Mythbusters

It’s Not One Size Fits All

It's amazing how long business experts, teachers, coaches, and advisors have swallowed and even spread the idea that a business plan is some sort of standard document, a predictable standard task with a generally accepted set of parameters to define it.

It just isn't so. Like so many other things in business, the business planning should be appropriate to the needs of the business.

Just about every business needs to build and understand its heart, that core element of strategy that's about what you're doing for whom, and who you are and what you want to do.

Beyond that, every business ought to be able to set down some tracks it can then follow and manage, watching progress towards goals. The sales forecast is the most obvious set of tracks. Milestones, like who does what, when, and for how much, are almost always useful. And don't forget the burn rate.

This isn't necessarily written down carefully into a formal text. It might be just bullet points, or even pictures; it might even be something you say in a 60-second elevator speech.

And as your company grows, you can grow your plan and your planning. Grow it like an artichoke grows, with leaves -- more details, more specifics, more description -- surrounding the heart.

Or, if you're starting your company with a plan for investment or business loans, or if your company is already there and already plans and you want to grow it, then you might go all the way to the more complete formal plan.

What's important is that you do the planning you need, to run your business better. Not the one-size-fits-all plan, but the just-big-enough plan to give you better planning and management without wasting any time or effort on documentation you won't use.

No Time to Plan?

"Not enough time for a plan," business people say. "I can't plan. I'm too busy getting things done."

The busier you are, the more you need to plan. Too many businesses make business plans only when they have to. Unless a bank or investors want to look at a business plan, there isn't likely to be a plan written. If you are always putting out fires, you should build fire breaks or a sprinkler system. You can lose the whole forest for too much attention to the individual trees.

The Plan is Worth The Decisions It Causes

A plan is worth the decisions it causes. If you already know your market, don't waste time or money doing market research.

Don't do it just because somebody said it was part of a business plan. But are you sure? Is it worth a fresh look? You decide.

The supporting information isn't part of your plan; it's just supporting information. Do you have to prove the concept? Will outsiders be reading your plan, and evaluating it? Does the market research prove something that must be proven? Then include it.

Information in business is worth the decisions it causes. You measure this by taking a guess at what your bank balance would have been without the information and comparing it to what it is because you had the information. Subtract the hypothetical balance without the information from the balance with the information, and that's the value.

 
That's a hard equation to deal with sometimes, and of course it's based on hypothetical values; but it's still an important concept to understand. Your business plan shouldn't include anything your business won't use. Either it's going to use the market analysis or it needs to present it as proof of market for outsiders -- or you just don't perform the analysis.