I totally believe in planning. Let me first make that clear. But in the course of talking to entrepreneurs, I have encountered an amazing range of points of view on business planning — from no planning to heavy-duty planning. I have observed very successful businesses that operate all across the planning spectrum. Who´s got it right? What should you be doing?
I know people who are truly against planning and yet they are successful! They claim their business success is based on being alert and nimble, keeping their antennas up in search of new business opportunities, and making calculated decisions to jump on some of them.
Flexibility is good. Businesses that fear it wither. So it looks to me like the anti-planners see the world as a trade off between planning and flexibility — as though you can´t have both.
Yes but"?¦ If you´re expecting others to invest in your business, this won´t work.
Can work if:
* You are a solopreneur or have a very stable and secure small partnership.
* You can finance the business yourself.
* You have a high degree of confidence in "your gut" based on real-life experiences.
The In-My-Head Planners
These people have a plan. Sort of. It just isn´t written down. A problem with plans that aren´t written down is that you really don´t have to be accountable to yourself.
This approach allows you to test business ideas until you find one with promise.
Yes but"?¦ You can´t do this if you need to be accountable to anyone else.
Can work if:
* You are a solopreneur.
* You have a financial cushion that allows you to absorb some failures.
The 40-Page Planners
For someone whose business will require outside investors, extensive, detailed business planning is a requirement. If you have a relatively simple business model, though, keep your business plan simple, too.
Yes but"?¦ If you are new to your type of business, your projections could be based on assumptions that are more idealistic than realistic. And rigidly adhering to a complex plan can potentially blinder you to promising new market opportunities.
Can work if:
* You do good research and have confidence in your assumptions.
* You monitor your progress and are willing to readjust or even relinquish the plan if it isn´t working.
My fundamental rules about business planning:
1. You´re more likely to accomplish something you´ve committed to in writing.
2. A plan insures that everyone, you included, is clear about where you´re heading.
3. You need to have realistic goals — numbers of customers, dollars of revenue and so forth, and target dates for reaching them.
4. The more people who are involved in your business — as partners or investors — the more essential business planning is.
5. You need the discipline to regularly review your plan against reality, stop doing what isn´t working, and make appropriate adjustments.
What are yours?