Do Small Businesses Need to Plan?
November 28, 2017
Many small business owners claim they either don't know how to plan or don't have the time to plan. Some will even state, "Planning is only for big businesses." Of course, the best response to that statement is, "How do you think those businesses got to be big?"
A Key Success Factor
Planning is one key factor for the successful growth of a business. Good planning involves more than just making general statements. Planning must be in specific terms so objectives can be measurable. Note the difference in the following:
General: I want to increase sales.
Specific: I am going to increase sales by doing the following...and by this amount (dollars, units, etc.).
General: I want to beat the competition.
Specific: I am going to beat the competition by doing the following...
General: I want to expand my product offerings.
Specific: I am going to expand my product offerings by doing the following...
Planning is not isolated to one area of business but involves all areas. This can include planning for budgets, needed capital, additional employees, new equipment, or different marketing strategies, as examples.
Planning is ongoing and a work-in-progress for any business. Business plans should be prepared in the formation stages of a new business. Not only is a business plan a blueprint for the owner, it is a necessity when attempting to attract investors or borrowing money. A well-developed business plan can and should be expanded into a more complex strategic plan as the business begins to operate, evolve, and grow.
Planning can look great on paper, but plans must be executed properly meaning plans must be implemented with efficiency, especially in today's competitive business environment. Real growth is reserved for businesses that not only develop a winning strategy, but also can actually implement and execute the strategy on a continuous basis.
It is important to go one step further and constantly measure the performance to see if objectives are being met. Performance monitoring allows a business to revise operations, as necessary. If objectives are not being met, then the question becomes "why not?" If performance exceeds objectives, there should also be further analysis. It is important to determine why variances occur from what was planned, whether positive or negative.
Without proper planning, a business has no direction. However, when business planning is soundly developed and followed, it will be a guide for success. Prudent business decisions can only be made with forethought and planning.
Association of Accredited Small Business Consultants