I’ve no doubt you’ve heard the maxim “Failing to plan means you’re planning to fail”. Here are some business reasons for creating a plan.
Business planning is all about the actions you take today that will give you the best chance of achieving your businesses objectives. There is quite a lot behind that sentence. And quite a lot which one might expect, that isn’t. Peter Drucker, in his book Management was all about action, and action now. But, given he was a guru, he had a structure behind how to form those actions. Below are six aspects that you might take into account which lays some sense behind the idea that a business plan is a good thing to do.
If a business has a vision, it has a purpose in its existence. QR3’s vision is to be the first business an SME thinks about when they decide to hire an experienced part time finance director.
2. Systematically Organise Effort
Have you ever heard the term ‘busy fool’? You can be very busy but achieve very little. The process of business planning helps you to take a stand back and think about what actions you should take and in what order you should take them. You wouldn’t want to put the car, for example, into drive before first starting the engine.
3. Continuous Often
A business plan is done, and then put away in the bottom drawer of the CEOs, or even worse, the Finance Director’s desk. Actually, taking time out to assess whether the actions you’re going to take are still in the right order is a good discipline to have. A business plan is therefore more than a document, its a live checklist where priorities can be shifted to suit a change in your market or what is right for your business. At QR3, our mantra is ‘less but better’. If we decide that action A is ineffective we wouldn’t do it, and move to action B that we think is. Doing both is being a busy fool.
Strange word, but what we mean is that a business plan encourages you to look very carefully at the now. Get as much knowledge about the ‘now’ as you can. This way, you have the greatest knowledge about the background as to why you have taken a decision now and the effect this will have in the future.
Many people believe that entrepreneurs are great risk takers. Actually, we believe true entrepreneurs are those who go out of their way to fully understand the risk and take action now to reduce to the bare minimum and therefore maximise the chance of achieving their objective.
A business plan helps you to formulate what you are expecting from the actions you are deciding to take. We talked about a vision above, which gives a business its purpose. Its Mission, or immediate objectives helps to take an abstract idea and turn it in to an objective. We’ll talk about objectives and how to set them in a later article.
6. Measure Organised
Systematic feedback is how Drucker put it. Putting it plainly, business planning, as you know is a continuous process. You set your objectives, and take your actions. You measure the results of those actions and then (to properly understand why you either exceeded or fell short of your objective) you measure those results against your objectives.
At QR3, we have a monthly set of numbers to achieve in the form of a budget. Our main Key Performance Indicators are around the number of days per week worked by our part-time finance directors, the rate at which they are charged and the margin that we take for finding an experienced finance director for an SME.
So, one could be forgiven for thinking that business planning was all about future decisions, how to eliminate risk, a load of forecasting and a box of techniques. Its much simpler than that. Its all about organising yourself in the here and now to give yourself the best chance to achieve your objective by taking actions in the right order and continuously measuring yourself against your objectives so that you don’t repeat ineffective actions.