Good Small Business Planning Guide

How to Make a Successful Business Journey

John Kirwan

• Publisher: A&C Black Business Information and Development
• Year: 2009
• Print ISBN: 9781408109489
• eBook ISBN: 9781408109526
• Edition: 1
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

Research shows that roughly half of all start-up businesses fail within the first three years, and the majority of failures happen because business owners aren't prepared enough to deal with the challenges that can affect them. In other words, they haven't done enough planning.

Creating a business plan should be one of the first things you do when you think of starting up a company, and it's an important document to turn to time and again as your business develops - especially in these difficult financial times. Accessible and easy to read, the Good Small Business Planning Guide shows readers how to:

• Plan their business strategy
  
• Pitch their plan to raise funds
  
• Spot problems in advance and work out how to deal with them
  
• Update and refresh the plan for different audiences

Chapter 1

The Principles Behind Successful Business Planning

‘If you think you can do a thing or think you can’t do a thing, you’re right.’ – Henry Ford

WHAT’S THE POINT OF BUSINESS PLANNING?

Is there a part of you that wonders what’s the point in all this business planning? Is there a voice that says: ‘Look, I’mtoo busy running my business to take time out on academic stuff – I’ve got customers to serve, suppliers to be nice to, andmy bank is moaning at me – plus the fact that my best worker has phoned in sick and we’ve got this order to deliver – so Ican’t stop when all this is going on; and anyway another thing …’?

Is there also a voice which says: ‘Besides, what’s the point? It’s not like it’ll make a difference anyway. Che sarà sarà’.

Such comments are understandable – I have heard them (and similar) many times in my career. They seem to resemble each otherin that they are both ‘anti-planning’, but in fact they come from quite different directions.

The ‘I’m-too-busy’-objection

The first type of comment, which I shall call the ‘I’m-too-busy’-objection, is a plea about the pressures of being a smallbusiness elbowing aside what are viewed as luxuries more appropriate for big business. ‘It’s alright for your big PLCs, they’vegot lots of people who can do this’; or ‘my business isn’t a complicated PLC, it’s a simple small business – I’ve got it allin my head’.

And yet the people who think such thoughts rarely go on to wonder how such businesses became big with lots of people, in thefirst place. There is also the presupposition that real work necessarily involves physical activity or a sense of fevered‘rushedness’, whereas thinking is not real work, but some sort of indulgence that masquerades as work. According to this view,it is like a free-revving engine: thinking and planning can, to some, make the sound and noise of considerable motion, whereasactually they believe it’s a con without any real traction on physical reality.

To be honest, I don’t have a lot of patience for the ‘I’m-too-busy’-objection. To such people whining that there is too muchon their plate for them to be able to think and plan, I say make the time (and get a bigger plate!). In my experience, thetrouble with people who keep their noses to the grindstone is that they always – and only – end up with bloody noses.

‘But how do I plan for my business?’ Now that’s a very fair question and I am going to help you answer that question very effectively with this book. So all you readers who are former I’m-too-busy-people, and those of you who are, all along, yes-I-do-believe-planning-is crucial-for-my-business-people. So let’s go.

The ‘che-sarà-sarà’-objection

There is an important group still to engage. These are the proponents of the che-sarà-sarà objection. This has a different basis from the ‘I’m-too-busy’ argument. Whereas that one presupposed a superior value in physical work over thinking and planning, the che-sarà-sarà objection assumes a fundamentally chaotic world that is indifferent to the rationalised hopes and plans of puny humans. When the fluttering of a butterfly’s wings in the Amazonian jungle, so the argument runs, can cause a hurricane in south-east Asia, what’s the point of a business in Cleethorpes hoping to plan to double its profits?

This is a dangerous anti-planning argument. Part of its danger is that it seems to inject some up-to-the-minute thinking aboutthe deepest nature of the universe into shoring up what is essentially destructive pessimism. ‘I may not like it’, so theargument runs, ‘but that’s just me failing to be a mature adult in this precarious modern world. I am simply clinging on toa childish and ultimately forlorn assumption that my hopes and aspirations actually matter. It is a delusion to think thatthe chaos of the universe can be bent or moulded to my tiny purposes.’

‘Just do the best you can’, the che-sarà-sarà people would recommend, ‘and if you are fortunate you won’t go against the grain of the benign indifference of the universe and you’ll get by. In fact, that might fool you into thinking your own plans make a difference, but actually you’ve just got lucky.’

So, the che-sarà-sarà objection has its attractions: it seems to be the mark of modern adulthood and it looks like it copes with contrary evidence. This is why it is so dangerous.

And that is also why it is so flawed. It is not the mark of modern adulthood; it is in denial of our basic human nature.

The ancient Greeks understood that people are essentially ‘teleological’: in other words, purposeful, goal-setting creatures. We have to have goals. So strong is this need, if we don’t give ourselves new goals, then we shall simply continue with the ones we already have, and nothing much changes. Or we take on someone else’s goal and then find ourselves joining our colleagues down the pub because we might as well; we have nothing better to do. Or, tragically, if our goal-orientation is taken away, we just curl up and die. We see this among some of those who retire – irrespective of the age at which they retired¹ – or among prisoners of war who are otherwise given enough sustenance to survive; or among surviving spouses who, being so dependent upon their partner in life, often live only a short while after their death.

When it comes to the inference that should be drawn about business planning; the essential nature of humans as teleological trumps any insights into the universe as chaotic. What does this mean for you as a business person? If you don’t have goals for your business and make plans on how to achieve them, then either you will take any old goal that comes your way, or your business will eventually curl up and die. So, better to set your own goals, consciously and deliberately and with intent, and plan on how to achieve them. In a complex, ambiguous world that is the truly adult thing to do!

We shall say more about the power of goal-setting and planning in Chapter 2, which is where former che-sarà-sarà-objectors can join their former I’m-too-busy-counterparts. Meanwhile, there is one last group with whom we must engage otherwise they, too, would remain as a ball in a pinball machine: plan-less and so knocked hither-and-thither by whatever levers and springs they happen to bounce into. Points amassed are scored by others; the ball itself is just struck and scratched.

The ‘my-business-is-already-good-enough’-objection

Your business is successful. Turnover is growing: has done for years, still is, and looks like it will for years. Customers are happy – at least they always tell you they are when you ask them and besides, they are rewarding you with increasing sales. With costs growing more slowly than turnover, you feel very happy with your rising profits. Indeed, your business is lauded as a model example pored over as a case study by students at what many would call the world’s foremost business school. Fortune magazine says you are top for innovation. With such success, what need have you of new goals and new plans?

Your business, called Enron, looks poised for stellar success². And yet it became the largest corporate bankruptcy in American history with repercussions still being keenly felt today. Corporate history is littered with the broken dreams of businesses that once flew high – and not just airlines like PanAm or DanAir. I remember as a child looking in wonder at the myriad of Airfix models at the toy shop I cycled to on my Tri-ang tricycle before racing home to meet my dad who had just driven home in his Hillman Imp. More recently, instead of typing this on my Samsung laptop, I might have been using a Tiny computer before checking my shareholdings in Marconi and Northern Rock.

Of course, it is not necessarily the absence of plans that did for these companies, but the quality of the plans – and mostespecially the quality of their implementation. A plan stands or falls not by the quality with which it is written or by thequality of its research and insight but by the quality of its implementation.

Sure, all businesses – from the smallest to the mightiest – can be seriously knocked about by external forces: a new competitor,a change of fad that pulls away customers, a technological breakthrough that banishes your product to obsolescence, a strokeof the regulatory pen that re-writes the rules of the game and takes away your ball. And it is because that these risks existthat business planning is all the more imperative.

No business is ‘already good enough’ to withstand such shocks. A business that thinks it is ‘already good enough’ will findno reason to change. Its goals will become more and more short-term until the business focuses just on maintaining the statusquo. What started as successful experiments will be routinised unhindered by any fresh thinking but propelled by complacencyall the way to orthodoxies, doctrines and dogma.

Such a business will be smugly gazing in the opposite direction from the juggernaut of change that brutally runs it over.Or, if it does catch sight of the headlights, it will not have the abilities, resources or time to leap to safety; and thespasm of the last-minute attempt will simply add to the anguish.

Yet forces – including forces of change – form trends and trends can be tracked and extrapolated. The outside-in attitudethat proper business planning encourages will help you to anticipate future changes and allow you to prepare your actionsin good time. The forces of change are not stopped, but you are better able to steer them towards your chosen goals. Noahdid not wait for it to rain before building the ark – just as it is easier for a healthy person to exercise in order to staywell.

One of the ironies of our age is that, as the life expectancy of individuals in developed economies is rising, that of businesses is falling. One accomplished business practitioner, thinker and writer, Arie de Geus, has studied this area. He found that a third of the Fortune 500 companies listed in 1970, had gone by 1983 (acquired, merged or broken up)³. De Geus goes on to quote a Dutch study showing that the average corporate life expectancy in Japan and Europe was only 12 years.

Another study found declining business life expectancy in the major European economies between 1987-89 and 1999-2001: it had dropped from 9.7 to 4.1 years in Britain; from 13.3 to 9.2 years in France; and from 45 years to 18 years in Germany⁴.

Achieving sustained success in business is extremely difficult. The Fortune list of top companies began in 1955. Just five years later, only 82 of the original list were still in the top 100. Afte...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Table of Contents
• Acknowledgements
• Introduction: About this book
• 1 The Principles Behind Successful Business Planning
• 2 The Benefits of Business Planning
• 3 The Process of Successful Business Planning: Its Form
• 4 The Process of Successful Business Planning: Starting at the End
• 5 The Process of Successful Business Planning: My Market place
• 6 The Process of Successful Business Planning: My Business
• 7 The Process of Successful Business Planning: An Illustration
• 8 The Process of Successful Business Planning: Some Soul-searching
• 9 The Number of the Counting
• 10 Pulling It Together: The Business Plan
• 11 Implementation: Making the Business Plan Happen
• 12 Implementation: Finding Failures Fascinating!
• 13 Implementation: Open Focus
• 14 Implementation: Relationships – Familiarity Breathes Content
• 15 Presenting Your Business Plan
• 16 Your Business Planning in Today’s World – Bonus Chapter
• 17 Parting Is Such Sweet Sorrow