Another myth about business plans

June 21st, 2012 | 4 comments Source: EnterQuest

We’re revisiting the subject of business plans this week, and will start off by giving you one of those priceless nuggets of information that the single most downloaded and read factsheet by subscribers to all of our various information services is – A Guide to Writing a Business Plan.

Which is quite remarkable when you consider the fact that the majority of new or currently trading small businesses don’t have a formal business plan written or in play at all.

And they probably never will, other than the loose and informal one that’s located in their heads or scattered around various notebook scribblings, e-mails, and other scraps of paper.

But maybe it’s not so remarkable when you consider that just about every single business adviser/mentor/coach in the UK, many of whom happen to be our customers, will be suggesting to their prospective business start up and owner-manager clients that they need to produce a written business plan before they start trading, or before they embark on a new business project.

So what is this week’s discussion point, and lessons for you to consider?

The point is that having a business plan is not the be-all and end-all for anyone setting up, running, or aspiring to grow a small enterprise. Or at least, its not about having a single written document that tells the complete story (for small business owner read clairvoyant) about how you will plant your little business acorn and how it will grow into an impressive, profit-generating forest of money trees in the first 12 months of trading.

The real point being made is that in the real world of start ups and entrepreneurship it’s not actually having ‘a plan’ that’s important, but having a number of distinct ‘plans’ for your business, and lots of them.

You need a plan for just about every critical aspect of your business, and you should certainly have these written down, no matter how short and sweet they are. And they should be capable of being read and understood by everyone involved with each relevant activity of your enterprise. They should include:

  • an advertising plan
  • a financial management plan
  • a sales plan
  • a purchasing plan
  • a recruitment plan
  • an e-commerce plan
  • a social media plan
  • a PR plan
  • a legal compliance plan
  • a direct mail plan
  • a succession plan
  • a disaster plan
  • an exit plan, and so on.

That may sound like an awful lot of plans, but of course you will not normally have or need to be working on more than one or two of these plans at any one time.

In fact you can break down and manage your plans relatively easily according to the stage you have reached with your new venture, focusing on the particular priorities that relate to your unique business situation.

To begin with, make a list of the most important aspects of your business that you need or would like to address, and for each one start off by jotting down, on a single side of paper, a summary of what you would like to achieve and how you propose to achieve it.

If you need to write more, or do more research, you can do this for each aspect of your business as you find the time.

Then, and if you really have the need, such as in the case of requiring a prospectus to present to a bank or other funder to raise finance, you will be much better placed to quickly pull together a single master business plan for exactly that purpose.

But concentrate on your real priorities first.

Plan in small chunks, and get the detail right so you’ve got some immediate targets and objectives to get yourself working on. The sensible approach for the vast majority of new owner-managers is to aim to keep your business moving forward in small, but from your point of view, significant steps.

To comment on this article you can do so below.

4 Responses to “Another myth about business plans”

  • Neil Davey

    I follow similar lines to Mike when describing how to put the plan together. Write all your ideas in a ‘stream of conscience’ way, derive the narrative by finding the natural starting point, tell the story and then break it down into the constituent parts of the plan. It doesn’t have to be ‘War and Peace’, often only a couple of pages of A4 plus the financial forecasts – a simple business equals a simple plan. The idea of a 50+ page document comes in the main from the many ‘one size fits all’ templates available, mostly online and full unnecessary and inappropriate sections which may suit a large company but not a simple start up. The important thing is introduce your own character and personality so the plan doesn’t look like A N Other’s.

    Comment was posted on Wednesday, June 27, 2012 4:09 pm
  • There is a common belief amongst many small or micro businesses that a business plan is only for those who want to gain external funding – they don’t see it as something that is useful to their own business. I think this is because of too many people believing ‘Dragon’s Den’ is what real business is actually like.

    Those that do attempt one then end up writing it for others rather than themselves. They try to do their business plan ‘the correct way’ and become overwhelmed by all the conflicting and often poor advice. I think this is why many give up or do not start in the first place.

    Instead if one starts with ‘what do I need in a business plan that will be useful to help me manage and develop my business’ and ignore everything else it’s a great start. The document should evolve over time and be regularly reviewed (at least once a quarter) to be of any real use. A good useful business plan does need regular review with comparisons made to establish what is working and what isn’t – otherwise it really is pointless.

    I have a very detailed business plan that covers several years ahead. When I first started it I tried to produce it ‘the correct way’ and did lots of research. But I quickly came to realise that none of that advice suited me – I did my own plan written in my own terms.

    I also happen to know a few profitable functional businesses that do no planning whatsoever!

    Comment was posted on Wednesday, June 27, 2012 11:43 am
  • This is cracking advice. Yes I do have a Business Plan, but I don’t have items broken up to these separate plans, so I need to go and revisit it, but as you say in Bite Size Chunks!

    Comment was posted on Thursday, June 21, 2012 5:19 pm
  • I largely agree with the premiss of the article. The main stumbling block is not that everyone should have a business plan but more what type and size it should be. The thing that puts all new startups and small businesses off is they are led to believe they need a 50+ paged document to have a business plan. I teach my people that when you think about your business and what you will be doing, thats a business plan, when you write down what you have thought (like a diary entry) thats a written business plan and what you do from there depends on you and your business. You’re breaking it down into chunks is sound advice. I would recommend that the record is done in something like Word so it is easier to update and then the chunks can more easily be brought together into one master document.

    Comment was posted on Thursday, June 21, 2012 4:52 pm

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