Small Businesses (pretty much) don’t use business planning. That’s my conclusion after 25 years as a small business consultant, thousands of conversations with owners and personally writing more than 2,000 business plans. From what I have seen, only about 5% ever wrote a business plan, usually for a bank loan or some other kind of application. Of those, less than 1% use it ongoing as a practice in their business.
Business plans are not a guarantee of growth and success: some businesses succeed without plans, some businesses fail with business plans. But for most businesses, there is little doubt that the business will be much better off from reviewing financials regularly, looking to reduce costs, analysing competitors, setting goals, mapping out marketing, looking at what’s working (or not) and creating an action plan for the years ahead. Better preparation undoubtedly gets better results, a concept followed by most disciplines, but less so in small business.
So, if it’s not too expensive, with clearly, demonstrable benefits, why don’t small businesses use business planning? Here are the top reasons (excuses) that I have heard.
My business plan is in my head.
One of the most common reasons, we often hear this one. However, when we review the business plans that clients send for review, it may not surprise you that these are very disorganised, hard to understand and sorely lacking on detail. From what I have seen, the ‘in head’ business plan is a long way from anything useful.
Mark Zuckerberg or Steve Jobs never had a business plan!
One of the most common reasons given for not having a business plan is that some famous Founder never had one, so that is taken as evidence that you can be successful without one. It is fair to say that your business can succeed without a business plan, but there is no doubt that planning helps. We have had clients double their revenue within six months of completing their plans. Once they had a clear understanding of where to focus, they stopped wasting time and money, so their business potential was unleashed .
I don’t have time.
The most effective business owners are those that are steering their businesses in the right direction, working to create and fulfil strategies and goals. These are not the business owners who are in the trenches every day, so busy that the big picture is not visible. Getting a good business planner to work with you takes surprisingly little time; if you don’t have time to dedicate a few hours to business planning, you probably need it more than ever. Business plans can map out a pathway to a more sustainable longer-term future.
It’s too expensive.
Like any business investment, return on investment is the measure of success rather than the cost. From our past projects, it is very easy to get your money back from the business planning process. Ineffectiveness are picked up quickly, excess costs identified and new opportunities found. Just having an expert analyse your financials, systems and marketing usually finds many opportunities to improve. Clarity of direction and future investments can save and make thousands.
I don’t need it.
If your business is exactly where you want it to be I suppose that is possible that you don’t need to do any planning.
For most business owners, however, there are ambitions for growth, so a realistic roadmap is key, an understands that state of the market equips you to make decisions and confidence in the future direction boost opportunities. Those that don’t plan can also miss what is going on in that market that could hurt your business.
