Effective Planning Principles for Small Businesses
Business Planning Guidelines Make Business Planning Easier
1) Business planning needs to be based on real, timely information.
Suppose a group of Neanderthals gets together and forms a business called Caveman Inc. Their business plan is based on killing big things that will provide lots of meat. But none of them knows what kinds of “big things” might be out there or how they might kill one of them if they find one.
Before you can engage in useful business planning, you need to gather the information that will allow you to identify priorities and make decisions. This information may include demographic data, market research, labour market information, competitive intelligence etc.
2) Business planning needs to be action-based.
Imagine Caveman Inc. having a business planning session. The team meets, waves their clubs around, deliberates and decides that killing a Tyrannosaurus Rex is a worthy goal for their business. Then they all continue to sit around the fire in the cave.
Goals are good things. You need them for direction. But without planning actions to undertake to achieve your goals, nothing will be accomplished.
3) Business planning needs to identify risks and challenges.
The Caveman Inc. team has finally left the cave on their Tyrannosaurus Rex hunt. Their hunt is successful in that they find a T. Rex. Unfortunately, they soon discover that individually running up to the T. Rex and trying to bonk it with a club is not a successful way to kill a Tyrannosaurus Rex – and suffer many injuries.
Looks like they should have taken a little more time in their business planning session on the risks and challenges of their plan. Successful business planning involves not only assessing potential risks but coming up with ways to mitigate them.
4) Business planning needs to be ethical.
While licking their wounds from their Tyrannosaurus Rex hunt, Caveman Inc. discovers that there’s another group of Neanderthals in the vicinity – and worse, they’re after a T. Rex, too. They immediately abandon their business plan, rush out, and try to kill off the other group.
There are all kinds of strategies that will increase your business’s profits. But before you make them part of your business planning, ask yourself if they are ethical. In other words, do they support or enhance your values and the values that you hope are shared by society? Remember that morals should not be bound by borders. If your conscience says it would be wrong here, it’s wrong in another country, too.
5) Business planning efforts need to be measured and evaluated.
Having chased the other group away, the Caveman Inc. team decides to give their original plan another try. However, when they find a Tyrannosaurus Rex they try to do exactly what they did before, and when trying to bonk the creature with their clubs, the entire team is wiped out.
If only the Caveman Inc. team had evaluated their plan and amended it! Carrying out business planning efforts and not bothering to measure and evaluate them won’t necessarily lead to disaster, but it will certainly waste your time and money. How can you get to where you want to go if you don’t even know what you’ve accomplished so far? And how can you make new plans if you don’t know if the old ones were effective or not?
Don’t put your business into the position of a Caveman Inc.! Business planning is critical if you want your business to survive and thrive. By being sure that your business planning adheres to these five business planning principles, you can ensure that your business planning moves your business ahead rather than just being an expensive waste of time.
Ready to plan? See Quick-Start Business Planning for putting together the basics of a business plan that will invigorate your business for the course of a year in just a pair of two to three-hour business planning sessions.