I’ve been working with the team at Palo Alto Software on a series of videos to help you with business planning. This video answers the question “Why is a business plan important?”

Transcript

So let me take a minute and talk to you about why I want you to do business planning. Because you’re going to use it to run your business better.

So I’m saying that the business plan you need is not necessarily the full, complete formal document that you probably fear and loathe; it sounds hard to do, but for the vast majority of us what you can really use (now note I say use, not need) is a plan that sets forth your strategy in a simple, bullet point–what are we doing, what are we not doing–as a reminder when you get back into the routine and the fires need to be put out, or the daily taking your phone calls and returning calls and whatever. A reminder of strategy, priorities, what are we trying to do here?

You can’t please everybody, so you focus. That’s one element that will give you benefit from your business plan. Another element then is to set your objectives. What’s success for you? And put them into steps and then set through on those steps, how do I accomplish what I want to accomplish? And you lay it out so you have ways to measure progress and track towards key goals, whether it’s dollars of sales or dollars or costs or expenses, or it’s calls or trips or hours or engagements or page views or conversions, you want to set forth for yourself your measurements, and then assign tasks to people, and set it up so that you can communicate what’s supposed to happen, and then as time goes on every month you look at, okay, here’s our numbers that we were expecting to meet, here’s our actual numbers, why is that different? And it will always be different. Nobody’s ever written a business plan that accurately predicted the future.

But what you get is the process then of management and steering your company. And what you get then is a monthly review so that your plan is being revised, stays alive, stays flexible, that old thing that’s in a drawer, static, that wasn’t able to change, forget that. You’re changing it and managing, and it gives you management. That’s why you’re planning.

‘Cause you can manage. It’s never about, oh, I need to do this because we have to stick to the plan, no, it’s about, as you change things, because you have a plan, it’s easier to see quickly when one thing is different from plan, what other things have to change because you have those relationships.That’s why you’re doing business planning. And notice, it’s probably on your computer and you’re going to use it to manage yourself and if there are others involved. And if you need to show a document to somebody, well then you’ll spin out the document. That’s output.

Your plan is what’s going to happen, and why.

What did you think about this video? Leave a comment below and let me know if there’s a question you’d like me to answer next.

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