No more business plans please! Keep your plans short and simple
“The 20th Century business model - constructed around hierarchy and five-year business plans - won't work for the new millennium,†Kingsland, chairman of the Association of Business Psychologists (ABP) in the United Kingdom.
A few days ago, I was talking to a friend and we were discussing business plans, specifically the one he used to submit to buy his business. I asked him to show it to me and it took him about twenty minutes just to find the plan.
He dusted the cover off and proclaimed, “Proud words on a dusty shelf,†referring to Ken Hensley's album of the same name.
Handing it over to me he said, “You know Vince, I've never looked at that plan since I got my business up and running. In fact, the only time I glanced at it was when it was returned to me. The strangest part was when I re-examined the plan, I found that some of the financials were out and my competitors’ analysis was off base. One day I will sort it out.â€
I asked him, “If you don't consult your plan periodically. What do you do?â€
“I may not have a 'business plan' but I certainly plan. The one thing that I've have learnt is implement one or two marketing ideas (or whatever it is you need to do), and stick with it for a time and then change. It's easier to look after two game plans that say five or six. For example, my shop on the forecourt suffers in winter, sales drop off slightly, but I know that people need gas for their heaters. Before the winter period, I negotiate with the suppliers for a better rate. I then guarantee the supplier that I will take one hundred gas bottles per week for the winter. The saving I get from the supplier I pass onto the customer. This has a knock on effect. It makes my gas the cheapest in the area, which brings in the customer who spends more in the store. You can say that I use the gas as a loss leader.â€
“You can't do it every winter,†I said, “your competitors will start doing the same, so you're going to have to be one step ahead.â€
“But I do. The one thing I do is look to other industries for ideas, but that's another discussion we can have.â€
Walking back to my car I thought. Plans don't have to be formally written. Writing down your ideas on an A4 sheet of paper or creating a mind map will suffice; something that will take an hour or two to complete. What is more important is acting upon them, making them become a reality. Output is more important than the input, ie writing the business plan. Plans should be simple and uncomplicated, not heavy-handed that weighs you down. There should be no need to produce a 50-page document for a five-year horizon, which in most cases won't be read. Short actions plans, that is key.
Daily we read and hear on the importance of business plans. We are told a business plan can be compared to a road map. It shows you where you are, where you want to go, and what resources you will need to get there. The purpose of a business plan is twofold. Firstly, it can help you obtain finance and, secondly, it explains to you and to the financiers what, why, when, where and how you intend to run your business. It will also help clarify why you believe the business venture is viable, and is a guide to achieving your goals. If this all so true why do so many businesses fail?
The world of entrepreneurship is flooded with information on business plans. A Google search for "Business Plans,†and “Business plan" recently revealed over 2.8 million and over 23.6 million pages respectively, from free business plans templates to sophisticated software packages that will help one design the ultimate business plan. Today writing a business plan is undoubtedly the most extensively used teaching tool in entrepreneurship learning and preparation. With so many plans available surely the success rate of the business should be higher than the 15% that succeed. Unfortunately, a good template will neither make for good content, nor automatically make a workable or successful business. (The technology crash in Silicon Valley can attest to this, great business plans, but little else except greed.)
Business Planning is critical for success! Business plans may not be.
So is there an answer to an alternative business plan? I believe there is...
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