There are many reasons why people don’t get around to developing a Business Plan (particularly in agriculture).
A few of the common objections we hear are:
- “My business isn’t complex enough to need a business plan”
- “It’s just business as usual for me – nothing much is changing”
- “I know I need to do it – I just don’t have the time right now”
- “I’m a farmer, not a ‘business’ person”
For those who haven’t done a Business Plan before, most don’t understand just how truly valuable the whole planning process is.
It is usually extremely insightful, and can help you avoid a lot of lost time and resources by fine-tuning your direction and plans. And in our experience, it can even strengthen relationships in the business and family (if handled well).
Just how important is it?
A Business Plan is easily one of the most important documents you can develop for your business. We’ve outlined just a few of the many reasons why below:
Forces you to think about the future
Most of us get caught up in the here and now, doing the daily competing tasks, working IN the business rather than ON it. Developing a Business Plan can help you rise above this, take the helicopter view and objectively review your business. It also ensures you are getting clear on the future of the business, one of the hardest thing to define.
Focusses you and the business
There is always a struggle between everything that needs to get done, balanced against the time and resources we have available. A business planning process can help focus where we spend our resources. As an example, when many of our clients spend the time reviewing what their customers really want, versus what is being provided, these business owners/managers realise they could achieve better outcomes with less work, if they just changed direction, even slightly.
Gets everyone on the same page
A Business Plan requires input from all key decision makers in the business. This applies whether there are 2 of you or 10 of you. It covers all areas, including goals for the future, production issues, financial management, personnel issues, risk and so on. Everyone must be on board with the plans, and headed in the same direction, to make sure the ultimate plan comes off. The real power is in writing the words down, and ensuring everybody agrees on what has been written. This process has proven effective time and time again, in getting everyone in the business on the same page.
How and when to get started?
Remember, a Business Plan isn’t only useful if you are starting a new business.
Even if you have been in business 20 years, it’s an important tool you can use to formalise and tighten things up. It’s good to do a stock take and review, to determine whether you are actually optimising your possibilities with the business, its resources and people.
And if you’re approaching lenders, or looking for external investment to grow the business, having a formally documented Business Plan reduces the perceived risk of your business, and makes you a much more attractive investment proposition.
Here’s a quick guide with some tips on the business planning process:
Step 1: A specific person must have ownership
Someone will have to take charge, and have ownership over the process, right through to the end. Remember, this can also be an external party, to let everybody in the business have their say during the planning.
Step 2: Everyone must be on board, and have their voice heard
Get everyone in the room, and have an open conversation about the business, where it’s headed, how things have been going (realistically), what everyone needs to make the plan work, and what timeframes you are working towards. If this step is ignored, it is guaranteed the execution of the plan will run into trouble.
Step 3: Everything must be documented
Formally document all the ideas. When things are written down, it makes them real. And make sure you do the numbers on all scenarios. If the numbers don’t stack up, you might need to rethink the overall plan, or parts of it.
Step 4: Make the Plan actionable
Specifically include an Action and Implementation Plan, i.e. the roadmap of how you are going to actually implement all your ideas. It must include responsibilities, actions, and timing. This is all about creating accountability for the planned change.
Step 5: As the business evolves, so too should the Business Plan
Remember that the Business Plan should be a live document, always being updated and changed as things change. So create a review protocol, dictating when you’ll review and update the Plan.
Summary
The old adage “Failing to Plan, is Planning to Fail” is completely accurate. And in a nutshell, the less risk there is in your business, the greater its value … to the owners, to family, any potential lender or investor, as well as staff and customers. Less risk also means less stress and a more productive business. The earlier you develop a Business Plan, and develop the discipline of sticking to the plan, and reviewing and updating it over time, the better.
Business planning webinar:
If you’re looking for more information on developing a business plan, we recently presented a webinar on “How to develop an effective Business Plan”.
