Drawing up a business plan is one of the most important things you can do to secure the success of your business and how to get it right.
FAIL TO PLAN AND PLAN TO FAIL
The chances are that if you’re a business owner, big or small, you’ve been having conversations recently about things like energy price hikes; raw materials availability, lead times and more price hikes; staff: hiring them, retaining them, adapting to new ways of working; how customer expectations have changed through the pandemic and how they’re continuing to change. It’s never-ending isn’t it?
With all of this going on, thinking about tomorrow is often put off ‘til just then, tomorrow. But therein lies the rub. Having a vision of where you want to get to in the future, and a strategic business plan of how you’re going to get there, gives you the very context and the confidence necessary to drive the decisions you have to make today.
If you don’t have a real living and breathing business plan, a clear vision of where you want to get to in the future and a plan of how to get there, then you’re not alone. So many SMEs we meet have no business plan at all, or there’s a plan but it’s not written down, it’s in the owner’s head.
And, for many, if they do have a plan, it was written back in 2018 to get the bank manager on side, bears no relation to where the business is actually going and has sat gathering dust ever since. Sound familiar?
And now for some salutary statistics: 20% of businesses fail in their first year and around 60% go bust within their first three years. Why is that?
THERE’S A DIRECT CORRELATION BETWEEN A BUSINESS PLAN AND:
- Decisiveness – without a clear plan, what is your context for decision making?
- Productivity/efficiency – lack of focus in terms of purpose and direction leads to lack of purpose in resource and time allocation
- Team morale, staff retention and ability to attract talent – why should I work for you? What does my future look like here? How can I best contribute? How can I make that future happen?
- Clarity of brand positioning and the ability to attract and retain the right clients – who is this brand and where are they heading? How does that match who I am, what I want and where I want to go in the future?
- Successful product strategy – without clear purpose and positioning, you can end up trying to be all things to all men
All of this dramatically impacts SMEs ability to grow, their ability to attract funding and to sell their business for a decent price. In short, to quote Benjamin Franklin, “If you Fail to plan, you are planning to fail”.
To offset the doom and gloom stats quoted earlier:
- Entrepreneurs with a business plan are 2.5X more likely to start their business
- Companies with a business plan grow 30 % faster – 71% of fast-growing business have plans
- Those with a business plan are 3 x more likely to attract angel investment
BUT CAN A BUSINESS PLAN ACTUALLY STIFLE CREATIVITY AND HINDER GROWTH?
There’s a school of thought that maintains that business plans aren’t worth the paper they’re written on. Those advocating a more undesigned approach point to the list of 10 billion dollar companies that started without a business plan: Apple, Disney, Facebook, Google, and Nike to name but a few.
Yes, they started without a business plan, but you bet they plan now! Research has proven that business planning is often more beneficial to existing businesses than to start-ups – so it’s never too late to start.
Where the sceptics are right is that there are indeed businesses that have no impact whatsoever on a company’s likelihood of success.
A plan that’s written purely to get over an immediate hurdle, that plan that’s sat in the filing cabinet since 2018 and hasn’t been referred to since it was written, will have no impact whatsoever on your business outcomes – your business plan needs to be a real living and breathing business plan, a working document that is constantly referred to and that evolves as your business evolves.
If you think you could use a hand at building a successful business plan, get in touch with our team of growth consultants today. We’re trained experts in how to grow your business, helping you create a company you can be proud of.