I’ve been focusing lately on the difference between your core business plan and the information and analysis and presentation additions that are really dressing, not plan. Too many people assume that a business plan necessarily includes background and supporting information. In fact, the plan itself is your strategy and the concrete steps and specifics you need to run the business. This is one of the core concepts in The Plan-As-You-Go Business Plan book that I’m now writing.
Consider this: every business needs to plan strategy and who does what, when, how much it costs, how much it brings in, and how much money is in the bank. That’s absolutely essential for everybody. That’s also what a plan has to include.
The plan should meet the business needs. Not all businesses need to do research and analysis on markets, the industry, the competition, and related topics as they develop their plan. Those that do know who they are. Also, perhaps more important, those that don’t want or need to do this extensive analysis shouldn’t confuse that with the plan itself.
You might be running or growing or starting your own one-person business. You feel very comfortable about knowing your customers and your market and you’ve got a strategy. Why are you writing all this down, formalizing it, making a big project that you don’t really need? No good reason. Planning is about the decisions it causes, it’s not about showing off your knowledge.
Example: you’re doing a new coffee roasting business. It’s just you and your spouse, and a close family friend who is also investing. You want to develop your strategy and cash flow projections and who does what, and you want to track progress against goals, so you do need a plan. But it’s not going to be a formal business plan document with a heavy market analysis and competitive analysis. It’s going to stay on your computer. You may or may not do a special research and analysis project for this plan, but either way, you’re comfortable with your sense of the market and the strategy you’re developing.
So if you don’t have to do the formal plan, because you’re not required to by the investor or the bank, then don’t. And when you do want to do the plan, because things are changing (maybe you’re entering a contest, or looking for an investor, or the bank asks for it), then you take the next step of developing the document with all the supporting information.
Some businesses need to explain and present the background information to investors, bankers, directors, members of the management team, or others. In that case, by all means, put it into your business plan document, and/or your presentation, summary, elevator speech, or whatever. But keep in mind that it’s dressing.
The heart of the plan is its strategy, and no matter which kind of plan output you’re using you still need to understand who you’re selling to, what you’re selling, why they buy, how they know about you, and how you’re different from other offerings. You can write that down, put it in slides, talk it through with others, or keep it in your head, but you really have to understand where and how you fit. It’s a combination of your identity, your market, and your business offering.
The flesh and bones of the plan are its review schedule, metrics, responsibility assignments, dates, deadlines, budgets, and financial forecasts. You need those as much as you need anything. It isn’t necessarily a document, or a presentation, or a speech, or a summary; it’s what you’re doing and what’s supposed to happen.
The output of that might vary. Its actual physical existence might be as simple as thoughts in your head, at the beginning, and — I really hope — quickly becomes a collection of words and pictures and numbers you keep on your computer.
You do what the business needs: no more, no less.
And you never run a business without a plan, and you never think you have a plan unless you have a plan review schedule of meetings set up and you follow through with it, plus realistic metrics, a cash flow plan, and accountability.