Traditional wisdom suggests that businesses should have a five-year plan; that to go into business, or continue an existing business without one is foolhardy. After all, who would consider building a house without first commissioning architectural drawings? Many small business owners and even successful entrepreneurs will tell you they have a plan, it’s just in their heads. All well and good, but sharing it with others in your company, not to mention lenders and investors is a tad difficult when you have nothing written down.
One of the primary reasons why people don’t get down to writing a business plan is that it’s a lot of work and what small business owner has the time? The problem is, operating a business with no planning is a little like running through a thick forest blindfold; sure you may get through, but you’ll suffer a lot of cuts and bruises along the way and possibly some broken bones.
The big news is that the five-year plan is all but dead; in fact, it probably is dead but many larger corporations haven’t realized it yet. Bottom line? If you were to sit down and write a plan that covered the next 60-months you would be planning for a world that simply won’t exist.
The business world is changing at warp speed; think of how much is changing in your industry and your market. Think about how technology is changing how you operate, manufacture, communicate. Consider how consumers’ awareness, knowledge and access to information is increasing every day. Look in wonder at how consumer trends jump from country to country and cross oceans in a heartbeat.
Understanding your market is a transient thing, you have to keep reinventing yourself, your company and how you communicate with your prospective market. The good thing is, if you are a small business you can change direction more quickly and have greater flexibility than your larger competitors. This is an advantage you need to capitalize on.
So, what’s the difference between a five-year plan and one that lasts just 180-days? Focus. Today’s planning needs to concentrate on one to three goals, all of which will further your primary cause – profitability. A six-month plan needs to be all about deliverables.
Here’s our quick guide to writing your plan in one-day. Yes, one-day – we all know you don’t have more time to spend on it, or at least we realize that if it goes beyond that you’ll be distracted fighting fires and embroiled in day-to-day business detritus.
First gather your management staff together – if that’s just you, then place yourself in front of a whiteboard or a flip chart for the day. Or, better still, ask any friends, family, or other advisors to pretend they are employees for the day. Amazing what second-opinions can do to improve a plan!
If you can manage to co-opt someone into being your scribe so much the better – this stuff needs to be recorded. Worst case, you will have use your smartphone to photograph everything you write on a whiteboard, or flip chart and transcribe it later.
1. Think about what one to three goals are vital to the success of your business. Remember they need to lead to increased revenue and/or profitability.
2. Break down each goal into its component objectives.
3. Allocate each objective to someone. If you are a one-person business, then consider what you can manage and either sub-contract, or get friends or family, to help with some of the work.
4. Break each objective into individual tasks and set start and finish dates.
5. Set deliverables – these will be how you identify that tasks have been achieved. You need a way to evaluate the success, or otherwise, of your objectives.
6. Set an overall timeline for each goal – remember it has to be within six months. If a goal is to large, then it should be broken into phases and the next phase allocated to the following six-month plan.
7. Set targets both in terms of units and revenue. It’s no good doing all this work and then not reaping the rewards in terms of cash in the bank. So sales targets need to be set for each of the six-months. How you break this down will depend on your goals, objectives and tasks. Be realistic – enthusiasm is great, but failing to reach targets can be demoralizing.
8. Create a cash-flow spreadsheet. It’s an old adage, but cash really is king. No plan is going to work if you don’t have enough money in the bank to keep operating. Use your sales targets spreadsheet to help you figure out whether you’ll need to go to the bank (with your plan) to increase your line of credit, or get a loan.
There’s a whole lot more you can add to the plan, and feel free to do so. But the simple one-day to create, six-month plan above will help steer your business through the ever-changing and often turbulent waters of today’s business world.
This article is provided by Community Futures Okanagan Similkameen. Questions about your business? Contact their office at 250-493-2566.