In your opinion is having a detailed business plan a good idea, nice to have or essential ?
April 15, 2008 | Start Up
I have often heard it being said that until you sold something your business is nothing more than an idea. It’s also been said that one should write your ideas down and plan for your success. In theory, this all sounds well and could even be sound advice but so often when I am out meeting and speaking to business owners I find that their “business plan” is all in their head and sometimes, they are the only one who knows what the plan is.
They would agree that it’s a good idea to have a written down plan and in the same breath they will say that they don’t have the time to write it all out. I was always told that if something is important enough one will find the time to do it and would dare to say that perhaps they don’t see the importance.
This is how I see it; a business owner is normally the person with the idea or, the vision for the business. They have an objective or goal in mind “the reason for starting the business”, for me a personal motivation if you like. Steve Jobs’ 2005 Stanford Commencement Address illustrates the visionary for me in the three points he makes; connecting the dots, love and loss and then talking about death.
Once the vision is clear, the business owner knows why they are in business and what they want the business to do for them. They can then start developing the strategies that will get them there. Having this written down and documented makes up the framework of a business plan as this then become the drivers in a business. The business owner normally has a close inner circle around them who helps them bring the strategy to life as example their board of directors or management team.
After the strategy has been outlined, putting in place some tactics to ensure that the strategy can be delivered within the timeframe you expected is the next logical step. Delivering this normally become the responsibility of senior management in most organisations.
After tactics have been put in place, senior management and management can start working on putting systems and processes in place to support the business. Processes make the day to day operational working within the business easier.
When starting out, the business owner might be the only person in the business and responsible for running the business as well as the day to day operational work. Without a business plan it is difficult to see where one should focus at any given time, as the business plan is the starting point for both the running of the business and delivering the day to day operational objectives.
In my experience business owners of (SoHo) Small Office Home Office and (SME) Small Medium Enterprises, typically start up understanding the day to day operational side of their business, as this is the main area they have always been working in. Few business owners starting out understand how to “work on their business” areas mainly dealing with strategy and tactics as appose to “working in their business” areas that deals mainly with execution of tasks, governed by systems and processes.
Without a business plan, it becomes difficult and sometimes impossible to know exactly where one is spending most of your time and where on should be focusing effort on profitability within your business. It is also difficult to measure progress, what is working or not and how to make the necessary changes that is needed to ensure that the business grow and flourish.
Often overlooked but each area within once business has a different driver and will influence; strategy, tactics, systems and possess within an organisation. That is why it is important to make the time, invest it in your business plan and understand the business drivers. As a minimum a, business plan should set out your business strategy, include a marketing and cash flow plan for at least a 12 to 18 month period.
If you are interested in developing your business plan and do not know where to start, I would also recommend you read the HSBC briefing on writing a business plan as it explains; what information to include and how to present your financial forecasts.
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