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For years I thought I was an accidental business owner. I mistakenly believed that I’d fallen into business ownership out of a determination to avoid bosses and office politics, which eventually led to an aha moment when I figured out that—yes!—I like the business of running a business.
While this makes a nice story, success is rarely an accident. What really happened was that I identified a market need and the appropriate universe of prospects, created services and pricing, developed a marketing strategy, and got to work selling. In other words, I had a plan.
This column is all about business planning—what it is, why it matters and what you really need to know.
Because I’m often better at helping others write their plans than putting my own on paper, I thought I’d seek out some advice. Tim Berry, entrepreneur, founder of Palo Alto Software and author of The Plan-As-You-Go Business Plan, graciously agreed to share his wisdom. He started by talking about what plans are and why you really ought to be planning.
“People think that a business plan is hard to do and set in stone,” said Berry, “and that it has to be 30 pages long and filled with charts and company history and product descriptions. That’s great if you’re looking for investors. But not everyone needs all that information. The real purpose of planning is to steer your business better to control your destiny.”
By way of example, Berry describes business planning as a combination of a map, GPS, and real-time traffic and weather reports. “The map sets your starting point, and the GPS helps you navigate,” he said. “But you also need real-time traffic and weather data to understand how what you originally planned is changing—and to help you steer a new path.”
He also cleared up two big misconceptions about planning:
- Planning doesn’t have to be hard. People avoid planning because they think it’s going to be a huge production, that it’s too hard. But Berry points out that a plan has to be just big enough to run your business. For independents and small business owners, your plan could be just one or two pages.
- Planning isn’t constraining. People avoid planning because they fear the plan will be a straightjacket. But planning isn’t about setting something in stone. Rather, your plan should be a living document that’s agile and easy to adjust over time.
“There is value in writing this stuff down,” said Berry. “We need to be able to look over time and track results and implementation. If not, we kid ourselves about what we had been thinking six months ago.”
Sound familiar? I’m not sure about you, but I’m guilty of letting certain aspects of my business slide when I’m slammed with work. Yes, I have established targets for networking, prospecting, cold calling and so forth, but I’m guilty of neglecting to write down these targets. Now I suppose it’s time to put them in writing again so I squirm a little more when I ignore my best-laid (unwritten) plan.
Planning essentials
Now that we’ve established that every business should be actively planning, what needs to be in your plan? Berry highlighted three elements that he says must be addressed:
- The review schedule. “Planning isn’t about predicting the future,” he stresses, “it’s about setting things up to manage the future.” And you can’t do that if you’ve filed your plan away or tossed it into a desk drawer. As a result, Berry believes that it’s important to set up a schedule (monthly? quarterly?) of when you will take out your plan and review it. At Palo Alto Software, they review their plan on the third Thursday of every month.
- Your assumptions. If you don’t have assumptions about your market, your prospects, your services, and what will and won’t sell, then how are you going to know whether what you are doing is working or not? Berry points out that listing assumptions is critical to being able to go back and ask whether or not your plan needs to be adjusted over time.
- Concrete and measurable objectives, dates and deadlines (and assignments of responsibility—if you’re not a solo operation). If you don’t put down benchmarks, how will you know what was supposed to happen when and whether or not your business is on target? Berry points out that setting objectives that can be tracked “eliminates the guessing game.”
It’s also critical to ensure that your plan establishes your business identity (including your value proposition and core competencies) and your strategic focus. “Too many people want to do everything,” says Berry. “But when you try to do everything, you are not credible.”
When the economy is humming and business opportunities abound, it can be tempting to skip the planning and just move to the working part. But what happens when your fortunes change? Planning isn’t designed to lock you into where you are. Rather, it’s designed to help your business identify its strengths and weaknesses and understand the competitive landscape—and prepare you to make course corrections along the way. Or, to quote former U.S. President Dwight Eisenhower, “The plan is useless. But planning is essential.”
Daria Steigman advises clients on business and communication strategy. She also blogs about business, entrepreneurship and social media on her Independent Thinking Blog (www.steigmancommunications.com). She can be reached at +1 202.244.7651 or
. Or connect via Twitter: @dariasteigman. |
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