When I work with a client that wants to start a business, the first question out of my mouth after hearing about their dream, and their journey to it is, “Have you written a business plan yet?”
There are a number of reasons why they need a business plan. First and foremost, the business plan and its financial forecast is the “proof of the pudding” for their concept. It also acts as a guide as they make preparations to launch the business in order to make sure they don’t get enticed by some shiny object and get off track (that would never happen to an entrepreneur). Finally, a well thought out and presented business plan is critical in getting start-up and operating capital whether it is from a bank or investors.
Once the plan is done I look them in the eye and warn them not to just throw this in a drawer, never to see the light of day again. It needs to be a living, breathing document that serves to guide the growth and development of their business. Of course, when my time with them is over, I have no idea what they do with their business plans. But, I can usually make an educated guess based on how their business is doing.
When I work with plateaued or struggling business that have been around for a while, one of the early questions is, “Have you written a business plan lately?” Blank stares typically follow.
As cliché as it sounds, business don’t plan to fail, they fail to plan. The marketplace changes. A major client gets acquired or goes out of business. Technology makes the products you have been producing obsolete (printed catalogs anyone?). We have a pandemic. The business is growing beyond what was ever imagined and the growing pains are fierce.
That business plan, if it came out of the drawer once or twice a year, should have been updated for potential events that might help or hurt the business. The strategies and tactics needed to capitalize on or protect against these eventualities should have at least been discussed so the business is not caught completely flat-footed.
Of course, I don’t personally know anyone that foresaw Covid-19 and the ensuing severe reactions from our government agencies. But, many companies were quick to pivot and take advantage of things like the need for face shields, physical distancing floor graphics and hand sanitizer. My guess is that many of the businesses had spent some amount of time thinking, “what if;” even if it was not a full-blown formal planning process. At least it created a flexible, creative mindset within the company.
Just like the ad slogan, “Orange juice: It’s not just for breakfast anymore,” business plans are not just for start-ups anymore, either.