When a business doesn’t have a business plan, that’s a pretty clear indicator to me of their growth potential. An actual study by the Kauffman Center for Entrepreneurial Leadership indicates that companies with a written business plan have 50% greater sales growth and 12% higher gross profit margins.
But of course, I’ve heard every excuse in the book for not having a business plan. Here are four of the most common I encounter – and why they’re completely wrong!
1. Business plans are for when you’re starting up. Or when you need investment or a loan.
Your business plan should be far more important to you than just as evidence for an external body. If it is useful for showing them that you’re worth investing in, then it should also be useful for keep you on track towards your goals.
Every year it’s important to sit down and strategise for the coming year. You should be digesting your learnings from the year that’s gone by and re-evaluating the path your business is on. The best time for this is at the very beginning of the year – when you’re fresh from the holiday break and in the right mind set to initiate change and move forward.
2. I know the plan, why should I write it down?
When you’re a small business – and want to stay that way – then it could be acceptable to keep your business plan in your head. Still risky though – what happens when you accidentally forget something? If you would like to see your business grow though, then not having a written business plan can be a real roadblock. It’s there in the numbers – 50% greater growth and 12% higher margins for businesses that have written business plans!
Writing a business plan in itself is not enough, of course. But not writing a business plan is definitely not going to be useful. Besides being useful to you, it’s also useful to your business. Your business plan is the beginning of you setting up processes so that your business can run without you. If you’re keeping the business plan in your head, you’re never going to be able to step back and work on the business rather than in it.
3. It’s not the business plan, it’s my mind set that’s the problem.
No! Stop blaming yourself for the business slowing down. It’s not about being stuck in a small business mind-set or your leadership skills – more often than not, it’s actually the structure of your business that’s the problem. Stop running faster and get off the hamster wheel first!
When you’re the one in charge of everything, it can seem like the model and the mind-set are one and the same. That’s why it’s critical to write the business plan down – separate yourself from the business model and then you can start to work on it properly.
Once it’s written down, you will discover you can easily see what needs to change, and you can release the pressure you’re putting on yourself. Real growth can start and your stress can go down.
4. My business changes every few weeks, what’s the point in writing a business plan?
If your business plan becomes invalid after your business goes through some changes, you’re writing your plan incorrectly. It’s not a wish list. It should have real, achievable goals. It should help you to assess your current status, and how you fit into your industry, and help you plan out your next steps when changes come along. This isn’t a game plan, or a blueprint of exactly what you are going to do.
It’s an indication of where you want to be headed. It should have the strategies you are going to employ to keep you on track, no matter what bumps may come your way. But the truth is that it isn’t about having a business plan so much as it is about learning how to plan. That way you can weather whatever uncertainty comes your way.
If you would like to discuss any of the points covered here, please feel free to request a free call below.