Business plan – why the journey is more important than the destination?
Antoine de Saint-Exupéry – French writer and pioneering aviator
What is a business plan?
It is a formal statement of future business goals and a plan for reaching those goals.
In their 2017/18 SME Research Report, Australian financial and business advisory HLB Mann Judd found a staggering four in five businesses do not have a working business plan. Of those with a business plan, only one in three regularly spends time refining their plan. Similar results were found in the UK in 2015 in a survey by Barclays Bank. Only 47% of all UK small- to medium-sized enterprises (SMEs) had a formal written business plan.
Should this be of concern?
Failing to plan increases the likelihood of failure, whether in business or at a personal or professional level.
What should be in a business plan?
A business plan should commence with a vision, mission and values statement. It should set goals, realistic objectives and attainable targets. These targets should also be stretch targets to challenge management and include strategies as well as a plan of action. A business plan is not static. It must be a dynamic living document, providing a mechanism to resolve problems and maintain profitable growth.
What are the benefits of having a dynamic business plan?
Change is inevitable. A dynamic business plan can provide a framework to manage internal change and to meet the challenges and opportunities of external change. The process of developing a business plan commences with a Strengths Weaknesses Opportunities Threats analysis (SWOT). The SWOT, if performed well, will identify the opportunities and threats to the business and its strengths and weaknesses. My clients tell me the best SWOT sessions should be conducted by an external professional facilitator, who does not necessarily have an intricate knowledge of the business or industry. They are less likely to have internal business agendas or conscious or unconscious biases. The best SWOTs are derived from a well-facilitated process.
How can a business plan fit into the annual running of the business?
In writing a business plan, some of the greatest value is derived from the time spent thinking about the business – understanding its background and the external and internal aspects of the business and industry. A SWOT is a good example of this process.
The next step is to write a business plan. There are many different models and templates that can be used to write a business plan, and the choice of model is a matter of personal and professional choice. In my experience, the best plans result from a team effort – which includes input from key managers and provides greater scope for involvement and commitment. Even as the business owner or CEO, you may not be the smartest person in the room.
The ongoing value of a dynamic business plan is in monitoring the plan. I use the model below which breaks down the plan into 90-day projects, 1-year goals and a 3-year vision. This is aligned with the annual budget.
Dynamic Business Plan
The business plan is presented in manageable and achievable bites, like eating an elephant. At monthly management meetings, 90-day projects are monitored to check progress towards the overall vision. Small projects build towards the 1-year goals, which in turn form part of the 3-year vision. The power of this approach is that those involved can measure the progress against the plan and are therefore more committed. At the same time, financial performance is checked against the annual budget. If circumstances change, priorities can be easily adjusted. With our logistics business, our goal was to be recognised as the pre-eminent provider of floor-ready merchandise services for suppliers to major retailers. When the retailers established distribution centres in Asia, we were forced to change our strategy to providing full warehousing services to SMEs.
Remember: business planning – like life – is a journey, not a project.
Do you have a business plan for one year or three years?