Business owner, please:
If you have any doubt about the value of planning your business, at least take this simple first step.
Just do a sales forecast, which means you aren’t doing text, editing, or a document, just good management. Follow it up monthly and you’ll have planning—and the planning process—without the formal plan.
You might even call it a Lean Plan, or a one-page business plan, if you like.
Step one: The first forecast
A useful sales forecast is a lot easier than most people think. It doesn’t take an MBA or CPA or advanced mathematical modeling.
You group your sales into a few strategic categories that match your accounting summaries. You estimate units and price per unit for each category for the next 12 months.
The goal is not accurately guessing the future; it’s laying out the assumptions so you can track them. We’re human. We don’t guess the future that well. What we can do is look at the past, think about what might be different, and make some reasonable guesses about the future.
What makes one sales forecast better than another is how well it matches the categories that drive the business, and the reports you get from actual sales.
For more on that on this site, read How to Forecast Sales, which goes into the process of forecasting in more detail.
Step always: Track and manage
Commit to reviewing sales results every month. Track the difference between what you expected and what actually happened. Set up a schedule, timing, attendance—and maybe even the lunch menu for that meeting next month.
With those monthly meetings, you’ll discover that the difference between what you planned and what actually happened leads to management. It’s almost automatic. It’s the way normal people think. As we look at what worked and what didn’t, we try to take advantage of good news and correct bad news.
And just like that, you have planning
I’ve seen this many times in actual business situations. Dealing with plan versus actual sales leads easily to looking at strategy, tactics, and execution. Once you have this regular process in this business, you’ve also got a lot of the benefits of planning.
It’s sort of the way we think, as humans, and especially as business owners. When we look at a past forecast and consider what really happened, we can’t help thinking about what went right and what went wrong. That leads to management, changes, and planning process.
So just do this, and from then on, you stop apologizing for not having a business plan. You’re on your way.