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Ask Don't Tell Leadership: Why Do I Need A Business Plan?
Author : George Kincaid
Submitted : 2011-10-19 Word Count : 870 Popularity: Not Rated
Tags: Leadership Training, Leadership Development Training, Youth Leadership, Personal Mastery, Corporate Leadership Training
Why you'll need a business plan!!!
Q: In last week's column, you gave advice about starting a business, and you kept preaching about writing a business strategy. I own a company, I don't have a plan, and I'm performing just fine. What's the large deal?
A: How do you know your business is performing "fine" if you do not have a business plan? This really is like a runner stating that he is "fast" when asked his operating pace. Quality and success cannot be measured without getting benchmarks and goals. A company strategy provides both, permitting you to compare your outcomes to your objectives. With out a strategy, it's all too simple to maintain moving the bar for yourself.
Within the words of Alan Lakein, "Failing to plan is planning to fail." Business owners might neglect preparing for a number of factors. They may dislike making decisions, or they may be concerned about how the strategy will reflect their good results. An owner may really feel anxious about documenting (and generating "official") job descriptions, lines of authority, budgets, and advertising plans. An entrepreneur may dread such control measures, feeling that a company strategy is just like getting a boss! If you construct a house without a strategy, however, you might find your self living in what looks like a child's play fort. Every stage is according to a sudden inspiration, and your new house becomes "curiosity run wild." A high quality architect begins with his or her final product in mind. To construct a secure business, you need to plan.
According to the Small Business Center at Bradley University, 70 to 80 percent of new companies fail in their initial year, and of those that continue past a year, only half survive to five years. Similarly, statistics from Dun & Bradstreet reflect that only 37 percent of businesses with fewer than 20 employees will survive four years, and only 9 percent will survive ten years. In light of such daunting statistics, it seems foolish to take unnecessary risks - like failing to plan.
You might still be thinking, "I can't make a strategy, because things change too quickly." Although constant change is inevitable in any business, a good plan can be your key to dealing with change. As a sailor, I view a company plan as similar to a centerboard on a small sailboat. Thanks to its centerboard, the boat can continue moving forward, as the winds shift direction; without its centerboard, the boat would flail around and eventually crash. A good plan keeps you consistently moving forward - sometimes slowly, sometimes quickly, but with out crashing!
While writing your business plan, you may feel frustrated. After all, you will be writing your objectives, with out taking immediate action to reach them. You need to understand where you are and where you are going, before going anywhere. Writing a plan can be exhausting, too. I guarantee, nevertheless, your listless feelings will disappear, as your company transforms from "doing just fine" to "doing very well."
I hope my response to your question is sufficient and gives you an understanding of why I believe a company plan is critical. Below are some questions to consider while developing your plan:
. Why do I want to start my own company?
. Have I found the right business for me?
. Who are my customers?
. What do these customers require that the market is not currently providing?
. How will I reach them?
. What will it take to reach them?
. How much will it cost to provide for their unmet needs?
. How much are they willing to pay to meet these require?
. Can I make money at this business?
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