Do You Need a Business Plan?

Well, of course you do.

At least, I sure think you do. My standard comparisons are: chefs need recipes, pilots need flight plans, actors need scripts, football teams need game plans, teachers need lesson plans--and so on and on.

What do business plans do? They answer three core questions about your business: Where are you? Where are you going? How will you get there?

I think people may define "business plan" too narrowly. They think of it as the booklet you prepare when you're going to a bank or other investor to obtain financing. Not that this isn't a good reason to prepare a business plan, but there are others that are more important.

The first of these is financial management. When you do a business plan you first record what your company's assets and liabilities are, which means you create a balance sheet. In addition, you make projections for sales (by category), costs for goods and services sold, expenses (again, by specific category), and cash flow. For most plans, you create these projections for three years out.

When you do a business plan, you should build in the means to review it on a regular basis--whether monthly, quarterly, or bi-annually. Many businesses fail to do this. When I was out there in corporate America, I would often see financial results for a given month two weeks into the succeeding month. Often these results would be met with much hand-wringing and feverish attempts to correct whatever it was that led to the results.

This is wrong-headed. With this approach, the cattle have already left the corral.

What you want to do instead is implement a system in which you project results, then monitor those results to see where you are per your projections, preferably seeing variance in the form of percentages. This is the tried-and-true Budget/Actual/Variance reporting that you may already be familiar with. But in both my corporate career and my consulting practice, I see few companies who do this in a systematic way. Developing and using this reporting strategy is one of the key benefits of having a business plan.

The tools for doing this kind of planning are readily available. You can do them by hand, you can use Excel, you can use business planning software such as Business Plan Pro, or you can use the budgeting features of QuickBooks or other accounting applications. While my preference is that you hire me to help you with any of these options, you can certainly learn how to manage the process yourself with a minimal investment of time and effort.

A second reason for doing a business plan is the thinking that you're forced to do. Some of the software applications mentioned above will guide you through this process--asking you about your vision, mission, values, competition, keys to success, organizational structure, marketing plan and so on. THIS IS THE MAIN REASON FOR DOING A BUSINESS PLAN! And yes, it's the main reason to work with someone like me. If your business is going to survive and grow, you have to learn to think about it on an ongoing basis.

I think you need to look into the future. If your business is a wagon train, you can't let it get into a canyon, then ask, "I wonder if we've passed into Indian territory?"

Why don't business people plan? You've probably heard the cliche: many small business people become overwhelmed with working IN their businesses; they need to find the time to work ON their businesses. This is the thinking dimension that I just described. Doing a business plan forces you to work ON your business, asking yourself the really tough questions.

I'm not sure why we resist this. Maybe it's because it's easier to be a "catcher." Here's the routine: Show up at your business, unlock the door, turn on the lights--and wait for things to happen. We get to be good catchers. Maybe it becomes the way that we determine a good deal of our self-worth. No one can catch as well as we can. And we're not talking about just catching one thing--such as technical problems (catchers love to tear into pieces of machinery).

No. Not only can we run and fix every machine in the place, but we can "catch" all the marketing issues as well. We can design brochures. We can write the ad for the newspaper. We can pick up the phone and prospect for customers. And, we can of course "catch" every customer who walks through the door, and give that customer an absolutely glorious experience.

Uh huh.

I think there's a better way. It's the planning. Houses don't get built without blueprints. Businesses need business plans.

I said earlier that I think people define business planning too narrowly. Here's the real secret message of this post. Only you who are still reading are going to reap the benefit of this.

Every business that I've ever seen or worked in has issues. Sometimes the issues pertain to business processes. The processes can be hopelessly gnarled, causing untold confusion and consternation--but, by gum, we've always done it this way. One definition of insanity is to keep doing the same thing and hope for different results. Look at the way you're doing things; map your processes. Create an "Is Map" and a "Should Be Map." Use a business planning process to FIX YOUR BUSINESS PROCESSES!

Sometimes the issues are people issues. Use the business planning process to FIX YOUR PEOPLE ISSUES. Business plans require you to work on your company's organization and management (where people issues can take root and blossom). Business plans require you to look at force-load issues (how much work is there, and how many people do we have to do it?). Business plans force you to make staffing an ongoing consideration.

Part of a business plan can include the development of policies. Eventually, you need to operate according to policy, not personality. Often people put up with "bad apples" in their companies for months and years because they have no consistent, legally-defensible way to manage the bad apples out of the company. Don't live with a situation like that. Make a plan and execute it (the plan, not the person).

Use a business plan to get yourself more peace of mind. You can only sweep things under the rug for so long--eventually, you're going to bump your head on the ceiling.

Good planning!

Jim Hall

Why Do Strategic Planning?

Planning is an unnatural process; it is much more fun to do something. The nicest thing about not planning is that failure comes as a complete surprise, rather than being preceded by a period of worry and depression.

Sir John Harvey-Jones

Why Do Strategic Planning?

To See Where You Are

Some people, in some organizations, don’t really want to know where they are. There is some bliss in ignorance. These people will do tomorrow what they did today and hope for the best. They think they know who their competitors are, but they may not. They think they have costs well contained, but they may not. They think their key customers are happy, but those customers may not be happy. These people think their products are priced correctly, but they may not be. Strategic plans help organizations learn where they are.

To Clean the House

Every enterprise, every group, every company, every person, sweeps some things under the rug. When this happens those things don’t go away, they get bigger. The strategic planning process forces people to pull up the rug and deal with what’s under there.

To Manage Growth

Often an enterprise achieves success because of the technical or sales skills of a few key people. The business grows. In time a tipping point is reached, from which old ways of doing things work less well. Through its internal analysis, strategic planning identifies resources, allocates responsibilities, improves communication, eliminates disconnects between departments, and strengthens business processes.

To Align the Organization

Everything in an organization should be pointed in a common direction. People in the organization can’t have separate agendas. There is one agenda: the company’s success. Strategic planning helps people move beyond personal, philosophic, and tactical differences and align behind a single vision and mission.

To Get Better

For a company to achieve its potential, its people must be expert performers. They must know what they’re supposed to do and how they’re supposed to do it. Strategic planning helps a company discover gaps between the knowledge, skills and attitudes (KSA’s) its people have, and the KSA’s its people need.

To Create The Future

When the Steelers play the Eagles on a given Sunday, they don’t just hope for the best. Through careful planning they try to create the best possible outcome. Without strategic plans, businesses hope for the best. Sometimes that’s enough. Sometimes it’s not.

Punctuation Tip of the Day: The Semi-Colon Revisited

As promised, here is some additional guidance about using the semi-colon. Before I get to the semi-colon guidance--actually to lay the groundwork for it--I need to mention another punctuation mark.

This flimsiest of punctuation marks, the comma, barely slows a reader down. We hardly see them. This is the reason your English teacher was so horrified when you made what she called "comma splices"--you used the wimpy comma to separate two independent clauses, two groups of words that each could have been a sentence. Shame on you!

There really is logic here. If we are to digest "main ideas," we have to come to a significant pause between them.

I write well. I enjoy writing. I teach others to write.

Those are all complete sentences, all complete thoughts. The periods help readers stop and think.

And so does the semi-colon, and this was yesterday's Punctuation Tip of the Day. You use a semi-colon to separate independent clauses. If you're tempted to use a comma, think twice! Remember how you got dinged in the eighth grade for those comma splices! Day after tomorrow I'll tell you when you can use a comma between independent clauses, but you're just not ready for it yet!

Here is Semi-Colon Use #2: You use a semi-colon with an animal called a "conjunctive adverb" between independent clauses. Again, you can use a semi-colon all by itself if the relationship between the two clauses is clear and straightforward.

For example--

He ran all the way to the store in his heavy jacket; he was exhausted, soaked through with sweat, when he arrived there.

The relationship between the ideas is pretty clear: he ran all the way and got all sweaty in the process. When the relationship is a bit less clear, you use a conjunctive adverb.

Common conjunctive adverbs are--

therefore
consequently
hence
nonetheless
accordingly
however
nevertheless
thus
moreover

So the second major use of the semi-colon is to join one independent clause to another in a sentence with a conjunctive adverb.

For example--

I was dead tired when I arrived home; however, I still had housework to do before going to bed.

It may help you to remember the definition of "conjunctive": it is "serving to join together." I think of the prefix "con" meaning "with," and I think of "junctive" as a meeting place (as in "junction"). So, a conjunctive adverb is an adverb that "joins together." There. Remember that.

You are such a sophisticated semi-colon user now! There's one more fairly common use of the semi-colon, and we'll cover that in tomorrow's post.

Punctuation Tip of the Day: Colon or Semi-Colon?

Actually, this question should never come up, as the uses of the two punctuation marks are quite different!

The colon is a very strong punctuation mark. It brings the reader to a dead stop! The only stronger punctuation mark is the period. You use a colon most often when you want to stop the reader before presenting a number of items in series.

For example--

Our reasons for choosing Hanover as a place of residence are these: the excellent school system, the weather, and the small town quality of life we experience here.

You can also use a colon for sheer emphasis:

When asked to name my favorite food, there is no contest: it's popcorn.

The semi-colon is also a very strong punctuation mark, but as I say, its functions are quite different. Its most useful function is to separate independent clauses (groups of words with subjects and predicates that could be sentences).

For example--

Her reasons for needing to go to the grocery were not major; she knew she could put the trip off till the next day.

The two clauses could each be sentences. For example--

Her reasons for needing to go to the grocery store were not major.
She knew she could put the trip off till the next day.

You would be perfectly correct in writing these thoughts this way. In determining to write the complete sentences or separate the two clauses with a semi-colon, you simply ask how closely related the two ideas are. If it would be convenient for your reader to get the two thoughts "in the same breath," then you would write one sentence, separating the two clauses with the semi-colon. If you wanted to give each thought its own "weight," then you'd write the two complete sentences.

Stay tuned! My next blog will cover an even more exciting way to use the semi-colon!

Welcome!

My name is Jim Hall, and I operate Jim Hall & Associates in Hanover, PA. Hanover is just north of the Mason-Dixon line, close to York and Harrisburg in South Central Pennsylvania. Mine is a business consulting practice. I have a long and fairly varied career in business and industry. My specialties are strategic and business planning, plus employee and management development processes.