Friday, July 22, 2011

Business Planning: Why you should do it.

Think of it this way:  You are driving down the highway at night, with your high beams on.  You can see the road, the ditch (for about 4 car lengths).  A deer shoots out in front of you and you have to react.  During the light of day, you would have seen it coming, and in fact, you would have seen them in the field much earlier.Having no plan is driving in the dark with a limited line of sight to react.

Lack of planning is one of the big reasons for failure in business.  According to Industry Canada, 80 percent of small and medium sized enterprises will not be around in 10 years.  Those that have developed skills in planning, communications, human resources, finance, operational effectiveness and technology and information management tend to have a better chance of survival and growth.

Growth is linked to the intent to growth.  Intent is established in planning.  Many business owners and entrepreneurs can see it, but they can`t say it. Some can`t see it, say it or write it down.  Neither are effective. The inability to see it and say it immediately limits the road upon which you travel. The company may well thrive as long as the owner is alive and able to keep the dream alive, but with no shared vision, there is no legacy.

Industry Canada says that we are facing a wave of retirement in the SME market, and that succession will need to occur for these businesses to continue. Without a succession plan in place, we could see these businesses sell or close their doors as a result.  This is no different than the family farm concept.  If the business planning does not occur, quite often succession is not in place and the land and farm are sold off in whole, or in parts.

There is a misnomer that small and medium sized business do not need to engage in formal planning processes and that a budget will suffice.  Business is business. Large or small, every business must be good at  certain things: planning and executing, communicating, human resources, finance, and marketing.

Business planning is number one on the list for these reasons:
1. It creates clarity. Vision and foresight shines the light on what is ahead, including trends, opportunities and risks.  
2. It creates focus on what needs to get done and keeps the business on track. 
3. It allows for balance. It allows the organization to look at multiple perspectives at once. 

No matter the size of company, organizations that apply business planning practices reap the following rewards: 

1.  Accountability is defined, so things get done. This gives the shareholders and stakeholders confidence in the management of the company. 
2.  Clarity about the the direction and goals of the company provides a clear line of sight for employees and owners. 
3.  What matters most is defined, creating focus.  
4.  Resources are aligned and money is spent in accordance with the goals of the company. 
5. Priorities and pressures are more easily managed within a cycle, instead of adhoc reactions. 
6.  Reviewing the plan allows for adjustments as needed. 
7. Companies that plan and execute are more nimble because they have developed competency in foresight, decision making and execution. 
8.  Companies with a business plan can more easily keep their eye on multiple facets of their business including customer satisfaction with products and service, employee satisfaction and experience,  internal processes and business practices, and the financial outcomes.  

Business planning is one of those things that you don`t know that you don`t know until you know.  Sounds confusing, but it`s like seeing in the dark.  If you never knew there was daylight, you would not know what you could have seen until you experience day light. 

But when the light goes on, the `aha`moment of what is possible with a plan is worth the journey.  That`s why I do what I do

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