Our first blog explored the tricky side of measuring a business plan and how just looking at the post-market entry results only gives part of a plan’s true value. However, when we talk about a “business plan”, what are we actually referring to? Do we mean a strict list of do’s and don’ts? Is it a rigid, written document that must be stuck to no matter what? Or is it something more flexible and flowing than the above, but also contains the entrepreneur’s skills and behaviours?
Tim Berry of Bplans.com states that the number one mistake in business planning is that it’s business planning (verb) not just a business plan. He states that “Planning isn’t just a business plan. It’s business management. The real benefit comes from setting up the assumptions and the links between strategy and specific actions, plus the metrics, and the task assignments.” Having a plan in place already gives power to any edits that are made to changing assumptions throughout the journey.
A study by Chwolka and Raith (2011) looks into the value of business planning, not just from an after-market-entry perspective, but from the very moment that the entrepreneur decides to start a business plan.
The authors state that business planning is more of a collection of skills than a to-do list. These skills include opportunity analysis, decision making, strategic marketing, business-model development, and financial planning. As with any skill, they can be trained and honed, enabling the entrepreneur to achieve a higher quality of planning. One important aspect of this is training reduces the costs of planning in the long run. The higher the quality of planning is, the more the emerging entrepreneur will benefit from planning the venture before it enters the market.
Chwolka and Raith show that this holds true whether business planning does or doesn’t enhance ex-post market performance. Plans shouldn’t be done in one big push, but instead in smaller steps. Tim Berry (Bplans.com) refers to a plan as a set of connected modules, like blocks. Start anywhere and get going. Entrepreneurs should do the parts that interest them most, or the parts that provide the most immediate benefit. No plan should ever be finished or complete. The most recent version you have at hand should only be seen as a snapshot of the plan at that moment in time. The plan should be fluid, open to change and shared amongst your team since it can be used as a management tool.
Business plans should not be seen as tools just for start-ups or SMEs. Prioritizing, tracking progress, and developing accountability are key skills needed for any entrepreneur, business, or industry giant. Likewise some smaller companies might not need the big overarching business plan, but everybody could be helped by the skills that come with planning.
Take aways
More of a collection of skills than a to-do list, including opportunity analysis and strategic marketing.
It’s the planning not the plan that benefits a venture and entrepreneur alike. Having a fluid, non-rigid plan can only benefit the planner.
Planning isn’t just for the SME or start-up entrepreneur.
Blog by Anthony….