Last month I revealed the 5 reasons businesses stay small.
In this post I will discuss the first of the Five Pillars of Guaranteed Business Success: The Plan.
When I speak about plans what I see are generally business plans created when the business was first started, that read like novels, and if they were in libraries, they would be classified as science fiction. They are filled with the optimism of the inexperienced, but once exposed to the reality of the market place, these plans regularly get forgotten on the shelf gathering dust.
General Truman once said “Planning is essential but plans are useless”. Perhaps this thought was prompted by a 19th century German Field Marshall von Moltke who said “No plan survives contact with the enemy.”
In battle, this is obviously true. The opposing general’s mission is to make your plan fail. In business, the opposing generals, and there are many, are your competitors.
What Truman was referring to was the planning process as being essential, rather than the plan itself. The planning process looks at what is to be achieved, the opportunities and the obstacles to success, the risks and contingencies you need to plan for. Nothing is certain, and plans need to be flexible enough to be changed as circumstances change.
For small business, the 80/20 rule definitely applies when planning, with 80% of the benefit being achievable with 20% of the effort, which is why I advocate a 1 page plan that’s easy to prepare and to keep up to date. It’s a review of how the strategy has been working to date, looking at what’s working well, and identifies the black holes being subsidised by the gold mines that might exist in the business.
I have created a tool that I call the Profitability Analyser that helps define the key segments in a business and the true profitability of each so that with a side-by-side comparison, strategies can be developed and different scenarios tested easily. The tool
• Builds your wage into your invoices
• Prices your products/services correctly
• Defines the strategy for profitability for each product/service
• Creates a plan that delivers the results you want for your business and the profit you deserve.
Detailed planning often becomes a form of procrastination where many hours are spent on a fluffy Mission Statements (download our Mission Statements Made Easy Tool here for a hard edge Mission Statement) and then many more hours on plans so complex that they are never implemented. With a 1 page plan, progress can be easily tracked and the plan updated as necessary.
While planning is important for decision making, there will always be some element of risk which can never be eliminated.
I rather like Richard Branson’s approach, after they have done their planning, their unofficial mission statement is “Screw it, let’s do it!”
May Your Business Be –As You Plan it!
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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.
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