Laddie once met with a new client at his location and asked to see his existing business plan. The man reached for a binder covered in dust that sat on top of a bookcase. It held a document 50-or-so pages long that obviously hadn’t been touched for several years.
Having an outdated business plan that has rarely been looked at isn’t unusual. Large, overblown plans can be laborious to create, costly if you use outside help, and cumbersome to use, which is why a lot of business owners don’t bother with having one. If you create a plan that’s too complicated, chances are you won’t follow it and may never want to change it.
We’re believers in having and using business plans, with the emphasis on using them, but we don’t believe most businesses need lengthy, complicated plans. Plans with charts, graphs, research, history, which are often created for obtaining investors or bank loans, are basically sales packages rather than user-friendly maps for running companies. The average business needs a “living” document that is easy to create, changes on a regular basis, and helps execute the owner’s plans for the business
Here’s what we believe a simple, yet powerful business plan should contain:
First, it’s helpful to include something about your business philosophy and strategy. This section defines what your business is about, who you’re going to serve and how you’re going to run your company. It can also help clarify your business culture, such as your core values and how customers will be treated. This section helps you and your employees become focused on your philosophy, strategy and values for the business, and can usually fit on one page.
Next, you should define your personal goals. Most business plans don’t include this section, but we believe it’s essential for two reasons. First, it’s important to clarify why you own the business and what you want from it on a personal level. Second, your personal goals should be consistent with your business goals. For example, a personal goal of spending every evening with your children is probably incompatible with a business goal of growing the company by fifty percent over the next year.
You should periodically review your personal goals to gauge whether the business is moving towards achieving what you want for your life. We recommend keeping this part of the plan private and not sharing it with employees. One page or less should be adequate for this section.
The next section should include long-term and intermediate business goals. We think looking ahead four to five years for long-term planning and two to three years for intermediate goals are reasonable lengths of time. This is where you plan for future benchmarks, such as where you want your revenues and profits to be by a certain time. It’s also the place for significant events that will take years to accomplish, succession planning, and other wealth-creating strategies, like buying your own building. You’ll probably have three to four goals in each area.
Now define your short-term goals — the ones you’ll work on over the next twelve months. Clearly set out what you want to accomplish and stick to three to five key items. Under each goal, list objectives, which are major steps that should help to achieve the goal. For example, if one of your goals for the next year is to increase your sales by twenty-five percent, one objective could be hiring a salesperson.
Based on your short-term goals and objectives, outline a 90-day action plan. We’ve found it can be counterproductive to prepare action plans further out than three months because circumstances will likely change and require adjustments to the action plan. Each action item should set out the task, completion date, and responsible person. Using the example of a goal to increase sales and the objective of hiring a salesperson, action items could include placing ads, interviewing candidates, and making a selection.
One key point to remember is that you could complete the action items and objectives, but still not accomplish your goals. For example, simply hiring a salesperson doesn’t automatically lead to more sales. To assure that your goals are reached, your 90-day action plan and objectives should be reviewed and revised at least quarterly.
You can certainly operate your company without a business plan, and many business owners do. But a solid plan is a tool that will help you gain clarity and act as a roadmap for where you’re going. The key to having a workable plan is simplicity. If you create a simple, yet powerful plan — and follow it — you’ll have a much greater chance of achieving your goals.
Laddie and Judy Blaskowski are partners in several businesses, including BusinessTruths Consulting. They are authors of The Step Dynamic: A Powerful Strategy for Successfully Growing Your Business. Judy@BusinessTruths.com.