodate whatever is flying your way. Without some form of plan, you run the risk of floundering in a waffle of 'what do we do now then?' that can become blind panic if the pain is sharp enough. It almost goes without question that the numbers in it will not be valid, but what will be valid will be the collection of CSFs, objectives and associated strategies, sales plans, risk analysis and issues / dependencies that mean you understand your business and are on top of running it.
Ultimately, you should be able to articulate your business plan in less than 1 side of A4 (I can't remember the source of the quote) but without going through the thought process, you end up writing reams of semi-meaningful but unfocused stream of consciousness material that should tell you that at heart you haven't really thought it through........ I agree that it's the clarity that is important.
So yes, I see value, of the Whatever works for You variety. If that means you need to raise money, you'd better be able to tell someone what you want to do with it and how you will deliver a return to them. The banks may be a bit anal sometimes in their approach, but on the whole, they don't have a problem if you can articulate things well enough.
I expect many of you know the quote form John Harvey Jones: "Planning is an unnatural process; it is much more fun to do something. And the nicest thing about not planning is that failure comes as a complete surprise, rather than being proceeded by a period of worry and depression."
I'm with Eisenhower on this one: it's the process that matters. All plans are wrong because once you start to execute them, some detail changes, since sales or any other metric will be higher, lower, faster or slower than you thought. The real value in planning is threefold: firstly it forces the planner to think, and increase the number of "knowns" and reduce the number of "unknowns"; secondly a good plan will document the answers to "what ifs", like a key employee leaving, or competition emerging before you have got your product established; thirdly it becomes a means of communicating to people in your team, increasing the likelihood that you will all pull in the same direction.
In my experience there are two types of business plan. One is mainly for internal use to give direction and milestones and the other is external to raise finance. They are totally different. I get involved in writing the later and it is geared at highlighting the areas that Banks, investors, Finance Wales etc. want to hear about. ie Is it viable, do the numbers stack up and do the management team have the ability to deliver.
A business plan in itself is a useful reminder of what you planned to do. It is also a great sales document for staff and investors. However, a business plan is far more useful than that: - It enables you to create a model for your business that enables you to understand the impacts of different actions, understand where the stressors are and what you can do about them - It enables you to test activities on paper rather than for real. Especially if you bring in a facilitator to help you build a true model of your business and then truly test it. - The process of creating the plan can be very enlightening, throwing up challenges so that they can be solved, not just swept under the carpet. - Identify marketing activities and associated costs - Identify capacities and when and who to take on as you expand. - How much cash will you need and when? 85% of businesses go bust because they run out of cash! A business plan helps you see this coming and develop strategies to cope.
As an engineer, I would not dream of building something as complex and sensitive as a business without modelling it in detail and fully understanding its behaviour, nor would you expect it. So why do it with your business.
How many of the people that have told you that you can do without a plan are truly successful? How many that tell you to plan are truly successful? To run a sustainably successful business you need to understand what is coming and how you are going to deal with it.
Using a facilitator that is independent of the emotion of a business and has broad experience will help you to identify the potential issues in your business and will help you find practical solutions to catalyse your business.
Get yourself a business catalyst, coach or advisor today to help you plan and implement a business plan for sustainable, profitable growth.
I'm not sure what would constitute a "great" plan. What I find is that it is the people who write the plan that benefit by far the most from it and it usually leads them to change important things in the business. Actually having to write down thoughts leaves no hiding place - the first person to really convince is yourself, the writer.
It is always interesting to get other people's take on the benefits of planning and on how they do it.
I don't expect that working through the first stab of your own business plan would lead to any major eureka moment, but by golly it is a sure way of finding out what your business is about; if you work through the detail to understand the ins and outs, you will at the very least have an excellent reference point for future reference. I use the e-volving business coaching methodology with clients and we focus on 22 separate growth areas over as many months. And having a business plan really comes in useful as a benchmark during this process.
To expand a little on Greville's last point: A business plan is not an end or a single product in itself. An increasing amount of my mentoring projects are with start-up or second stage companies. Very frequently I find that they have been told they must have a business plan and in a particular format. It quickly becomes similar to an examination thesis. The objective becomes one of having a well structured and well presented document. However, all this shows is an understanding of, and ability to construct, a business plan.When this "examination" is passed the business plan is filed away in case some investor needs to see it. A business plan, as Greville clearly states, can have many formats, depending on target audience. It is a statement of the company vision, product USPs, market analysis, competitor analysis and all of the upside/downside financial analysis that the foregoing throws up. It must be real and dynamic.This knowledge and analysis may be partly in the head of the founder(s) and partly on various documents when it is being used to drive and monitor progress internally. When a lender or investor requests insight to the business plan it will need to be presented in an orderly and clear format. However, it is the same real, meaningful and active business plan.
So; yes, every business should have a business plan. It's only the method of recording and presenting that is optional.
Having been a project manager most of my life, I can't imagine a business succeeding without a plan. At the very least if there are more than a couple of people involved you have to write down your thoughts to make sure everyone is pulling in the same direction and understands priorities. Plans are just a vehicle to communicate intent. If you need background info and analysis to make that communication work, then in it goes - and that depends on who you are communicating with.
I often write plans just for myself - so I don't have to remember it all and reinvent how I am going to achieve something ever time I think about it - the pen is a wonderful memory device! But once it is written it immediately starts to change - no worries, just wait a while and bring it up to date - for me, it is the thinking process and recording for my memory that is important.
One problem I do have with plans is that we tend to make them all time based - and this is one area that tends to go wrong the most. I certainly hardly ever stick to business milestones because of the date - rather I do things when the context and criteria are right - yet this is not often in the plan. I am thinking of rewriting my plan with decision criteria and as few dates as possible. I wonder what it will look like, and if the various audiences for it will understand it readily?
Wow this is all getting very deep and detailed. To summarise my understanding at the moment:
If you want to get somewhere specific - you need a plan
If you don’t care where you end up – you don’t need a plan
Banks don’t lend against plans and projections they lend against your assets
Grenville - many days ago you said "God comments here: very good!" But you didn't put the link in. I would be interested to see what He had to say on the subject. Did He have a plan or did He make it up as He went along :)
I don't expect that working through the first stab of your own business plan would lead to any major eureka moment, but by golly it is a sure way of finding out what your business is about; if you work through the detail to understand the ins and outs, you will at the very least have an excellent reference point for future reference. I use the e-volving business coaching methodology with clients and we focus on 22 separate growth areas over as many months. And having a business plan really comes in useful as a benchmark during this process.
Having been a project manager most of my life, I can't imagine a business succeeding without a plan. At the very least if there are more than a couple of people involved you have to write down your thoughts to make sure everyone is pulling in the same direction and understands priorities. Plans are just a vehicle to communicate intent. If you need background info and analysis to make that communication work, then in it goes - and that depends on who you are communicating with.
I often write plans just for myself - so I don't have to remember it all and reinvent how I am going to achieve something ever time I think about it - the pen is a wonderful memory device! But once it is written it immediately starts to change - no worries, just wait a while and bring it up to date - for me, it is the thinking process and recording for my memory that is important.
One problem I do have with plans is that we tend to make them all time based - and this is one area that tends to go wrong the most. I certainly hardly ever stick to business milestones because of the date - rather I do things when the context and criteria are right - yet this is not often in the plan. I am thinking of rewriting my plan with decision criteria and as few dates as possible. I wonder what it will look like, and if the various audiences for it will understand it readily?
I'm with Eisenhower on this one: it's the process that matters. All plans are wrong because once you start to execute them, some detail changes, since sales or any other metric will be higher, lower, faster or slower than you thought. The real value in planning is threefold: firstly it forces the planner to think, and increase the number of "knowns" and reduce the number of "unknowns"; secondly a good plan will document the answers to "what ifs", like a key employee leaving, or competition emerging before you have got your product established; thirdly it becomes a means of communicating to people in your team, increasing the likelihood that you will all pull in the same direction.
I see the value of a plan (and any other 'strategy' type documents) for the value of the thought process, and for the fact that a well thought out plan / strategy / whatever gives confidence - to you, to your people, to potential investors or anyone else it may be needed for.
Confidence is the intangible factor that will keep things running - particularly commitment - when the real world intervenes and you need to know how to adjust to accommodate whatever is flying your way. Without some form of plan, you run the risk of floundering in a waffle of 'what do we do now then?' that can become blind panic if the pain is sharp enough. It almost goes without question that the numbers in it will not be valid, but what will be valid will be the collection of CSFs, objectives and associated strategies, sales plans, risk analysis and issues / dependencies that mean you understand your business and are on top of running it.
Ultimately, you should be able to articulate your business plan in less than 1 side of A4 (I can't remember the source of the quote) but without going through the thought process, you end up writing reams of semi-meaningful but unfocused stream of consciousness material that should tell you that at heart you haven't really thought it through........ I agree that it's the clarity that is important.
So yes, I see value, of the Whatever works for You variety. If that means you need to raise money, you'd better be able to tell someone what you want to do with it and how you will deliver a return to them. The banks may be a bit anal sometimes in their approach, but on the whole, they don't have a problem if you can articulate things well enough.
agree with Rod. As a mortgage broker I think there is some truth there. I have not yet seen in my experience (albeit not as extensive as many of you), where a business plan for a new business brought about the financial results. It is something the banks and other lenders foist on small business some of which are struggling to make sense of their raison d'etre whilst they try and get their business off the ground. I have seen the opposite where the business plans have gone up in smokes - with the business! I think it is appropriate for more established and certainly larger small businesses.
Maybe great for an existing business with measurable results but ludicrous when you're making figures up as a start-up so you can get a puny overdraft out of a bank. And talking of measurable results, in over 25 years as a mortgage broker, nothing I've tried by way of marketing, advertising, promotion or PR on a virtually non-existent budget has every produced a measurable result meaning I haven't dared gamble larger (borrowed?) sums when no-one's been able to prove to me that 'their' magic formula has worked or anyone else.
Robert - I had you at one of our ACCA seminars - I think you are great! Business plans...the banks and those with the money swears by them so I think we are backed into the wall here...
A business plan in itself is a useful reminder of what you planned to do. It is also a great sales document for staff and investors. However, a business plan is far more useful than that: - It enables you to create a model for your business that enables you to understand the impacts of different actions, understand where the stressors are and what you can do about them - It enables you to test activities on paper rather than for real. Especially if you bring in a facilitator to help you build a true model of your business and then truly test it. - The process of creating the plan can be very enlightening, throwing up challenges so that they can be solved, not just swept under the carpet. - Identify marketing activities and associated costs - Identify capacities and when and who to take on as you expand. - How much cash will you need and when? 85% of businesses go bust because they run out of cash! A business plan helps you see this coming and develop strategies to cope.
As an engineer, I would not dream of building something as complex and sensitive as a business without modelling it in detail and fully understanding its behaviour, nor would you expect it. So why do it with your business.
How many of the people that have told you that you can do without a plan are truly successful? How many that tell you to plan are truly successful? To run a sustainably successful business you need to understand what is coming and how you are going to deal with it.
Using a facilitator that is independent of the emotion of a business and has broad experience will help you to identify the potential issues in your business and will help you find practical solutions to catalyse your business.
Get yourself a business catalyst, coach or advisor today to help you plan and implement a business plan for sustainable, profitable growth.
Greville, I agree with you AND even an plan written for internal use benefits hugely from a critical read from a third party ... someone who is not emotionally linked to the business and can provide a balanced view ... that's why we use coaching groups and presentation panels on the Better Business Programme and why I encourage any business owners that I work with to share their plans with people outside their business (preferably other people who run businesses) ... the more times you articulate your plan to outsiders, the more you take on (or ignore - no one person is an expert) their feedback, the more robust it becomes, the more you believe it, the more likely you are to make it happen.
Yup! Behind every plan there is a 'vision', but what do we mean by 'vision' exactly?
In terms of a business plan for a company, for one that is large enough to have a board, it is where the board wish to take the company and on what timescale, in order to deliver their promises to shareholders and stakeholders.
For a small business run by a Managing Director Owner, it is essentially what he (or she) wants out of the business himself on his timescales, and where he wants to take the company in order to deliver that.
But you can also have visions for any significant development you wish to make with your business. The key here is that these 'visions' should be aligned with the company's vision for itself.
Banks in Britain are simply another burden on the backs of those obliged to use them. The days of an autonomous manager with some powers of decision are long gone. Such figures were of the Captain Mainwaring generation. Look at the way a bank manages your account and see whose interests are being served. It is definitely not a professional, client based relationship of equals and based on mutual goodwill.
Ask the question what use is a bank to the business or individual relationship and could it be done better? Our banks are part of an unholy establishment alliance against the rest of us.
I strongly believe that a business plan is absolutely essential for most businesses.
A good business plan must cover a lot more than just sales, and is useful for far more than just raising funds. When I produce business plans with (not for) my clients they are struck very quickly by how little they actually understand about their business, industry, competitors, margins, strengths & weaknesses etc etc.
The business plan production process always throws up issues and concerns, as well as opportunities that the business owner had not even considered, In my view the main purpose for producing a plan is to ensure that every angle of the business is looked at, that there are clear and quantifiable goals in place, together with a well thought out plan, or staged road map, in bite sized pieces, showing how and when these goals will be achieved.
This will include monthly and annual budgets that must be reviewed regularly.This is a discipline that most businesses in my experience do not work to, but that can make the difference between success and failure.
All the other issues such as realism in sales forecasts, funding requirements etc are essential but would form an integral part of the business plan in any case.
This is why it's always a good idea to have someone outside the business involved, so that these things can be challenged.
Consider risk. If you really identify and attempt to analyse risk elements then you provide the complete reason to reject.
Although risk exists and you are expected to address it and set out how to manage and reduce it, this exercise is anathema to a (UK) bank that is probably completely risk averse.
The "risks" banks take in the commodity, currency and futures markets are entirely underwritten by their customers and, in the case of the UK, by the Government via taxes pledged in advance.
These are the operations that attract the big, risk-free annual "bonuses" that are about to be announced in the New Year.
What the average British banker knows about risk could be written on the back of a small postage stamp.
The bank will want you to state that there is no risk, and thus accept all responsibility if there is any, or it will look at your logical reasonings to recognise and manage uncertainties and risks and try to force you to pledge your entire fortune, life and belongings now and into the future to them for not accepting your well-thought-out proposal and its attendant risk profile no matter how small or unlikely.
"A good plan today is better than a perfect plan tomorrow" General Patton.
Business plan are essential. The trouble is that they normally live on a shelf collecting dust. You should review your plan regularly. They should be a business action plan.
Going back to the original question, it's more likely that you'll create the future you want for your business and for yourself if you can (1) articulate it clearly and (2) put together a clear, comprehensive and robust plan of what you will do to get you from where you are now to where you want to be. So, planning is a valuable thing to do.
At the same time, the only thing that can be guaranteed about a plan is that reality won't work out quite like the plan! The point is that it's the process of planning that is valuable rather than the document itself.
And, in my view, it's more useful to have a plan for your business (ie. a plan that works for YOU) rather than to follow a formulaic standard set of contents for what a business plan is meant to be like.
142 comments:
I think Business Plan are like "goals", a great way to analyse the situation and get passionate about the future, but if you believe that everything will happen according to plan then you aren't paying attention to reality.
The secret of success in most fields is flexibility.
Never stuck to them. Too much changing. Especially now. Do the sumd then work your arse off.
Chip
If people prepare a business plan with the belief that things will turn out according to plan they are misguided. However this doesn't mean that that it isn't a worthwhile exercise.
Many business owners are so bogged down with day to day issues, that business strategy can play second fiddle to day to day issues. However failing to look at a business strategically can lead to missed opportunities or threats. I believe one of the most important aspects to business planning is looking at the Strengths, Weaknesses, Opportunties and Threats in the business. It can provide a real focus for addressing the big issues faced by the business.
Also a business plan can provide a benchmark to montor performance against and where necessary respond to changing circumstances.
I don't agree with the argument, don't plan because things always work out differently. When going on a journey people start off with an idea of how they are going to get to their destination (they don't head off in a random direction), if there is a traffic jam or a rail problem they work out an alternative travel plan - this doesn't mean that it would have been right to not plan the journey (and head off in a random direction) in the first place!
I think that you have taken Craven a bit too literaly. He is simply challenging our assumptions about the wretched business plan. While there is no way to replace the BP then we have to make do with it, warts and all!
Well, sarcasm aside, you do need something, ideally a bit ore than a sketch on the back of a fag packet. I imagine you might get a few reaponses from this one.
Robert, "great" is likely not appropriate. However a business plan is useful, it helps focus the mind and appropriate action and will demonstrate where revenue and profits will come from and when!
Agree with Michael - also the sharing of the plan with employees helps them to appreciate the aims of the company and to feel part of the plan and thereby contribute in a positive way that in my experience many do want to do. Any plan,of course,needs a regular review so that it may be adapted to improve performance and results.... especially Robert if the plan is to achieve "greatness" !!
Where are you now? Where do you want to be in X years time? You need to know those two things to grow your business into what you want it to be. And a Business Plan is the route map to ensure you get there!
A business plan provides the yardstick against which the efforts of everyone in the business should be measured with all forms of measurement hanging off it, so that there is transparency around the changes that will occur as the plan meets reality through the year.
A Great Business Plan will go a stage further and help the people in the business to be clear about how the organisation will be run and how their efforts are connected to success. This is important as it allows everyone to act independently and with confidence that their actions fit the intended plan and to be clear when they are outside what was intended.
Of even more importance is the process of planning itself......
" planning is everything, the plan is nothing" D. Eisenhower
I can see where you are coming from, but "Fail to Plan is the same as Plan to Fail"
I agree you should have a plan to have something to work towards. The secret is knowing what you are trying to achieve and doing everything you can to succeed. Success is not in the plan its in the outcome.
A business plan is words . Business success is action.
A plan can be very restrictive and maybe cause you to miss opportunities due to "It's not in the plan". A goal is a better option. So many businesses sound great because their plan says that in year x they will make this much and in year y this much. Often figures plucked out of the air and will have no relevance when 'reality' kicks in.
I agree Roland. Business plans like cash flows are wish lists. On what basis can you draw up a business plan or cash flow for a new business other than what must be achieved to succeed.
Well an interesting point and as a seasoned strategic and business plan compiler I can say that most I read have little or no substance, you can drive a truck through them. All because the focus is borrowing or credit, banking facilities not building a strong business.
A business plan rarely looks like the document produced for public consumption, it is well structured and offers insight, contingency and is a resource for the company. The financial guess really annoy's because it is a legacy of Business Link (How to get paid whilst doing no work - write a business plan and get a £5,000 grant to fail).
My business is to pick up the pieces, create living documents that work at three or four levels.
So if you are asking do businesses need the current excuse for a profile document with best guess and dreams the answer is NO!!! but do they benefit from a well researched and rehearsed business structural document with planning resources the answer is YES!!!
Most good business plans don't involve credit, loans or grants, it identifies the work you are going to do.
Business plans are good for many reasons albeit that they are a form of guidance rather than goals set in stone. Moreover, the sheer act of writing a business plan has many benefits. From helping one equate ideas, vision, processes and procedures to aiding one to think about certain aspects that they may not consider.
I believe start-ups do need a business plan but existing businesses may not. However, if there is expansion, growth or company culture change then planning these are essential to success.
I still refer back to my original business plan when I get close to fulfilling some of that vision I had years ago so there must be some merit in it. But planning, like design, has an organic nature about itself so will change over time.
One of my favourite business guru’s Sir John Harvey-Jones said “Planning is an unnatural process; it is much more fun to do something. The nicest thing about not planning is that failure comes as a complete surprise, rather than being preceded by a period of worry and depression”. Perhaps this may be the reason why we may shy away from business plans?
In each business plan we know there are other plans such as marketing, cash flow, etc. These in their own right are very essential to the success of business so as part of the mix business plans should prevail.
I have always thought that "action" is the vital missing word when developing, analysing or presenting a Business or Marketing Plan. You may know or think you know where you are going - but, without a map you're not going to make it anywhere!
Alan
The trouble with satnav it leads you down a load of blind alleys. Which is a bit like most life maps.
If you are in the driving seat you do not need a map just follow your instinct. You have just as much chance of getting to your destination.
A general idea is great. But the plan is in the setting of goals to enable you to achieve and be successful. Plans are no good without action.
'A Great Business Plan' is just a plan for your business that works for you, and I would say you certainly need that. Some entrepreneurs are natural planners: they seem to carry their plan in their heads and that works for them. Others need help - mentoring - to articulate their plan and get it down on paper. This is one of the services we offer.
We firmly believe you should have a plan for every significant development you make with your business, e.g.
• starting up a new business
• a long-term plan for the business as a whole that could include an exit plan;
• a financial-year plan for a business or a department;
• 90 day plans for a seasonal business;
• a plan to grow market share by improved marketing;
• a plan to grow sales by developing and launching a product;
• a plan to achieve cost reductions; or
• a plan to expand by acquisition or to integrate an acquired business.
We focus on what is behind and in the plan, and we try to get that down in 1 page of A4. This is a great way of focussing the mind, and it can be quite re-energising for a business, especially if it has lost its sense of direction.
Compliments of the season to all
Hi - Essential in my mind, yes, of course it is just a PLAN but without direction and pre-thought, its mighty easy to get lost. All plans should be flexible?? and revisited...
I'd always understood that 'plans were nothing, but planning is all'. In other words, the best plans in the world fail through poor implementation - particularly if the process of planning is flawed.
In our research (which I hadn't realised was a while ago) we discovered that the top six reasons why plans fail have to do with poor training.... the findings are copied here for interest.
Top Six Implementation Problems:
1) Implementation took more time than originally allocated (76%)
2) Major problems surfaced during implementation that had not been identified beforehand (74%)
3) Co-ordination of implementation activities was not effective enough (66%)
4) Competitive activities and crises distracted management from implementation decisions (64%)
5) Capabilities of employees involved were insufficient for the task (63%)
6) Training and instructions given to lower level employees were inadequate (62%)
Adapted from: Alexander, L. (1995), Successfully Implementing Strategic Decisions. Long Range Planning, 18 (3). pp. 91-97
I wonder if much has changed in the last 15 years?
If I understand Robert's challenging question correctly I believe that he is referring to the need for adabtabilty (often shown in surprise acquistions in the big corporate sector). If so I agree that a lot of the headline names seem to be run by a core benevolebnt dictator who allows a great degree of freedom within the operation. Is that model replicable for all? Can it be modified to fit fr 'many' or 'most'.
He could be talking about logical incrementalism, or is that another word for sloth?
BUT. Somewhere somehow there must be a plan (or without getting too hung up on words a 'communicable vision' ). It is easy for us to look back in hindsight and say 'w*******s' lost its way but who at the time new what its way was supposed to be? Was there a plan or just a set of accountants' projections?
Sub-notes:
1) I always thought the best business plans could be summarised on the back of one or two beer mats. (Trendy bars don't have them anymore...). They were ideas based rather than Excel derived.
2) re: the communicable bit I once persuaded IiP to accept that THE business plan for a company was actually in the form of a powerpoint !
3) reference another debate about the role and failings of the CIM. Don't you feel gutted when the Finance dept. take the lead on creating a business plan?
John
I use a mind map and a spreadsheet for the companies I work with. Fast efficient, cuts to the chase whilst leaving easily amendable documents for the client to work with. I recently used mind map on a client's ipad - that was great as the client did all the work and had distributed it to everybody before we had even stepped out the door! The spreadsheet then brings together all the financials and assumptions plus with the use of variables you can do a range of scenario planning.
You may not need a great business plan - but you surely do need A plan of some kind - if only to know when you're veering off it :-)
What about the old adage - fail to plan, plan to fail, I think it still very true! As Gill says, you do need a plan of some kind ....Maybe the word Robert is trying to explore is 'GREAT' - a plan certainly needs to be as realistic as possible and cover all angles of the business model.
Its very easy to 'over-plan' I think, spending months and months honing a document but never actually doing anything - or (possibly worse and I've done this :-) ) - writing a plan, putting it on the shelf and ignoring it once you get started! If a plan is to be of any use you need to refer to it to check how you're doing and if necessary come up with a new plan.
No doubt everyone needs a Business Plan, but what do we mean by a "Great" Business Plan. I am a strong believer in the one side of A4 Business Plan. Just enough to give some focus, to identify priorities and to enable you to monitor progress. For small businesses in particular, this is really all they need; the challenge being to get the thoughts and ideas out of the bosses head and on to paper.
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Discussion: Business Plans - over-rated?!
I think a business plan that is regularly updated is absolutely essential. Without one a business can lack focus, simply drift along and not achieve its full potential.
As is often said, you need to step back, look at your business objectively, work on the business and not in it - and a business plan is part of that. You can then measure your results against the plan and make adaptations as necessary. Yes, it will change over time - but isn't that the point - adapting quickly to changing economic conditions?
Marketing methods come and go - some are flavour of the month for a while then fizzle out. Carry on with the same old methods and results can begin to suffer. I wonder where new media will be in another 5 years?
A mentor I know and trust claims that all business owners are maniacs - good at their jobs but less so at strategic planning. They are so involved in the day to day running of their business that they never step back to plan and measure properly. I'm sure he's right!
I'm not sure you even need a business plan - I think that there are only 3 reasons that its worth spending your time on them rather than getting out there and doing more fun stuff (and encouragingly the Institute of Small Business and Entreprenurship seemed to like this idea)
My boss has a - What makes God laugh - - - - - Somebody who plans
Hi Robert - I agree with you. A business plan is NOT essential unless you need funding and everyone screams out for them. As a business owner of nearly 30 years I also assure Rod I am NOT a maniac. (Nor I would suggest would be Lord Sugar, Sir Philip Green, Theo Paphitis, etc.)
I also have relevant qualifications both technical and in business management, so I do know about business and strategic direction. I consider a business plan to be like a photograph at a wedding - the minute you have taken it someone has moved. It is only an overview at best of a particular point in time and once produced is out of date.
Tell me any entrepreneur that runs his business via a business plan! Rather than being a plan for the future it can actually turn into a straight jacket! Show me any business plan that has a section on 'spotting new opportunities and acting on them'. Infact if you should even mention that you are "keeping your options open in certain areas" the plan will immediately be marked down as 'lacking focus'.
I was of the same opinion untill recently -spent hours doing a business plan as part of my "Coaching Homework" I was then asked for a business plan by one of our potential suppliers and due to the professionalism of the report we got the agency agreement- Result!
I used free Sage business plan software
http://www.sage.co.uk/lloydstsb/default.aspx
(You will probably get a sales call from LLoyds TSB if you use it )
Nicely done Steve!
I think to run a business without any idea of where you want it to go, or assessment of risks etc is unwise. However, that plan shouldn't necessarily have to be a huge exhaustive document as it is impossible to plan for everything. At the risk of sounding very Buddhist, I would advise a middle way with business plans, and that it depends on the type of business you are running (or wanting to run)!
Unfortunately, the very term "Business Plan" has fallen into disrepute because of the way it is used. Also it is seen as filling in a template and passing an exam! When a client says to me, "Do I have to do a Business Plan?" I tell them an emphatic NO. I then go on to tell them they need to plan their business. This turns it from an imposition into a positive act.
The two oldest illustrations in the book still hold true - you wouldn't set out on a journey (especially in this weather) without some planning [where am I going, how am I going to get there, what do I need to take, etc], or you wouldn't go on holiday without some planning [what will it cost, etc].
The problem with Business Plans submitted to a bank, especially on their own templates, is that they are given 'points' and points don't necessarily make prizes! To simply score a Business Plan remotely (i.e. by computer) rather than discussing face to face to proposition with an experienced (real experience is essential) business banker is ridiculous.
Speaking as an individual not as a professional adviser, I have drawn great benefit from sitting down and getting my thoughts into some kind of plan. Whether this ends us looking like something I downloaded from the Business Link website is a different matter. The point is it helps me to gather my thinking together.
I do this on a frequent basis by journalling which is a way of using reflection to inform future action. I have found this very powerful as a means to aiding my own personal effectiveness.
In time management terms for the individual this is called a brain dump. Sounds a bit raw but it is a way of uncluttering your head to begin to start to identify your priorities and plan your time effectively.
like many of you I believe a Business plan can have it uses,
having said that the following quote came to mind
Vison without action is just a dream, action without vision passes the time
action AND vision ( in a plan!) can change the world.
we may not want to change the world with our business plans, but we may want our bsuiness to grwo, change , evolve etc
successful plans need both vison and action?
I agree Neil every business needs some degree of planning, in order that you are in control - I think the comprehensive business plan templates can sometimes frighten people, and often a large percentage of requested information on these templates may not be relevant to your business. Pen to paper with common sense is best!
Whether you like it or not some form of planning is necesssary. It shouldn't be regarded as something only the bank or investor requires, first and foremost every business owner should appreciate the importance of asking themselves some very searching questions. As the old saying goes "fail to plan and you plan to fail"
I agree with Linda Knowles final comment - a plan requires action.
Why not? Don't you think there's value in writing out:
a) this is what I do, and how I do it;
b) this is where I want to get to; and
c) [the part that takes up most of a business plan] this is how I am going to get there.
Even if no one else sees the plan, I believe that the act of writing it helps you to crystallize your idea.
Neither am I anymore sure that a great business plan is benificial, the banks are NOT lending, last week would have thrown out all your numbers out anyway and in this market when prices are being driven down only the nimble change managers survive. unless. Please NO MORE SNOW!!
I totally agree. As the previous owner of 14 different successful businesses I have never had a business plan. As long as I had a clear vision, mission, CVP and strategy I was away.
I'd say so, If not and you have a team of people developing and building the business. How do they do it? Jut one person dishing out the orders every morning. If you are a one man band you could possibly do it. But to build a business good enough to sell Surely a plan helps. It ensures you find our about your customers, who to target, competition, how they price, Of course a SWOT analysis. I know a business who want to sell out in 5 years time for £6million but have no idea how to get there? The business plan helps break it down, the steps on how to get there.
If someone make there business work without one fantastic good for them but companies who are looking to grow rapidly need one.
How much money will it take to get the business off the ground.
A) We'll chuck £50k in and see what happens.....
B) We'll chuck £50k in. And its for this, this, this and should generate this in return.
Also marketing campaign, you had worked out in the head, costs £3500.00 after researching it as part of the business plan it will cost £7000.00
That's my opinion. I suppose I can say that as I have a business plan
Hope that helps
To be fair though thinking about it. A business plan is usually requested by the banks in order to lend. I am not sure why, as they don't bother reading it as it costs them to much time? and they ain't lending anyway. So on that front you don't need a business plan
I've done and seen a few over the years Robert.
I reckon that the "bulk" of the content is quite useful, in terms of getting disciplined and "real" about what the business could or should afford as it evolves (like is that fleet of shiny new beamers "essential" from day 1?).
But the killer line is, inevitably, the top one....."Sales".
And that can range all the way from super-cautious, through beer-goggles and rose-tinted specs and up to the utter fantasy/fiction category. And that in turn, of course, makes all the difference in the world to "the bottom line".
So the bottom line is - Is your sales forecast over-rated? And from which we get the supplementary questions about whether anybody knows what good, professional, reliable, trustworthy, honest, realistic, intelligent, informed, optimistic and ambitious selling is all about.
In my humble opinion, that is! ;-)
Kind Regards - Neil
Publisher - ModernSelling.com (e-Magazine for UK Sales Professionals & Managers)
Twitter: @ModernSelling1
Ignoring the slightly facetious point that a business plan is needed to persuade bank managers to lend money; it is common experience that the sitting down and thinking part of producing a plan of any kind is valuable.
A fixed written plan also lets others into the process, not just the bank manager, but partners.
It's also an old adage that 'no plan survives first contact with the enemy' - plans should not be set in stone but be able to be adaptive, flexible and cover contingencies. Situations very rarely unfold exactly as you expect and plans need to be living documents.
It depends on what you mean as 'great'.m In some businesses ( I've work as a consultant with SMEs) any plan would be 'great'. Not wanting to trade semantics but my view is that a good business plan gives direction, focus and, most importantly and measure that allows the business to know the direction of the business and what 'success' will be measured against. More import than 'good' maybe we should be looking at realistic, achievable and flexible - responding to ever changing market conditions. I will be interested in the comments of others! DN
Hi Owen, I think much of the reason that the lowly business plan has fallen into disrepute is sadly the work of 'expert' consultants who produce great snapshots or 'photographs' as you so rightly put it, of a business for the purpose of raising financial backing or gaining buy-in from stakeholders.
Plans that are static are relatively worthless although if the process of producing a plan is a collaborative one involving a minimum of the key players in a business, the process itself is often immensley beneficial. In the work I have done with my clients top teams have had the opportunity to work through their own versions of the plan and begin to create something which results in a greater degree of shared understanding and ultimately priority and focus.
It is therefore 'planning' that is the beneficial process not the outcome of a 'plan'.
The world is changing very quickly so the ability of businesses to learn quickly using planning as a means to adaption and change is I believe essential.
No plan is a substitute for Leadership within a business. Neither is a 'plan' a 'strategy' by definition. The two are NOT synonymous.
https://www.box.net/shared/n8zkss9nnk - This is a link to an insightful article on the area of planning which is very relevant to the 21st century business. It's worth a read.
In essence you could make the same argument about mission and vision statements. They are intended to reflect purpose provide direction for a business and in many cases they do. Having one is by no means however a true indication that a business has either purpose or direction.
I am quite sure that Sir Philip Green et al and, indeed, every other successful business does have a plan. I am equally sure that these plans will differ greatly from each other, because the needs of the business and the stakeholders of that business will have widely differing needs and expectations. In reality the newly opened sandwich takeaway catering for a primarily lunchtime trade will have decided on its wares, its inventory needs, opening hours and premises based on the demands that meeting that primary objective. This is a plan - it is not simply the process of planning, as Colin puts it, but the outcome; a substantial plan.
The owner of that small enterprise may not have committed the plan to paper, but instead may reasonably have retained it in his or her head, but it remains a plan.
The likelihood that a business with many divisions, employing huge numbers of staff could operate on the same basis is doubtful in the extreme - where many people are actively engaged then the plan, its component parts and the monitoring of its success will need to be communicated - so it becomes a more structured and detailed written document. Yet, even then it is not carved in stone, it is a dynamic work that through the continual process of monitoring and reflection (processes that may only happen subconsciously in the minds of entrepreneurs of micro-businesses - yet they still dohappen!) along with the caveats of risk and contingency taken on board, the business will utilise the 'plan' as a working document - a road map for the business and not a constriction.
I have no idea if Owen employs people in his business, I must assume not given his comments; otherwise his employees would have no idea where they were going, or what they might do to add value to the business; "It (a business plan) is only an overview at best of a particular point in time and once produced is out of date." If that is his idea of the fundamental purpose of a business plan then I can understand why he is dubious of their value.
"Tell me any entrepreneur that runs his business via a business plan!"; OK, how about..."Lord Sugar, Sir Philip Green, Theo Paphitis, etc."
"Rather than being a plan for the future it can actually turn into a straight jacket! " that would certainly be the case were the plan badly devised and irrelevant to the needs of the market, the stakeholders. I would be the case too if it were one which foolishly neglects to have a section that might be entitled.." 'spotting new opportunities and acting on them'." I know of few investors who would take a second look at a plan that neglected to have in its vision a route to developing markets and opportunities.
The final comment "Infact if you should even mention that you are "keeping your options open in certain areas" the plan will immediately be marked down as 'lacking focus'." illustrates best, I believe, of Owen's misconception of a business plan.
Simply keeping options open is a lack of focus and the antithesis of a plan, but it is the context of this statement that I want to comment upon. The plan is not for someone else's benefit, it is for you, the manager of the business. So who is it that is going to mark the plan down as lacking focus?
In the new businesses that I have started and which I have then managed I have been grateful for the existence of a plan on two very important grounds, especially during the nascent period. The enthusiasm with which I pulled the plans together prior to the actual start-up period was matched by the amount of time that committed to the consideration of the detail and the ideas that eventually became the business. Once the business was started, I was very busy and working to ensure that the business was secure and moving forward - I needed that plan to remind me of direction and resources; and essential tool.
Whether written down or not plans are evident in business. The question referred to a business plan (my assumption here is that Robert is referring to the written form). Every business needs a plan, clear direction, shared vision, and so on. There are certainly benefits in writing down the plan as you rightly pointed out although all too often written plans are not used to guide the process of development in the way you suggest.
Depends what you might need the business plan for.
Funding - yes, but don't use one of those useless business plan software packages. Start from scratch and build it up, that way you can answer questions posed to you by a would be lender.
Again, remember with funding you'll be asked: how much do you need and what do you want it for - obvious questions? It's surprising how few can answer those well.
Also, your financials must demonstrate that you will generate enough cash to cover loan/interest payments if (as Neil points out) your sales forecast is too ambitious..
Business planning - a good idea if you want to set a medium term plan, perhaps for exit and/or succession planning.
Just remember if you do a business plan, use it. Don't do what I have seen loads of businesses do with annual budgets and business plans - finish it and file it. The document should never be out of reach, if it becomes out of date or obsolete then its probably time to re-do it, if you're going to use it.
Hi Colin
I accept that your comment was probably based on the assumption that you say, but there was nothing explicit in Robert's question about the nature of the plan. I think that this last point is very important because business planning and the creation of a business plan does not necessarily involve the creation of a long and detailed document; rather the scale, scope and nature of the business will dictate how the plan is created and implemented. I would not produce a written document for a morning's activity at a car boot sale, but if I intend that it is profitable then I would plan for it. I would measure the performance on the day so that I might learn by it; these lessons would then be incorporated into my revised plan for the next sale - all without the need to produce a tome.
I do take the point that sometimes businesses do formulate plans that they then proceed to ignore; I guess that this must also be Owen's experience, but that is to misunderstand the process of planning and the process of management. A plan is a management tool; if the plan is effective then it will signpost when and where decisions need to be made dependent upon the circumstances that arrive at the door of the business. The effective plan will also provide evidence of the success or otherwise of the business and from it ought to be derived the data that will be needed to identify problems for which revisions of the plan are required - it is a dynamic tool!
In successful businesses the plan will have been followed, albeit the plan in place a year or so down the line may not bear more than a passing resemblance of the original. Can you imagine the reaction of Alan Sugar to a member of his team whose contribution was not in full accord with the plan or its improvement? I really think that the words "You're fired" might well be heard. That does not mean that the idea generated by that team member would not be valid; I would expect that the idea would be heard and, if appropriate, be then incorporated into the plan in such a way that it does not create a hiatus elsewhere. That is planning as a management tool!
I think that in essence we agree on many things. I certainly no not disagree that planning is an essential management tool this being my first assertion. I think the brevity of the question and its openness to interpretation add fuel and breath to this thread and allow people to air their experience and their views. You could read the question differently still and focus the the word 'great'. Clearly this is a subjective word with no way of measuring it. Not an appropriate management word then. What is great to one business may be average or poor when placed in a different context. That is why it is such a good question.
think that in essence we agree on many things. I certainly no not disagree that planning is an essential management tool this being my first assertion. I think the brevity of the question and its openness to interpretation add fuel and bredth to this thread and allow people to air their experience and their views.
For example, you could read the question differently still and focus the the word 'great'.
Clearly this is a subjective word with no way of measuring it. Not an appropriate management word then. What is 'great' to one business may be average or poor when placed in a different context. That is why it is such a good question. For example the business owner may think they have a great business plan but Peter Jones may have another view (just thought I would throw in another reference to a reality TV show).
For me 'greatness' is ultimately measured in the result rather than the input. So is a great plan? Technically it may be. It might even be conceptually 'perfect'. Will it work? That depends on a whole range of other factors.
If I were to differ with you in any way John I would probably not share the degree of your fervancy given the complexity of the simple question and the many different applications for plans and planning in organisational life.
For example, 'the plan has to be followed' simply doesn't happen in reality in every type of plan. Depending on the level of the plan within a business this may or may not be true, but in every plan there has to be inbuilt flexibility in order to account for the fact that our foresight is far from perfect and that we are not in control of everything around us such as thebehaviour of currency, the economy, our suppliers' businesses, the price of raw materials, the pace of change, the rate of technological advancement, societal expectations, the loss of key staff, the availablility of finance, new statute, and most noteably of late, the weather (to mention just a few
If we don't know where we are going, how do we know when we've got there? The lack of some sort of plan / or vision greatly impacts the operational ability of those sitting at the lower levels. As a marketeer - without knowing the higher level plan, it's impossible to direct marketing activity or dollars and we likely devolve into random acts of marketing on whatever takes the fancy of those who own the budget. If we know who is being acquired, if the plan is to grow X share, go for X revenue then we know where to direct operational activity and what to measure success on. But you are right some of the best business plans I've seen have been powerpoints or a one pager. Some of the worst are long rambling research documents with no end goal.
I'm not sure either, i seem to spend TOO much time currently adjusting mine which has a good line and bad line. Lets hope next year is better than this one but i'm planning for a lift in 2012 !
"Execution trumps great strategy" or in other words - an average plan well executed is better than a fantastic plan poorly implemented.
What a good topic! But it's probably a bit too broad to be able to prove or disprove anything about the usefulness of business plans.
A bit like saying, for example, "do you really need 'A Great Haircut'?" - Well yes sometimes I'm sure a great haircut is really important - but the rest of the time it's not.
Business plans, how they are written, who reads them and what they are used for covers a very broad range of variables ...
But, I think we can say that (like haircuts) in many situations a great business plan is crucial but that for the rest of the time (most of the time?) it's not.
What is tricky is being able to distinguish between the two and act accordingly.
By the way, I don't have a very good haircut at the moment...
There are business plans and business plans.
Those which are sales documents for banks and which do not become part of the central fabric of day-day management have limited value. So many business plans lie on shelves gathering dust after the first flush on enthusiasm.
If business plans are underpinned by a vision and strategy that the stakeholders are truly committed to, then the plan can be central to the alignment of processes and people that will drive the vision.
The best business plans are those which are tools for strategic execution.
The answer is "Yes, ...but only when you need to convince investors to part with their money!" Nobody gives away their kids inheritance without seeing a "Great Business Plan". On the flip side I've seen some remarkable bits of "business pornography" masquerading as business plans intended to do just that. Seemingly attractive but totally unrealistic....
You are right, Richard. I had the 'misfortune' to be involved in a stem-cell business that had a CEO and COO who could write brilliant plans, attract many 'mom and pop' investors (as well as a few 'wise men and women') then burnt the lot in less than a year. They had good IP and technology (a better mouse trap) but couldn't 'get the world to beat a path to their door', which is now firmly slammed shut.
They needed (and had) a great business plan but couldn't implement. They left many creditors high and dry (but at least I wasn't one of them).
Essential for employee engagement.....how does each department and individual know what they are required to achieve if there is no plan?
I've just spent two days training various levels of lawyers in management.... none attending (a few years qualified but not yet partners) had seen their firm's plan; this was either because there was no plan or becaue they were not party to it's publication. Employee engagement? Huh! All they knew they had to do was to keep earning the fees...
Just as a final comment to John - yes I do employ people (16 of them) and yes they do know exactly what is expected of them - daily and weekly team briefings see to that and yes we do have a plan for the business and it is currently exceeding all projections. However, it may not be a 'formal' Business Plan in the sense that Robert's question posed and yes it is dynamic and can change daily - it did yesterday after a trip to London for instance - but I do have a 'plan' for my business.
Never needed a business plan for funding as I started my company with $30.00 and I keep funding from savings. Not easy but I sleep better at night!
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Discussion: Business Plans - over-rated?!
Hi Owen
I am glad to hear that the business is doing well. I am especially pleased to hear that you do not subscribe to your own previous comments that a business plan is unnecessary. It matters not a jot how formal it might be, as long as it is relevant and, above all that it works.
Perhaps your initial comments were about simply having a process called planning that has no real enagement with the reality of business. It certainly happens, but rarely in successful businesses. Colin mentioned about my apparent fervency; well I suppose that it is true that I get a bit of a bee in my bonnet over this particular issue and that is simply for two reasons.
The first is that far too many comments are made in public groups by people who claim to be experienced business people who cast doubts on the whole process of business planning - usually with the sort of bravado that might be expected of those who actually have no real experience of actually running a successful business. The second is that new start-ups can easily be influenced by the sorts of inane claims that suggest that success is easy and apparently offering a work-free panacea to a viable business.
My mission in these things is to challenge claims such as you appeared to be making and to put across an alternative viewpoint supported by the relevant arguments.
Thanks for the comments John, I have been running various businesses now for nearly 30 years and am still learning. However, my method of business planning is exactly that 'my method' it works and it doesn't involve reams of paper with Venn Diagrams, Graphs, Pie Charts and pages of financial forecasts, which seem to be the major components of those that I see far too often produced by consultants.
Owen, it is always a pleasure to hear of success stories. In what I intend to be my final comment - I remember well a phrase that one of my former bosses kept repeating to me way back in the early 70s, "horses for Courses!" he would mutter in his rich Galway brogue.
It has to be said that the comment was very often, from his lips at any rate, entirely inappropriate and banal, debased and cliched through overuse. But in this case it fits well. If you employ me as a consultant, I do not carry with me the inherent enthusiasm and the prior knowledge and history of the business, I could only tell you about what is available for me to see, measure and understand. It would not be my business, but as a consultant, I would have been given a brief, and I would have my own reputation to uphold (not to mention to defend in the case of a contested outcome).
In those cases I would feel entirely justified in presenting to you, the manager and owner of my client business, a full digest of the proposals, the reasoning for the proposal (supported by whatever visual aids and diagrams that were appropriate) and the full plan with intended road map and outcomes; only by this means could I ensure that you, my client, were fully briefed about what I planned for YOUR business.
Only through that means, I believe, would you have sufficient insight into my methods and ideas for you to apply your prior knowledge to challenge them and therby between us to ensure that we got it abslutely right. If, on the other hand, I were the owner manager, then I would use 'my method'.
Off to see the new bank manager... will take along my 'business plan' - interesting to see what he makes of it!
Wondering if he has done the homework and read this blog!
RC
Will he show you his Robert, if you show him yours?
Hi Robert,
The BP is like a route map. It helps you decide which direction you want to go and shows some variations on how you might get there. It shouldn't be set in stone, but if you borrowed money on the strength of it it would be wise to discuss significant changes with the funder,
Fail to plan, prepare to fail is my opinion. However, the format does not need to be 199 pages long. I think the key is communicating the vision to employees or those who have execute the plan.
Planning is often undervalued and in many cases execution saves the plan.
Some great points, I think the process of planning is essential to get the understanding of what needs to be done, and what is possible to achieve and some targets to aim for, and when. But I also agree that they should be as succinct as possible so they are easy to read, understand, follow and implement - that is the best way to get employee (and senior management) engagement.
And on a slightly tongue in cheek note, of course they are essential otherwise 25% of the CIM Professional Diploma is unnecessary!
Hey Andrew.. like the tongue in cheek comment. My fail to to plan , prepare to fail mantra is commonly used by me and also a succint way to remind me of the fundamentals of how to get things done. You made me chuckle.
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Some valid points specifically around the process, implementation, employees engagement etc. I think I would add regular review and update of the plan. Of course with all checks and balances techniques available to us if we do not believe 100% in what we are trying to achieve then the plan could fail!!
Going back to the original question, it's more likely that you'll create the future you want for your business and for yourself if you can (1) articulate it clearly and (2) put together a clear, comprehensive and robust plan of what you will do to get you from where you are now to where you want to be. So, planning is a valuable thing to do.
At the same time, the only thing that can be guaranteed about a plan is that reality won't work out quite like the plan! The point is that it's the process of planning that is valuable rather than the document itself.
And, in my view, it's more useful to have a plan for your business (ie. a plan that works for YOU) rather than to follow a formulaic standard set of contents for what a business plan is meant to be like.
For me I should need a plan for my business, it is more like a business goal. So that I can see where my business heading.
I absolutely agree with Nigel.
The very process of writing down your plans for your business increases the chances of achieving your goals. If you don't like what the plan is telling you once you have prepared it, you can rip it up and start again. You can explore different scenarios in a risk free environment.
I have worked on plans with experienced business owners who have become jaded. In discussing and preparing the plan they have become re-energised and they are reminded of why they went into business in the first place.
All businesses should be planned for, otherwise you leave it up to chance - a precarious strategy.
Sadly, most Business Plans I've looked at are 'Works of Faction' - a combo of fact and fiction - and rarely survive contact with reality aka. the competition.
RobertC - the business planning world needs you now!
As Churchill said 'Plans are nothing, planning is everything'. It's not the bit of paper but the thought process. As I said to a contact at the BBA banks should really produce a form that seeks the information that their credit scoring requires to try to get the Business Plan back to planning the business not satisfying the 'tick box' part of funding.
Business plans started for the right reasons but have become hostages to fortune. The more detailed and honest the plan the more likely it is that it can be endlessly interrogated for reasons not to support it and its underlying proposals.
Consider the most famous weasel words in the English legal lexicon: "anything you say may be taken down and used in evidence AGAINST you".
This is what you do when you give a cynical, half-witted bank employee a well-written business plan. You provide the half-wit with all the evidence to hang you because, as the words say, it may be; probably will be, used against you: not for you.
Today, it is probably better to set out a statement of intended outcomes to your project proposal and let them judge if you and your team are capable of carrying it out. The big, set-piece business plan concept has been corrupted by the very people (banks) it was intended to assist in deciding whether to support you.
"A good plan today is better than a perfect plan tomorrow" General Patton.
Business plan are essential. The trouble is that they normally live on a shelf collecting dust. You should review your plan regularly. They should be a business action plan.
I view a business plan as essential in order to run a business well. You can run one without a plan, but it's like working blindfolded with one hand tied behind your back.
But they don't have to be complicated. I believe that a lot of SME businesses don't have a business plan simply because they view putting one together as an onerous, time consuming and complicated process, but a simple plan is better than no plan.
All you need is one sheet of paper onto which you note who your customer is (or who you want it to be), what product or service you are going to sell to them is, and how you are going to sell it, and just that immediately give some focus. And I agree with Paul (or is it Napolean) that the process is the valuable element as it forces you to think strategically about the business - particularly with SME's who are usually running around frantically running the business on a day to day basis.
And this is the other reason why simplicity is best. A business plan is a living, breathing plan and so it needs to be reviewed and updated regularly - I would suggest every 6 months or whenever there is a significant change in the business or the market. A simple plan that addresses the key drivers to the business updated twice a year is far more effective than tomes of cerebral strategic thinking once every 5 years.
Consider risk. If you really identify and attempt to analyse risk elements then you provide the complete reason to reject.
Although risk exists and you are expected to address it and set out how to manage and reduce it, this exercise is anathema to a (UK) bank that is probably completely risk averse.
The "risks" banks take in the commodity, currency and futures markets are entirely underwritten by their customers and, in the case of the UK, by the Government via taxes pledged in advance.
These are the operations that attract the big, risk-free annual "bonuses" that are about to be announced in the New Year.
What the average British banker knows about risk could be written on the back of a small postage stamp.
The bank will want you to state that there is no risk, and thus accept all responsibility if there is any, or it will look at your logical reasonings to recognise and manage uncertainties and risks and try to force you to pledge your entire fortune, life and belongings now and into the future to them for not accepting your well-thought-out proposal and its attendant risk profile no matter how small or unlikely.
I believe a BP is only really effective when it is linked to a crystal clear vision. Everyone involved should have access and understanding of both.
I really like “If you want to go fast, go alone. If you want to go far, go together.” Wareen Buffett
With this thinking and ensuring the vision fits with life purpose/company culture achieves so much more than not embracing it at all.
I strongly believe that a business plan is absolutely essential for most businesses.
A good business plan must cover a lot more than just sales, and is useful for far more than just raising funds. When I produce business plans with (not for) my clients they are struck very quickly by how little they actually understand about their business, industry, competitors, margins, strengths & weaknesses etc etc.
The business plan production process always throws up issues and concerns, as well as opportunities that the business owner had not even considered, In my view the main purpose for producing a plan is to ensure that every angle of the business is looked at, that there are clear and quantifiable goals in place, together with a well thought out plan, or staged road map, in bite sized pieces, showing how and when these goals will be achieved.
This will include monthly and annual budgets that must be reviewed regularly.This is a discipline that most businesses in my experience do not work to, but that can make the difference between success and failure.
All the other issues such as realism in sales forecasts, funding requirements etc are essential but would form an integral part of the business plan in any case.
This is why it's always a good idea to have someone outside the business involved, so that these things can be challenged.
I'd agree absolutely with you there Nick, only you're getting quite close to actually running the business for whoever it is.
And the "adjustments" that need to be made if the top-line, Months 1 - 6, is coming in at £0, £0, £0, £0, £0, £0 can be rather profound, and time and money consuming. ;-)
In other words, "if you don't know where you are going, you'll end up somewhere else"!
Why does everyone think a business plan is for the Bank?? I agree it's for your Business, fact, it's not even looked at like it used to be 15 or 20 years ago, back then you sat down with your Bank Manager and discussed you business plan. those days are long gone, now it's all Analytics and your credit score, but without one you can lose your way, far better to have one.
Peter, could not agree more, it is the act of planning not the plan itself that is so important. So few businesses ever really stop to take stock of where they are now, where they want to go, and how they are going to get there. With no destination in mind, how do you know if you are on the right road, or even if you have arrived!
If the need for a Business Plan ensures business think about planning then it is worthwhile.
Incidentally ...I think it was Eisenhower who is credited with the quote not Churchill!
Banks in Britain are simply another burden on the backs of those obliged to use them. The days of an autonomous manager with some powers of decision are long gone. Such figures were of the Captain Mainwaring generation. Look at the way a bank manages your account and see whose interests are being served. It is definitely not a professional, client based relationship of equals and based on mutual goodwill.
Ask the question what use is a bank to the business or individual relationship and could it be done better? Our banks are part of an unholy establishment alliance against the rest of us.
So Robert, what did the bank manager think of the 'plan'? Was it developed for him/her or is it the tool that you will manage the business through or something else entirely?
A plan is probably more important for the people inside the business than those outside of it ... and the planning process is probably more important than the plan itself ... done well it can lead to inspiration, motivation, alignment and drive (done poorly, the writer ends up frustrated as the document gathers dust on the shelf and those who it is aimed at continue to ignore it) ... arguably the most important parts of the plan are the higher level objectives, outcomes and principles ... the activities will need to change consistently as you face new challenges ... no plan survives first contact with the enemy, so imagine all possible scenarios and plan out your likely response ... I have no doubt you need to plan for your business (otherwise I wouldn't work with and support Your Business Your Future and the Better Business Programme) ... however, having once written a 60 page business plan, with 5 years of financial projects to get funding for a business that eventually failed, I am not sure a business plan (in its traditional sense) is critical for the success!
As Gerard says 'it is a plan for your business and needs to work for you'
Yup! Behind every plan there is a 'vision', but what do we mean by 'vision' exactly?
In terms of a business plan for a company, for one that is large enough to have a board, it is where the board wish to take the company and on what timescale, in order to deliver their promises to shareholders and stakeholders.
For a small business run by a Managing Director Owner, it is essentially what he (or she) wants out of the business himself on his timescales, and where he wants to take the company in order to deliver that.
But you can also have visions for any significant development you wish to make with your business. The key here is that these 'visions' should be aligned with the company's vision for itself.
Where business plans are only prepared for banks, it has the potential of becoming a box ticking exercise this implies that the owner sees little or no value in having a business plan.
Many business owners are so bogged down with day to day issues, that business strategy can play second fiddle to day to day issues. However failing to look at a business strategically can lead to missed opportunities or threats. I believe one of the most important aspects to business planning is looking at the Strengths, Weaknesses, Opportunties and Threats in the business. It can provide a real focus for addressing the big issues faced by the business.
Also a business plan can provide a benchmark to monitor performance against and where necessary be a trigger for response to changing circumstances.
Greville, I agree with you AND even an plan written for internal use benefits hugely from a critical read from a third party ... someone who is not emotionally linked to the business and can provide a balanced view ... that's why we use coaching groups and presentation panels on the Better Business Programme and why I encourage any business owners that I work with to share their plans with people outside their business (preferably other people who run businesses) ... the more times you articulate your plan to outsiders, the more you take on (or ignore - no one person is an expert) their feedback, the more robust it becomes, the more you believe it, the more likely you are to make it happen.
Yes, you see the obvious advantages in sharing a complex task and letting others savage it as an act of creative destruction. It is easy to put the bits back together when you recover your pride and composure. Old Schumpeter the poet, philosopher and sometime economist worked on this sort of thing back in the forties. Creative destruction and reinvention: it works!
Well kind of ... my natural optimism would prefer it to be called creative construction ... an appropriate balance of challenge and support
Yes: just words to describe the same result. But it all helps and someone thought of it all before we did. That's the clever bit.
Whether it's 'great' or not is debatable, however I think most businesses would do better with a written plan of action. You wouldn't set out to climb a mountain without the necessary provisions, map and compass, likewise with business - how do you know where you're going if you don't know where you're heading; asos you won't know when you've got there!
A plan acts as a guide a benchmark and in that sense if useful where it falls down often is in execution however I do think one vital part is cash flow projections that help to keep you mindful of the need to be paid on time. I have tried many versions of the plan over the years bowdays I set myself a long term destination a yearly forecast an activity sheet and then 3 months max of detail but the key thing is putting it into action at the right time. Reactivvity especially for a small business is workable so long as there is something to work against but when times get tough using a business plan as a benchmark enables focused flexibilty.
Robert - I had you at one of our ACCA seminars - I think you are great! Business plans...the banks and those with the money swears by them so I think we are backed into the wall here...
Maybe great for an existing business with measurable results but ludicrous when you're making figures up as a start-up so you can get a puny overdraft out of a bank. And talking of measurable results, in over 25 years as a mortgage broker, nothing I've tried by way of marketing, advertising, promotion or PR on a virtually non-existent budget has every produced a measurable result meaning I haven't dared gamble larger (borrowed?) sums when no-one's been able to prove to me that 'their' magic formula has worked or anyone else.
Agreed but if you are looking for ant funding they are vital.
agree with Rod. As a mortgage broker I think there is some truth there. I have not yet seen in my experience (albeit not as extensive as many of you), where a business plan for a new business brought about the financial results. It is something the banks and other lenders foist on small business some of which are struggling to make sense of their raison d'etre whilst they try and get their business off the ground. I have seen the opposite where the business plans have gone up in smokes - with the business! I think it is appropriate for more established and certainly larger small businesses.
I learn't the hard hard way that 'flying by the seat of your pants' - whilst being rewarding on the 'material' and 'daily champion' fronts - eventually becomes a chain too heavy to service.
A 'plan' of your business to me is simply a clearly defined set of goals and targets that are visible to the whole organisation.
I'm a great believer that having a 'roadmap' now is actually a comfort and acts as a 'horizon' or 'altimeter' gauge.
Like a traffic light - when you check against your roadmap and it's green - GO GO GO, when it's amber - time to review, refine and prototype and when it's red - you've stopped! :-)
To quote Eisenhower "plans are nothing; planning is everything."
Yes, you can over plan. The key to a successful business is not having a good plan, it's having a good business model (see Doug Richard talking about this at http://www.schoolforstartups.co.uk/entrepreneurs-guide-to-creating-testing-business-models/). If you don't have a good business model, no amount of planning will make you any money.
'Business Plan' conjures up many different things for different people and because of that some treat it as a chore and some thrive on playing with figures.
To those I have worked with who have no apparent Plan I ask simply - "Where do you want to take your business? What will you then look out for that tells you you're getting there? How will you make sure you do get there?" The answers come in varying degrees of form and detail, but they all have a common conclusion. Getting this base clarity of thought unlocks their energy to make things happen.
They don't need a great Plan as such, but they do need help in creating the clarity that works for them. Indeed some of them think of their new clarity as a Plan: others need to write it down in detail.
Whatever works for you is what matters.
Harold
I see the value of a plan (and any other 'strategy' type documents) for the value of the thought process, and for the fact that a well thought out plan / strategy / whatever gives confidence - to you, to your people, to potential investors or anyone else it may be needed for.
Confidence is the intangible factor that will keep things running - particularly commitment - when the real world intervenes and you need to know how to adjust to accommodate whatever is flying your way. Without some form of plan, you run the risk of floundering in a waffle of 'what do we do now then?' that can become blind panic if the pain is sharp enough. It almost goes without question that the numbers in it will not be valid, but what will be valid will be the collection of CSFs, objectives and associated strategies, sales plans, risk analysis and issues / dependencies that mean you understand your business and are on top of running it.
Ultimately, you should be able to articulate your business plan in less than 1 side of A4 (I can't remember the source of the quote) but without going through the thought process, you end up writing reams of semi-meaningful but unfocused stream of consciousness material that should tell you that at heart you haven't really thought it through........ I agree that it's the clarity that is important.
So yes, I see value, of the Whatever works for You variety. If that means you need to raise money, you'd better be able to tell someone what you want to do with it and how you will deliver a return to them. The banks may be a bit anal sometimes in their approach, but on the whole, they don't have a problem if you can articulate things well enough.
I expect many of you know the quote form John Harvey Jones:
"Planning is an unnatural process; it is much more fun to do something. And the nicest thing about not planning is that failure comes as a complete surprise, rather than being proceeded by a period of worry and depression."
I'm with Eisenhower on this one: it's the process that matters. All plans are wrong because once you start to execute them, some detail changes, since sales or any other metric will be higher, lower, faster or slower than you thought. The real value in planning is threefold: firstly it forces the planner to think, and increase the number of "knowns" and reduce the number of "unknowns"; secondly a good plan will document the answers to "what ifs", like a key employee leaving, or competition emerging before you have got your product established; thirdly it becomes a means of communicating to people in your team, increasing the likelihood that you will all pull in the same direction.
In my experience there are two types of business plan. One is mainly for internal use to give direction and milestones and the other is external to raise finance. They are totally different. I get involved in writing the later and it is geared at highlighting the areas that Banks, investors, Finance Wales etc. want to hear about. ie Is it viable, do the numbers stack up and do the management team have the ability to deliver.
Peter
A business plan in itself is a useful reminder of what you planned to do. It is also a great sales document for staff and investors.
However, a business plan is far more useful than that:
- It enables you to create a model for your business that enables you to understand the impacts of different actions, understand where the stressors are and what you can do about them
- It enables you to test activities on paper rather than for real. Especially if you bring in a facilitator to help you build a true model of your business and then truly test it.
- The process of creating the plan can be very enlightening, throwing up challenges so that they can be solved, not just swept under the carpet.
- Identify marketing activities and associated costs
- Identify capacities and when and who to take on as you expand.
- How much cash will you need and when? 85% of businesses go bust because they run out of cash! A business plan helps you see this coming and develop strategies to cope.
As an engineer, I would not dream of building something as complex and sensitive as a business without modelling it in detail and fully understanding its behaviour, nor would you expect it. So why do it with your business.
How many of the people that have told you that you can do without a plan are truly successful? How many that tell you to plan are truly successful? To run a sustainably successful business you need to understand what is coming and how you are going to deal with it.
Using a facilitator that is independent of the emotion of a business and has broad experience will help you to identify the potential issues in your business and will help you find practical solutions to catalyse your business.
Get yourself a business catalyst, coach or advisor today to help you plan and implement a business plan for sustainable, profitable growth.
A plan will often change at the first engagement. Yet without it you may never reach the first engagement.
A great plan is one that can be easily adapted to cope with the realities experienced.
The latter usually includes the all important reviewing component which is sometimes forgotten.
I'm not sure what would constitute a "great" plan. What I find is that it is the people who write the plan that benefit by far the most from it and it usually leads them to change important things in the business. Actually having to write down thoughts leaves no hiding place - the first person to really convince is yourself, the writer.
It is always interesting to get other people's take on the benefits of planning and on how they do it.
I don't expect that working through the first stab of your own business plan would lead to any major eureka moment, but by golly it is a sure way of finding out what your business is about; if you work through the detail to understand the ins and outs, you will at the very least have an excellent reference point for future reference. I use the e-volving business coaching methodology with clients and we focus on 22 separate growth areas over as many months. And having a business plan really comes in useful as a benchmark during this process.
To expand a little on Greville's last point: A business plan is not an end or a single product in itself. An increasing amount of my mentoring projects are with start-up or second stage companies. Very frequently I find that they have been told they must have a business plan and in a particular format. It quickly becomes similar to an examination thesis. The objective becomes one of having a well structured and well presented document. However, all this shows is an understanding of, and ability to construct, a business plan.When this "examination" is passed the business plan is filed away in case some investor needs to see it.
A business plan, as Greville clearly states, can have many formats, depending on target audience. It is a statement of the company vision, product USPs, market analysis, competitor analysis and all of the upside/downside financial analysis that the foregoing throws up. It must be real and dynamic.This knowledge and analysis may be partly in the head of the founder(s) and partly on various documents when it is being used to drive and monitor progress internally. When a lender or investor requests insight to the business plan it will need to be presented in an orderly and clear format. However, it is the same real, meaningful and active business plan.
So; yes, every business should have a business plan. It's only the method of recording and presenting that is optional.
Having been a project manager most of my life, I can't imagine a business succeeding without a plan. At the very least if there are more than a couple of people involved you have to write down your thoughts to make sure everyone is pulling in the same direction and understands priorities. Plans are just a vehicle to communicate intent. If you need background info and analysis to make that communication work, then in it goes - and that depends on who you are communicating with.
I often write plans just for myself - so I don't have to remember it all and reinvent how I am going to achieve something ever time I think about it - the pen is a wonderful memory device! But once it is written it immediately starts to change - no worries, just wait a while and bring it up to date - for me, it is the thinking process and recording for my memory that is important.
One problem I do have with plans is that we tend to make them all time based - and this is one area that tends to go wrong the most. I certainly hardly ever stick to business milestones because of the date - rather I do things when the context and criteria are right - yet this is not often in the plan. I am thinking of rewriting my plan with decision criteria and as few dates as possible. I wonder what it will look like, and if the various audiences for it will understand it readily?
Wow this is all getting very deep and detailed.
To summarise my understanding at the moment:
If you want to get somewhere specific - you need a plan
If you don’t care where you end up – you don’t need a plan
Banks don’t lend against plans and projections they lend against your assets
Grenville - many days ago you said "God comments here: very good!" But you didn't put the link in. I would be interested to see what He had to say on the subject. Did He have a plan or did He make it up as He went along :)
A business plan is a MUST as it gives you a better idea of where you are, where you want to go and, most importantly, what stays in between.
Then it is important to stick to your goal but not to how to get there.
Too much planning takes away the required action, only action might cause blindness.
I don't expect that working through the first stab of your own business plan would lead to any major eureka moment, but by golly it is a sure way of finding out what your business is about; if you work through the detail to understand the ins and outs, you will at the very least have an excellent reference point for future reference. I use the e-volving business coaching methodology with clients and we focus on 22 separate growth areas over as many months. And having a business plan really comes in useful as a benchmark during this process.
Having been a project manager most of my life, I can't imagine a business succeeding without a plan. At the very least if there are more than a couple of people involved you have to write down your thoughts to make sure everyone is pulling in the same direction and understands priorities. Plans are just a vehicle to communicate intent. If you need background info and analysis to make that communication work, then in it goes - and that depends on who you are communicating with.
I often write plans just for myself - so I don't have to remember it all and reinvent how I am going to achieve something ever time I think about it - the pen is a wonderful memory device! But once it is written it immediately starts to change - no worries, just wait a while and bring it up to date - for me, it is the thinking process and recording for my memory that is important.
One problem I do have with plans is that we tend to make them all time based - and this is one area that tends to go wrong the most. I certainly hardly ever stick to business milestones because of the date - rather I do things when the context and criteria are right - yet this is not often in the plan. I am thinking of rewriting my plan with decision criteria and as few dates as possible. I wonder what it will look like, and if the various audiences for it will understand it readily?
I'm with Eisenhower on this one: it's the process that matters. All plans are wrong because once you start to execute them, some detail changes, since sales or any other metric will be higher, lower, faster or slower than you thought. The real value in planning is threefold: firstly it forces the planner to think, and increase the number of "knowns" and reduce the number of "unknowns"; secondly a good plan will document the answers to "what ifs", like a key employee leaving, or competition emerging before you have got your product established; thirdly it becomes a means of communicating to people in your team, increasing the likelihood that you will all pull in the same direction.
I see the value of a plan (and any other 'strategy' type documents) for the value of the thought process, and for the fact that a well thought out plan / strategy / whatever gives confidence - to you, to your people, to potential investors or anyone else it may be needed for.
Confidence is the intangible factor that will keep things running - particularly commitment - when the real world intervenes and you need to know how to adjust to accommodate whatever is flying your way. Without some form of plan, you run the risk of floundering in a waffle of 'what do we do now then?' that can become blind panic if the pain is sharp enough. It almost goes without question that the numbers in it will not be valid, but what will be valid will be the collection of CSFs, objectives and associated strategies, sales plans, risk analysis and issues / dependencies that mean you understand your business and are on top of running it.
Ultimately, you should be able to articulate your business plan in less than 1 side of A4 (I can't remember the source of the quote) but without going through the thought process, you end up writing reams of semi-meaningful but unfocused stream of consciousness material that should tell you that at heart you haven't really thought it through........ I agree that it's the clarity that is important.
So yes, I see value, of the Whatever works for You variety. If that means you need to raise money, you'd better be able to tell someone what you want to do with it and how you will deliver a return to them. The banks may be a bit anal sometimes in their approach, but on the whole, they don't have a problem if you can articulate things well enough.
To quote Eisenhower "plans are nothing; planning is everything."
agree with Rod. As a mortgage broker I think there is some truth there. I have not yet seen in my experience (albeit not as extensive as many of you), where a business plan for a new business brought about the financial results. It is something the banks and other lenders foist on small business some of which are struggling to make sense of their raison d'etre whilst they try and get their business off the ground. I have seen the opposite where the business plans have gone up in smokes - with the business! I think it is appropriate for more established and certainly larger small businesses.
Maybe great for an existing business with measurable results but ludicrous when you're making figures up as a start-up so you can get a puny overdraft out of a bank. And talking of measurable results, in over 25 years as a mortgage broker, nothing I've tried by way of marketing, advertising, promotion or PR on a virtually non-existent budget has every produced a measurable result meaning I haven't dared gamble larger (borrowed?) sums when no-one's been able to prove to me that 'their' magic formula has worked or anyone else.
Robert - I had you at one of our ACCA seminars - I think you are great! Business plans...the banks and those with the money swears by them so I think we are backed into the wall here...
A business plan in itself is a useful reminder of what you planned to do. It is also a great sales document for staff and investors.
However, a business plan is far more useful than that:
- It enables you to create a model for your business that enables you to understand the impacts of different actions, understand where the stressors are and what you can do about them
- It enables you to test activities on paper rather than for real. Especially if you bring in a facilitator to help you build a true model of your business and then truly test it.
- The process of creating the plan can be very enlightening, throwing up challenges so that they can be solved, not just swept under the carpet.
- Identify marketing activities and associated costs
- Identify capacities and when and who to take on as you expand.
- How much cash will you need and when? 85% of businesses go bust because they run out of cash! A business plan helps you see this coming and develop strategies to cope.
As an engineer, I would not dream of building something as complex and sensitive as a business without modelling it in detail and fully understanding its behaviour, nor would you expect it. So why do it with your business.
How many of the people that have told you that you can do without a plan are truly successful? How many that tell you to plan are truly successful? To run a sustainably successful business you need to understand what is coming and how you are going to deal with it.
Using a facilitator that is independent of the emotion of a business and has broad experience will help you to identify the potential issues in your business and will help you find practical solutions to catalyse your business.
Get yourself a business catalyst, coach or advisor today to help you plan and implement a business plan for sustainable, profitable growth.
Yes: just words to describe the same result. But it all helps and someone thought of it all before we did. That's the clever bit.
Greville, I agree with you AND even an plan written for internal use benefits hugely from a critical read from a third party ... someone who is not emotionally linked to the business and can provide a balanced view ... that's why we use coaching groups and presentation panels on the Better Business Programme and why I encourage any business owners that I work with to share their plans with people outside their business (preferably other people who run businesses) ... the more times you articulate your plan to outsiders, the more you take on (or ignore - no one person is an expert) their feedback, the more robust it becomes, the more you believe it, the more likely you are to make it happen.
Yup! Behind every plan there is a 'vision', but what do we mean by 'vision' exactly?
In terms of a business plan for a company, for one that is large enough to have a board, it is where the board wish to take the company and on what timescale, in order to deliver their promises to shareholders and stakeholders.
For a small business run by a Managing Director Owner, it is essentially what he (or she) wants out of the business himself on his timescales, and where he wants to take the company in order to deliver that.
But you can also have visions for any significant development you wish to make with your business. The key here is that these 'visions' should be aligned with the company's vision for itself.
Banks in Britain are simply another burden on the backs of those obliged to use them. The days of an autonomous manager with some powers of decision are long gone. Such figures were of the Captain Mainwaring generation. Look at the way a bank manages your account and see whose interests are being served. It is definitely not a professional, client based relationship of equals and based on mutual goodwill.
Ask the question what use is a bank to the business or individual relationship and could it be done better? Our banks are part of an unholy establishment alliance against the rest of us.
I strongly believe that a business plan is absolutely essential for most businesses.
A good business plan must cover a lot more than just sales, and is useful for far more than just raising funds. When I produce business plans with (not for) my clients they are struck very quickly by how little they actually understand about their business, industry, competitors, margins, strengths & weaknesses etc etc.
The business plan production process always throws up issues and concerns, as well as opportunities that the business owner had not even considered, In my view the main purpose for producing a plan is to ensure that every angle of the business is looked at, that there are clear and quantifiable goals in place, together with a well thought out plan, or staged road map, in bite sized pieces, showing how and when these goals will be achieved.
This will include monthly and annual budgets that must be reviewed regularly.This is a discipline that most businesses in my experience do not work to, but that can make the difference between success and failure.
All the other issues such as realism in sales forecasts, funding requirements etc are essential but would form an integral part of the business plan in any case.
This is why it's always a good idea to have someone outside the business involved, so that these things can be challenged.
Consider risk. If you really identify and attempt to analyse risk elements then you provide the complete reason to reject.
Although risk exists and you are expected to address it and set out how to manage and reduce it, this exercise is anathema to a (UK) bank that is probably completely risk averse.
The "risks" banks take in the commodity, currency and futures markets are entirely underwritten by their customers and, in the case of the UK, by the Government via taxes pledged in advance.
These are the operations that attract the big, risk-free annual "bonuses" that are about to be announced in the New Year.
What the average British banker knows about risk could be written on the back of a small postage stamp.
The bank will want you to state that there is no risk, and thus accept all responsibility if there is any, or it will look at your logical reasonings to recognise and manage uncertainties and risks and try to force you to pledge your entire fortune, life and belongings now and into the future to them for not accepting your well-thought-out proposal and its attendant risk profile no matter how small or unlikely.
"A good plan today is better than a perfect plan tomorrow" General Patton.
Business plan are essential. The trouble is that they normally live on a shelf collecting dust. You should review your plan regularly. They should be a business action plan.
Going back to the original question, it's more likely that you'll create the future you want for your business and for yourself if you can (1) articulate it clearly and (2) put together a clear, comprehensive and robust plan of what you will do to get you from where you are now to where you want to be. So, planning is a valuable thing to do.
At the same time, the only thing that can be guaranteed about a plan is that reality won't work out quite like the plan! The point is that it's the process of planning that is valuable rather than the document itself.
And, in my view, it's more useful to have a plan for your business (ie. a plan that works for YOU) rather than to follow a formulaic standard set of contents for what a business plan is meant to be like.
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