“What’s the plan, boss?”
It’s a tough question. And it usually comes from your most hard-nosed, intelligent employee. Which makes it all the more difficult.
But when you run a business on your own – either as a sole trader or as the sole senior leader – it’s easy to avoid the question altogether. After all, if you don’t ask the tricky questions, you don’t have to answer them.
That, as I’m sure you can guess, would be a bit of a mistake. Because “What’s the plan, boss?” is one of the most useful questions you can ask of a business leader, and one which you should at least have an idea of how to answer.
In fact, your business plan – a written document no less – should outline the guiding objective of your business organisation. Your ‘North Star’, if you will. A live, evolving answer to that most important question.
Not only has planning been shown to improve commercial performance, but companies that plan grow 30% faster, and an incredible 71% of fast-growing companies have plans. The possible benefits are clear to see.
What is a Business Plan?
A business plan is a written document that outlines the nature of your business, and the goals you’ve set. It typically features objectives, strategies, and financial forecasts, and outlines what you plan to do now and in the future. It also includes where you expect those efforts to get you, with key performance indicators (KPIs) that help you to measure your success.
That said, the word ‘plan’ is a bit of a misnomer. It suggests a fixed idea, an outline that you follow, and a vision of the future that you must stick to.
In reality, your plan will act as a guide, of course, but it should be a living document: one that you adapt, and adjust as your business evolves, and as you see results – positive or otherwise.
So that means, rather than a piece of homework you have to painfully complete, hand in, and never look at again, it’s best to think of your business plan as a tool. A way of having an evidence-based conversation about your company, even if only with yourself.
Why Do You Need a Business Plan?
A business plan is a core document for any company leader – no matter whether you’re a sole trader or leading a workforce of thousands. It’s the foundation on which all your activities are built.
1. To clarify what your business is
Let’s start with the basics. A business plan is where you lay out all of the key facts about your enterprise: what you sell, why, and who you sell it to.
By laying out your products and services in black and white, and the markets you operate in, you can bring often-needed focus to your activities. It’s a great way of identifying what you don’t do as much as what you do, helping you avoid the classic trap of ‘mission creep’ that can dilute your efforts.
For many of the business owners I speak to, it’s only by laying it out on paper that they can clearly articulate exactly what problem they solve for their clients. And with that clarity, better plans – and clearer pitches – can be made.
2. To express (and confront) your assumptions
Assumptions are a part of life. We judge people, places and experiences within mere moments. We can walk into a restaurant and decide if we’d like to eat there before the waiter has even finished their ‘Hello’.
In business it’s not uncommon to do the same. We assume that a certain product supported by a certain message will resonate with our audience. Or we assume that we can take delivery of more stock in time for our sale because that’s usually the case.
But these assumptions can be dangerous, and miscommunication can cause real business problems. By laying out what we think will happen on paper, it becomes easier to spot where these might be creeping in – and take action to do our research.
3. To make big decisions
The human brain is a wonderful thing, but there’s only so much information that it can hold and analyse at the same time.
Even the smallest business is a complex beast, and as a sole trader you’re juggling day-to-day operations, marketing, sales, product development, finance, IT and much more. Holding all of that in your head at once just isn’t doable.
With a clear business plan, it becomes possible to analyse different aspects of your business in isolation, to identify gaps in your thinking, and to take the big decisions based on facts, not instincts.
4. To set your business organisation objectives
What’s the future growth plan for your business? How do you intend your workforce to expand over the coming years? What will you do if we hit another recession, or if demand suddenly sky-rockets? Where would you like to sit in the marketplace? What do you want potential buyers to say about you?
All these questions, and more, may well be explored in your plan (especially a ‘what-if’ plan), as you lay out achievable, measurable objectives.
5. To align your budgets
As you plan and track the progress of your business, it becomes possible to define budgets for each part of your activity against a viable return. Your marketing spend, for instance, needs to demonstrate a valuable ROI. For time-strapped business owners, it’s tempting to outsource whatever you can, but this also needs to be measured against the value it’s delivering.
A business plan is a great place to set out your budgets and track these against your revenue, so that you can keep the ship steady as demand evolves.
6. To measure your progress
Establishing clear goals and KPIs in your business plan makes it possible for you to track your progress with accuracy. Although many successful business owners have a finely-honed ‘gut instinct’, concrete figures are a far more effective way of assessing how you’re truly getting on. Tracking your progress will also make it easier to make adjustments in the future.
7. To attract partners or investors
Finally, if you’re after investment, a loan, or want to attract new partners to your company, a business plan is non-negotiable. These stakeholders will only be interested if you can outline the purpose, objectives and performance of your company in a clear, concise document. Without that, sadly, you won’t even get through the front door.
A Final Word of Comfort
Clearly, there are a lot of reasons to have a live business plan. Is it starting to feel like writing one might be a fairly Herculean task?
If it is, here are my words of comfort: an effective business plan needn’t be biblical in scale. A few concise pages might be all it takes (no, really!) to clearly lay out and define your goals and ambitions.
In fact, a few concise pages is probably going to be much more useful than 493.
So don’t be alarmed, laying out the objectives of your business organisation needn’t be a mammoth undertaking.
Now You’ve Set Your Objectives, Let’s Achieve Them
There are many reasons to work with a business coach, and it’s not for everyone. But chief among them is having someone who will ask the difficult questions, providing accountability, support and expertise. An effective coach can be a business soulmate who helps you identify and solve the big challenges, and gives you the focus and structure to get you from where you are to where you want to be.
A skilled coach can also guide you through the creation of your first business plan, or help you update and enhance your existing document – so that you can be more efficient and effective in all of your commercial efforts.
Because a plan that evolves as you do is a truly powerful thing.
If you have any questions, do drop me a comment below or send a message, and if you found this post useful, please feel free to share it.
Kind regards,
Chris