The power of planning
Steven Barnes will appear on the ‘Taking Care of Business’ radio show hosted by Jacki Mitchell from 11am to noon on Friday April 27. Tune in on 98.7 FM in the Melbourne area or stream it online. The show will also feature three women from the Business in Heels network discussing their Step Up programme for female entrepreneurs.
Although this is a generalisation, almost all small businesses – and the majority of medium-sized businesses – don’t have a strategic plan, or any plan for that matter. Some have a financial plan ‘because the bank needed one’. But this has long since been filed in the drawer and never been
reviewed.
So, if most small and medium-sized businesses don’t have plans, why should you have a plan for your business? Let me ask this question: ‘Why do most large business have plans?’ Large businesses have plans, not just to keep bankers and investors happy, but they have them as tools to manage their businesses better. They regard plans as a very powerful business tool.
That’s why all businesses should have plans – to assist them to manage their business better. Even the Australian Government’s website www.business.gov.au outlines planning as the first step in starting a new business. When you register for an Australian Business Number (ABN), the Australian Taxation Office (ATO) may call you and ask if you have a plan. They may even ask an existing business for a business plan if they have losses over consecutive years.
What are the advantages of having a business plan?
Plans help you stay organised and help you co-ordinate your efforts. Developing plans is not easy. For most small-business owners, their preference is to look at the detail and not the big picture and they prefer to undertake the role of a practitioner rather than an owner in the business.
One of the main reasons that business owners don’t develop and follow a plan is because they are afraid of failure. ‘What would happen if I have a big, hairy, audacious goal and didn’t reach it? What would people think?
When working with business owners, I assure them that the goals of their business are their goals, and no one else cares if they achieve their goals or not. Have you ever had a client ask you what your goals are? I suspect the answer is ‘No’ and I don’t expect you ever will – they just don’t care about your goals.
Not setting a goal or plan is like turning up at the airport without a ticket and not knowing your destination. Ask your client about a trip – ‘What will you do?’ and ‘How will you do it?’ and ‘With whom’ and ‘What do you want out of the trip?’ People spend more time planning their holidays than they spend on planning for their business.
Assure your client that they are more likely to get close to their goal if they first set one. Remember when you were saving up for a car or a house deposit? I bet you had regular savings goals and stuck to a budget. By knowing how much you needed to put away each week or each month, you were more likely to achieve your goal than if you had no goal or plan at all.
Plans are notoriously inaccurate
A plan is out of date almost as soon as it is completed because things happen along the way that you can’t plan for. They can be good things, such as a new client coming on board or implementing a more efficient system that saves you time and money. Or they can be bad – losing a major client, a downturn in your industry, or unexpected increase in input costs.
Most plans don’t build in slack to account for these unknowns. But the inaccuracy in plans does not make them worthless – in fact it is the process of planning that is most useful.
Planning helps you understand the risks, dependencies and resourcing of your business. As Dwight D. Eisenhower said: ‘No battle was ever won according to a plan, but no battle was won without one… plans are useless, but planning is indispensable.’
A plan is a living document
Don’t leave your business plan in the desk drawer. It is almost like a living document – you need to
review it regularly and it will evolve as you respond to external and internal changes. It needs to be an essential tool in running your business, and embedded within the business.
One of the challenges with implementing a plan is that it can be hard to track progress. Sure, you can ask for progress reports, but often it’s tempting just to measure what’s easy and not what is important. When this happens, momentum stalls and everyone gets frustrated.
To get around this, make sure you ask people in your organisation to be accountable. Accountability is a powerful tool within the business. With accountability comes empowerment. If they are going to be made responsible for helping to successfully implement the plan, then you need to give them authority and the tools necessary to impact the relevant measures.
Stephen Barnes is a business turnaround and recovery specialist, Board advisor and the principal of management consultancy Byronvale Advisors. He has over 25 years advising clients from new business start-ups to publicly listed companies and across a wide array of industries. He is a crisis manager that prides himself on quickly understanding the client’s business and issues and developing pragmatic solutions to complex problems. He is also the author of ‘Run Your Business Better’. To find out how Stephen can help you run your business better and quickly improve your business performance visit www.byronvaleadvisors.com.
