Business plan or business failure. Are these really the only two, mutually exclusive outcomes?
So many coaches and consultants use this tactic to scare the bejesus out of business owners, in a (usually unsuccessful) attempt to win business. “If you fail to plan, you are planning to fail” as a cliché is also trotted out in blogs, pitches and articles, just for the same purpose. There is no evidence that not planning results in failure, and in fact this ridiculous line actually undermines the value of business planning: those who would benefit just tune out. In reality, there is a continuum of outcomes for business with and without plans; most small businesses don’t do any kind of planning and haven’t failed.
Business failure in my opinion is WAY overused in marketing to small business. I have seen countless clueless providers use this as the central element of their marketing. In reality, this is not the hot button for small business owners: they don’t think they are going to fail. If they do, it’s already too late.
If avoiding failure is not the pinnacle of business planning, what is the point? What is this middle ground and how do we better structure planning, so it benefits the average small business? To me the whole point is about improving the outcome from what would otherwise be done without any kind of planning. Sometimes that means saving the business from oblivion, but not often. More often, it means the business makes more money, is better organised, wastes less time, knows where it is going, stops doing dumb things and the team are more aligned. Also don’t forget a much happier, better rested and certain business owner.
Let’s look at some examples of actual businesses that we have worked with and see what they got from a business plan that took less than a month.
- Plumbing company worked out that half of their business wasn’t profitable (and how to fix it), decided what staff they needed, opened a new office and got a new accountant (so they also saved tax).
- Pest control company that increased their pricing, developed a strategy to deal with seasonality, sold some extra vehicles that were killing their cash flow and found out what marketing to focus on.
- Kitchen installation company that stopped wasting thousands on advertising, changed their name, increased their profits, got a new website (that worked), stopped some wasteful expenses and started focusing on high-value clients that were much closer to their office.
- Consulting company that changed their billing systems to cut out bad debts, implemented a social media strategy, got some help in the office and gave the business owner his weekends back.
- Food delivery company that worked out how their business would run, how much to charge, what marketing to do and what staff they would need, before they started the business.
- Construction company that created a business plan to get investors on board.
Most small business owners don’t do any business planning because they think it’s not useful, too hard, too expensive, don’t need it or just don’t understand it. For most businesses, they are working without it, so why bother? A short, sharp, action-oriented business plan cuts the crap. Rather than making it up every day, you can just focus on what to do. If an effective business plan gives your business more than $1500 extra profit than not having a plan, why wouldn't you outlay that to get professional help to create one? From the businesses that we have worked with, they can generate that value with their eyes closed.
Dr Warren Harmer