Many small business people think of the business plan as that thing they had to do to obtain financing for their business. While that is one way to describe a business plan, it isn’t the right one.
Business plans are not something that should be seen as a hurdle. Think of it as a ladder. The business plan is part of a process that helps you achieve your goals. It leads you onward and upward. Sometimes the steps go quickly and sometimes they don’t. If you have done your research you should be well prepared and have a sound basis for your business decisions. You don’t need a business plan that is from a 30-page template you found on line. You need a working business plan.
The working business plan is not something that you use only once. Business plans are meant to prepare you to move forward and should be constantly in use — and evolving. Your initial plan is not going to be static. It will continually change and evolve as you learn more about your customers.
As Alan Lakein, author of “How to Get Control of Your Time and Your Life,” said: “Planning is bringing the future into the present so that you can do something about it now.”
Don’t be that person who writes a plan to get financing and then throws it away. If you did your planning correctly you have put time and thought into it that can be used to make your business stronger. At the very least you should use it as a benchmark on how you are doing. Did you plan to do $50,000 in sales last month with a net profit of $4,000? If so, how did you do? Did you hit both marks? Perhaps you met your sales goal but not the profit. If you didn’t hit both marks, where are you off?
Perhaps you only hit $40,000 in sales. If that is the case, what are you going to do differently this month? Maybe you need to change your marketing. Maybe you need to be open on Saturdays, or a couple more hours in the evening. You may just need to talk with your customers to find out what is important to them and how you are helping them meet their needs. It’s important to look at the alternatives and how you can implement them.
Perhaps you hit your sales goals, but not your profit target. Remember, sales are important, but sales without profits can be a warning sign as well. What expenses were different from your plan? Was it something that you can control? If it was a one-time unexpected expense that you could not anticipate that won’t be recurring every month perhaps no action is needed. On the other hand, if it will be something that will continue unless you make adjustments, you need to address it now, not next year.
After you have reviewed your numbers, determine if there is something you can do to help you achieve both your sales and profit targets for the next month.
Remember, your plan is just that, a plan. You are not going to see your results match up perfectly with your plan. If you are close you did well. But you need to keep monitoring how you are doing and looking for ways to improve.
Maine’s Hussey Seating, founded in 1835, started out by making horse-drawn plows. They’ve survived, and thrived, because they have evolved. If they hadn’t they would have closed when we stopped using horses for plowing fields.
Do you want your business to survive for the next 180 years? You better start planning and be ready to evolve.
Stephen Lovejoy is the director of the Maine Small Business Development Center at the University of Southern Maine. He can be reached at firstname.lastname@example.org
As published in MaineBiz