Thanks to Amy for this guest post. I’ve always identified with the saying that if you fail to plan you plan to fail. It’s resonated with me since I first dipped my toes in entrepreneurship.
Unfortunately I’m abysmal at taking my own advice and didn’t make a plan when I started! But I quickly learned that without that plan, even if it’s just a loose one, you leave yourself wide open for failure.
You have to have a direction for your business, for your future.
Without a clear direction and goals, it’s a wee bit difficult to know when you’ve reached them! So how about you… have a plan? Have no plan? Have a kinda plan? Drop your thoughts in the comments and tell us your dirty little secrets. 😉
When I took an entrepreneurship class in college, my professor used the infamous saying, “Businesses don’t plan to fail; they fail to plan.”
While that class gave me lots of useful tips and tools to use when starting a business, I couldn’t help but wonder if writing an actual business plan would be useful in the real world. While they could be the key to a successful small business, a business plan that isn’t changed or revised as the company grows could hinder a business.
Uses of a Business Plan
There are many practical uses for a business plan. You may need a plan to show prospective investors, and a good plan could help you land a big initial investment. A business plan is usually necessary for fundraising efforts like this because they usually reveal the probable success/failure rate of the company.
If you decide to follow a business plan, it could help you with your strategic planning. This is the process of defining a strategy, and deciding how you will allocate your resources to achieve this strategy successfully.
A business plan will usually explain how a business intends to use people and capital to achieve the goals of that business. Some of the tools business owners use to make this sort of analysis are a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) and a PEST analysis (Political, Economic, Social, and Technological).
While formal business plans can be a great way to make company goals, too many entrepreneurs stick rigidly to their business plans instead of interacting with customers to find a way to make their plan better. If you do make a business plan, know that it will be a guideline, and nothing else.
Even the most successful businesses have a setback from time to time, and trying to follow your business plan to the T while every other sign indicates that something needs to change will only cause your company to decline faster.
No Plan, No Problem?
It is true that there are lots of businesses that failed despite their flawless business plans as well as businesses that have become successful without formal business plans. The idea that a written plan means little in the business world isn’t new.
With the amount of time and effort a written business plan takes, not many would say they are good for business. They most certainly don’t mean success. However, while business plans can be overdone and are misused at times, the planning process is still critical.
When you think about it, all business plans are wrong. Nothing ever ends up exactly the way we plan in life, so why should our business be different? Still, the planning process will always be necessary.
Establish your goals and outline the steps you will need to follow in order to achieve them. This doesn’t necessarily have to be in a business plan form, but actually writing down and committing to your goals will give you a daily reminder of why you started your business and what it will take for you to feel successful.
Your initial plans will most likely be wrong, but how will you know they were wrong if you don’t write them down in the first place?
Many new businesses will need investors to get their feet of the ground. While some investors may say they don’t need to see a formal plan, they will still need to see your strategy, focus, priorities, commitments, dates and deadlines, as well as some other goals of your business.
They will have to be fairly sure you will be successful before they decide to give you money. The format may not matter, but the content will.
You Will Need to Decide
In the end, no one can tell you exactly which decision will be best for your business. You could start doing business without a formal plan, and later on realize that you need a plan in order to move forward, or you may want to have a guideline to follow from the beginning.
There will always be examples of businesses that succeed with no plans at all, but it could be very dangerous for a new company to start business without some kind of plan.
Yesterday’s plan may not work today. Change your business goals to take advantage of your strengths, weaknesses, and passions. The whole path doesn’t have to be clear. Many businesses and people have found their way to success without much of a plan, but they didn’t become successful by sitting back and watching either.
You need to set your goals high and use your talents like no one else has before in order to make your business a success.
Like this post? Help a dork out and share it with your pals. They’ll thank you and I’ll thank you. Well, at least for certain I will. Heh. 😉