It’s a rote truism that every business needs a business plan, although that necessity may not be obvious. Alan Gleeson offers an example from Lewis Carroll’s famous book Alice’s Adventures in Wonderland to illustrate the importance of business planning.
At a fork in the road, Alice asks the Cheshire Cat:
“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don’t much care where–” said Alice.
“Then it doesn’t matter which way you go,” said the Cat.
David Ronick agrees. At the very least, a business plan provides direction. Regardless of the reason you established the business, as the head honcho you’re obligated to lead it. A business plan prevents you from losing sight of reality amid the passion and excitement of launching your new business. If you don’t know where you’re going, then you won’t know how to get there.
Another excellent reason to craft a business plan is to secure investor funding. Banks generally require that a business plan be submitted with loan applications in order to determine whether the company’s leadership has a solid plan that will lead to the recovery of their investment. Banks and other investors won’t fund your business unless you can convince them that doing to will earn them a profit.
A solid and persuasive business plan outlines the path you’ll tread in leading the business to profitability. The best business plans allow for flexibility to maneuver around obstacles and even backtrack if necessary to regroup and reconsider alternate ways forward. It anticipates challenges and sets processes into place for confronting them.
Of course, you can’t predict everything unless you have a crystal ball that actually works. You can’t predict the tornado that might wipe out your building and equipment, but you can purchase insurance that will enable your business to recover physical assets and resume operation. You can’t predict your star employee’s sudden absence because he fell off a ladder while cleaning the gutters and broke both legs and arms, but you can ensure that other employees are cross-trained so they can pick up the slack while the poor guy’s taking the necessary time to recuperate.
Business plans help leadership develop and communicate a course of action. It will help your company assess future opportunities, develop a process for action, and then commit to that action. It can help you identify benchmarks for the company as a whole and for specific individuals in key positions to enable monitoring of progress. Circulated among staff, the business plan can also be used as a launching pad for employee questions and concerns. Their feedback will let you know where additional thinking and tweaking will help with comprehension and follow-through.
The benchmarks identified by your well-thought-out business plan further assist in making decisions when it’s time to quit. Sometimes a venture doesn’t work out. Sometimes a project just isn’t worth the time, resources, and sheer aggravation of its potential profit. Sometimes leadership makes the decision to retire. A proper business plan considers common exit strategies, such as an initial public offering of stock, acquisition by competitors, mergers, management succession, employee buy-outs, etc.
The best business plan in the world, however, does nobody any good if no action follows. Inaction leaves the business vulnerable to the whims of outside forces without any recourse for recovery or map forward.
The Heggen Group analyzes the big picture, breaks it down into coherent and finite goals, and helps businesses develop feasible steps to achieve those goals. We’ll assist in crafting a flexible process that will guide forward progress, accommodate unexpected challenges, allow for changes in direction, and establish accountabilities all with an eye toward your success.