One of my favorite questions is, “why do I need a business plan?” After that question, I typically hear some version of the following statements.
In this post, I’m going to address each of those responses. The bottom line is that every business needs a plan. It doesn’t have to be complicated, however. I work with my clients to build a plan for their business that fits on one page. It works when you’re small, and it works when your company is big. It creates focus, discipline, and accountability. It also helps you prioritize, solve problems faster, and, most importantly, make more money.
Putting together a plan for your business is especially critical when you are a solopreneur. The business plan to reflect the intentionality of your business. Precisely, what are you building, what results you will measure, and how are you going to grow and run your business.
Additionally, it’s essential that you predict, measure, and adjust your results. Why? Your business environment is continually changing and evolving. This is especially true of the solopreneur in the early stages of their business. You want to be nimble and, at the same time, understand the costs and benefits of those changes. Having a baseline helps you understand the impact of changes. The monthly discipline of looking at results keeps you based in reality. And the forecast will allow you to anticipate cashflow needs and profitability.
Finally, developing a plan will give you accountability. I’ve written before about the importance of accountability in growing your business. But what are you being held accountable to? That’s why you need a business plan. For example, how many sales calls are you going to make in a week? If you haven’t identified it, you can do as many or as few as you want and be satisfied. Determining the optimal number of calls and writing it down is what you build into your plan. And then you have a standard for accountability.
In short, the solopreneur’s business needs a plan to accelerate the growth of their business. The plan illuminates their path forward, allows them to see what efforts and initiatives provide the best results, and it gives them a framework for accountability.
Small businesses may achieve a level of success, just doing the work and bringing in the revenue without really worrying about what comes next. And that can work for a while. At some point, though one of two things happen, an unexpected curveball (think worldwide pandemic or significant economic reversal) occurs, or, as their employee count increases, the organization loses touch with the values of the organization and performance suffers. So, how does a business plan help?
First, developing a plan that truly defines the vision and mission of the organization, that outlines goals, clarifies strategies, and prioritizes the work to be done brings clarity to the entire organization. As you grow and present this plan to employees, they understand the “why” of the business.
And with that, understanding comes knowledge and power. Your employees can identify with the mission and vision and begin to see how their role helps to achieve it. By understanding what is measured, how you run the business, and what projects they need, they can make better decisions. The leader can delegate knowing the work will be done as they expect.
Further, this clarity helps with hiring in a growing business. The plan enables the business owner to see where the needs are and will be as well as the skill sets that will be needed. And, the potential employee can see what the business values, stands for and measures. The plan helps reduce turnover by ensuring a better match upfront for the organization.
The small business owner will save time and money by creating a one page strategic and operational plan that clearly defines the work to be done. It allows you to spend less time managing and more time leading, less time hiring and more time coaching their team. And less time correcting mistakes due to misunderstanding because the team thoroughly understands the work and priorities.
This type of plan is typical of a mid-size business. The leadership creates plans but does so without thinking about what they are creating. Too often, the top of the organization hands out some goals and objectives and instructs the teams to build a plan. There is no context of what that means for a division of the larger whole. No understanding of what the key strategies and priorities are for the business leading to misaligned plans.
I’ll never forget when I worked for a large, regional firm that brought in the leadership teams of the entire division to roll out an ambitious plan to blow out our numbers for the year. The goal was to double revenue for the division in about 18 months. There was great fanfare. There were even shirts handed out with the new slogan. The meeting starts, and leadership introduces big goals. Next up, the leader of the channel that had been driving growth for three years. He looked at the crowd. He looked at the division leaders. Then he said, “we’ve pretty much maxed out our growth. Don’t count on us to be able to contribute in a meaningful way.” That’s the danger of poorly understood and complicated business plans.
Wise leaders look to build alignment as they make the plan. They ensure that their goals are well thought out for the organization. They work for clarity on how the organization will grow and what the project priorities will be. They look for clarity, not complexity. Then they develop a clear and focused plan which they present to the next level of leaders. That group then applies all the relevant goals, strategies, and priorities to their line of the business, ensuring vertical alignment. And they work with their peers to build horizontal alignment, confirming resources exist for all the work to be done.
They don’t need a 50, 75, or 100-page plan to accomplish this. That creates considerable work for a document that will be referenced only rarely throughout the year. Instead, having a well-defined plan, understood by all with vertical and horizontal integration, ensures success and limits surprises.
A business plan that works is necessary for all types of organizations, big and small. It creates focus and alignment. It reduces mistakes and duplicate work. It eliminates small side projects and work that is not consistent with the long term vision. And it allows businesses and their owners to achieve success faster.