Friday, December 26, 2008

30-Day Biz Planning Challenge: Forget the Plan, Not the Planning

At this point, we're getting to the end of our challenge. You've seen how I do business plans and how others do business plans. You've seen every module (practically) you can include in a plan. And one theme comes up over and over again: Don't just write it and forget it. Business planning is an ongoing thing, a living organism that gets bigger and better when you focus on it. Today, guest blogger Erik Sherman, who taught me to do my first business plan and who is offering a new class on business planning in January, explains why making business planning a practice rather than a product is essential.

In the business planning for writers class I sometimes teach, I've often been asked about writing a business plan. "Don't bother," I say.

That probably sounds strange, but it actually isn't. Over the years, I've found that most companies and people write business plans for one of three reasons:
  • They think they're "supposed" to.

  • They want to get someone to give them money.

  • They're taking a class on business planning.
I've worked on my share of business plans, and they can be a good exercise. At some point you need to think about what it is that you want your business to do, how you plan to market it, who your market is, whether you can realistically make enough money to stay afloat, and what the potential for the venture is.

But the problem with the way most people undertake business planning is that it becomes nothing more than a formal activity for a period of time. The result, a paper document, gets shoved into a metaphorical (or sometimes real) desk drawer to sit. Then the plan authors go off, start trying to make a go of it, and forget all about that plan they devised.

That is a largely useless expenditure of time and energy because the planning has now stopped. According to experts--and my own experience in a number of areas supports this--planning should generally represent a good 80 percent of a project. You put all that time into planning because you want to maximize your chances of achieving what you set out to do in the time you allotted. You start with anticipating as much as you can, and then as things unfold, you continue to refer to the plan, modifying it as circumstances change and periodically seeing if you are still on track and, if not, whether you can get back on.

But if the plan has become a fossil in a drawer, you quickly lose any benefit from it that you got. What if one customer segment turns out to be the best fit for what you want to accomplish? It might be that unexpected expenses will increase the amount of money you need to make to be
self-sufficient. A sideline offering might overtake what you thought would be your main line of business.

It is easy to get lost in the daily process of running a business. Without keeping an eye on what you want to achieve and the plans you put into place, you can easily head off in a wrong direction. This is akin to driving without a map in an area that is unfamiliar to you. Getting caught up in the specifics of where you are doesn't tell you if you're getting closer to the ultimate destination.

When I teach planning, students do start with some exercises that help establish where they want to go. But most of the class focuses on how to make planning work in operating the business. That includes measuring success, pinpointing weaknesses, and otherwise working smarter, not harder.

I'm not saying never write a business plan. But make sure you know why you're doing it. If you're not setting a framework to help you make better decisions and to keep the business headed the way you wanted in the first place, then you're keeping the drudgery and losing most of the benefit.

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