Several years ago, I received a phone call from a business owner in response to a brochure he received regarding a business plan seminar. He adamantly insisted that he had been doing just fine for years without the benefit of planning. My response was simple: I was very happy for his success, but I had to wonder if he was doing as well as he could be (or thought he was).
So much emphasis is put on business planning for start-up businesses. Obviously, it is significantly important to lay out your strategies, finances, and goals prior to opening your doors. But what about after you open? A well-thought-out plan is a living, breathing document designed to improve your business success over the long haul. The power is in how you will use your plan.
If a new business owner is going to stick his or her plan on a shelf to collect dust, then I would argue that writing the plan is hardly worth the effort. While the process is worthwhile, the true magic happens as owners use the plan to adjust their strategies to achieve concrete and measurable goals.
Many new owners are incented to write their plan because their funding is riding on it. Banks and other traditional funders rely on the information provided in the plan to make their decision. There are many more uses for the plan than just getting funding, albeit that funding is definitely an important use.
The successful business owners I know, whether large or small, use their plans to provide the benchmarks of their business. They review and compare their actual outcomes and accomplishments to their plans on a quarterly or even monthly basis.
A crucial evaluation pertains to the financial projections. Unfortunately, a change here can cause a domino effect in spending and cash flow. Oftentimes, financial projections can go through periods of great upheaval. Overhead expenses such as labor, benefits, utilities, and the like are very fluid.
Owners provide their best guess based on what they know when they build their projections. Because of this fluidness, the projections can change rapidly. By evaluating on a monthly or quarterly basis, owners are more able to adjust their spending on other items to compensate for any shortfall.
A small business owner uses her plan to keep her business on track. In her words, “I’d suggest that a business plan helps to focus marketing efforts and budget. As a business owner, I’m continually faced with prioritizing in this area – especially with the exponential growth and impact of social media. A documented road map helps!”
A well-used plan can also protect your business. An anomaly is more likely to jump out when the owner is keeping watch. Moreover, an employee is more likely to steal when she/he knows no one is looking. While we all want to trust the people we work with, it is much easier when temptation is taken out of the mix.
The power of the business plan is in how it is being used. Keep it handy. Share parts or all of it with your employees and managers to help build a shared vision. Use it to keep your business nimble and responsive to any changes in your environment. If you incorporate the strategy of where your business is, as opposed to where you thought it would be, surprises should be kept to a minimum. The plan will also keep you focused and guide your decisions in all aspects of the business, including marketing and human resources. And you will always know whether you are as successful as you can be.
Christina Trombley is director of the UW-Green Bay Small Business Development Center. The center is part of the UW-Extension’s Small Business Development Center Network.
