Does A Small Business Really Need to Plan?
September 24, 2015
Many small business owners feel as though there is no need to plan. In fact, many think that planning is only a necessity for medium and larger businesses. Of course, one might ask how did those businesses become the size they are? Perhaps, and most likely, they grew because of proper planning. Long-term growth is a byproduct of planning rather than through haphazard decision-making.
Planning involves many different areas of a business:
Strategic approaches - There are a multitude of strategic approaches that a business can take and each can be equally successful. This creates a competitive marketplace. If a business does not have a clear idea, however, regarding its strategic approach, then it cannot make decisions that will consistently lead to accomplishing predetermined goals.
Examples of different strategic approaches might be:
- Striving to be a low-cost provider
- Having a higher quality product or service than the competition
- Focusing on a narrow market niche
Employees - Businesses must plan for future employees. What skills will be needed in the future? How many employees does the business anticipate adding and when? Will future higher-level positions be filled from within or will the business go outside to find needed talent? Employees are the most valuable assets a business has. The best products or services cannot be furnished or sold without quality employees.
Marketing - As the business grows, how will the marketing strategy be changed? Will the business be able to handle marketing growth or will some aspects of marketing need to be outsourced? Marketing is an integral part of any business. It is an opportunity for a business to identify potential customers and convince prospects that its products and services have intrinsic value to meet their needs.
Finance - Financing and budgeting are, also, essential elements of planning. A business must plan for the future to ensure sufficient capital is available for operations, asset acquisitions, debt servicing, and expansion. Future cash needs must be anticipated. Will the owner be able to provide additional capital? Will outside capital be needed? Will business loans be available? Financing cannot take a "back seat" to other business functions. Without proper financial planning, marketing and operations can come to a standstill.
Alliances - Strategic alliances can be a viable growth option for many small businesses. It can be a way to monetize what a business has to offer with little cost or liability. Forming the right alliances can improve market access and allow small businesses to gain entry into markets that would, otherwise, not be open to them.
Although long-term planning might be easier for larger enterprises with sizeable budgets, practically limitless resources, and hundreds or thousands of employees, small businesses can still plan for the next quarter, next six months, and next year. Proper planning today with forethought for the future allows implementation with anticipated timing. If a small business waits until “the time is right” before planning and acting, opportunities might very well be missed.
Planning is a blueprint to build a solid business. It is a roadmap to guide the business to success. Rarely does a business beat its competition by making spur of the moment decisions. Good planning and good execution are interrelated functions that create positive outcomes.