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Well, of course you do.

At least, I sure think you do. My standard comparisons are: chefs need recipes, pilots need flight plans, actors need scripts, football teams need game plans, teachers need lesson plans–and so on and on.

What do business plans do? They answer three core questions about your business: Where are you? Where are you going? How will you get there?

I think people may define “business plan” too narrowly. They think of it as the booklet you prepare when you’re going to a bank or other investor to obtain financing. Not that this isn’t a good reason to prepare a business plan, but there are others that are more important.

The first of these is financial management. When you do a business plan you first record what your company’s assets and liabilities are, which means you create a balance sheet. In addition, you make projections for sales (by category), costs for goods and services sold, expenses (again, by specific category), and cash flow. For most plans, you create these projections for three years out.

When you do a business plan, you should build in the means to review it on a regular basis–whether monthly, quarterly, or bi-annually. Many businesses fail to do this. When I was out there in corporate America, I would often see financial results for a given month two weeks into the succeeding month. Often these results would be met with much hand-wringing and feverish attempts to correct whatever it was that led to the results.

This is wrong-headed. With this approach, the cattle have already left the corral.

What you want to do instead is implement a system in which you project results, then monitor those results to see where you are per your projections, preferably seeing variance in the form of percentages. This is the tried-and-true Budget/Actual/Variance reporting that you may already be familiar with. But in both my corporate career and my consulting practice, I see few companies who do this in a systematic way. Developing and using this reporting strategy is one of the key benefits of having a business plan.

The tools for doing this kind of planning are readily available. You can do them by hand, you can use Excel, you can use business planning software such as Business Plan Pro, or you can use the budgeting features of QuickBooks or other accounting applications. While my preference is that you hire me to help you with any of these options, you can certainly learn how to manage the process yourself with a minimal investment of time and effort.

A second reason for doing a business plan is the thinking that you’re forced to do. Some of the software applications mentioned above will guide you through this process–asking you about your vision, mission, values, competition, keys to success, organizational structure, marketing plan and so on. THIS IS THE MAIN REASON FOR DOING A BUSINESS PLAN! And yes, it’s the main reason to work with someone like me. If your business is going to survive and grow, you have to learn to think about it on an ongoing basis.

I think you need to look into the future. If your business is a wagon train, you can’t let it get into a canyon, then ask, “I wonder if we’ve passed into Indian territory?”

Why don’t business people plan? You’ve probably heard the cliche: many small business people become overwhelmed with working IN their businesses; they need to find the time to work ON their businesses. This is the thinking dimension that I just described. Doing a business plan forces you to work ON your business, asking yourself the really tough questions.

I’m not sure why we resist this. Maybe it’s because it’s easier to be a “catcher.” Here’s the routine: Show up at your business, unlock the door, turn on the lights–and wait for things to happen. We get to be good catchers. Maybe it becomes the way that we determine a good deal of our self-worth. No one can catch as well as we can. And we’re not talking about just catching one thing–such as technical problems (catchers love to tear into pieces of machinery).

No. Not only can we run and fix every machine in the place, but we can “catch” all the marketing issues as well. We can design brochures. We can write the ad for the newspaper. We can pick up the phone and prospect for customers. And, we can of course “catch” every customer who walks through the door, and give that customer an absolutely glorious experience.

Uh huh.

I think there’s a better way. It’s the planning. Houses don’t get built without blueprints. Businesses need business plans.

I said earlier that I think people define business planning too narrowly. Here’s the real secret message of this post. Only you who are still reading are going to reap the benefit of this.

Every business that I’ve ever seen or worked in has issues. Sometimes the issues pertain to business processes. The processes can be hopelessly gnarled, causing untold confusion and consternation–but, by gum, we’ve always done it this way. One definition of insanity is to keep doing the same thing and hope for different results. Look at the way you’re doing things; map your processes. Create an “Is Map” and a “Should Be Map.” Use a business planning process to FIX YOUR BUSINESS PROCESSES!

Sometimes the issues are people issues. Use the business planning process to FIX YOUR PEOPLE ISSUES. Business plans require you to work on your company’s organization and management (where people issues can take root and blossom). Business plans require you to look at force-load issues (how much work is there, and how many people do we have to do it?). Business plans force you to make staffing an ongoing consideration.

Part of a business plan can include the development of policies. Eventually, you need to operate according to policy, not personality. Often people put up with “bad apples” in their companies for months and years because they have no consistent, legally-defensible way to manage the bad apples out of the company. Don’t live with a situation like that. Make a plan and execute it (the plan, not the person).

Use a business plan to get yourself more peace of mind. You can only sweep things under the rug for so long–eventually, you’re going to bump your head on the ceiling.

Good planning!

Jim Hall

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