The 2017/18 SME Research Report by HLB Mann Judd found that only 20% of business owners had a business plan in place. And only around 30% of them reported setting aside time to work on their growth strategies.
In a 2020/21 research piece, Apiary Financial found that only a quarter of SMEs undertake regular planning with only 6% could point to comprehensive plans which they actively managed.
You don't have to look too far to find other proof that business planning is something that many businesses either overlook or actively ignore.
Which is a pity, because there's plenty of other evidence pointing to its benefits. In our opinion, a coherent and actively managed business plan is a prerequisite to building growth that's sustainable - that is, reasonably predictable, consistent and repeatable.
Which all begs the question - why is "active" business planning so often placed in the too-hard basket?
Many factors conspire to make business planning one of the least appealing activities associated with running a SME. Happily, there are ways to reduce the pain factor...
Give your business plan direction
A business plan without direction is next to useless.
To create growth in your business that's sustainable, there's a process that should drive your planning activity. As you can see from the graphic below, your business and action plan is just one part of the process and one that is given direction by each of the steps preceding it.
Planning must start from a place where your purpose - the non-financial reason your business exists - is clear. This is where the overall direction for the business is set.
Purpose is what informs your vision. Strategy then sets out the medium to long term initiatives that underpins your "purpose-driven" sustainable growth.
Only after you've addressed purpose, vision and strategy can you really create your business plan. Without those things, you'll lack the long term view of your business that enables a clear focus for your shorter term business and action plans.
And that clarity brings with it a reduced risk that you'll find yourself engaged in activities that are actually irrelevant in the quest for sustainable growth.
Involve your employees (if you have them)
Your business and action planning process must absolutely involve your employees (if you have them).
If it's not practical to involve all employees, they should at the very least have input to the areas and activities in which they're directly involved. As a result, they'll build a better understanding of where the business is heading and how their individual contributions impact outcomes.
A great business plan (and the process of creating it) helps your employees be more effective in their roles because they better understand what's expected of them and the contribution they're making.
An added bonus? Involving your employees in business planning is also a brilliant way to improve and maintain employee engagement.
Measure results
Once you've got your business plan prepared, you need to put in place the right framework to regularly check in on whether intended results are actually being achieved.
Every action in your plan should have a "single point of accountability" - someone in the business who is ultimately responsible for seeing an action item through to completion. They may not (and most likely won't) do all the work involved but it's their role to coordinate others and make their own contribution to ensure that it's completed in the time required.
Importantly they should also be empowered to raise any potential roadblocks that may, or may potentially, knock things off course. Better to know there are issues than ignore them and down the track wonder where it all went wrong!
Part of the measurement framework should be the creation of relevant key performance indicators (KPIs). We've posted on this in the past and we'd recommend you check it out if you need more information on setting great KPIs.
Review
There's nothing more certain that during the period your business plan covers, things will change. Those changes may be external or internal to the business but either way they'll have the potential to be disruptive.
Given that, you can't simply set and forget your business plan. To help ensure it remains relevant, structure a formal review process with (say) quarterly check-ins involving all relevant employees. Each and every action item need to be reviewed to ensure interim milestones are being met. If they're not, identify what's going wrong and what can be done to get back on track.
As well as this "full-scale" review process, business plans should be at the forefront of communications in the business on a daily basis. After all, the reason you create a business plan in the first place is to guide the day to day activity in the business in order to achieve your medium to longer term strategies and deliver on your business purpose. So it really isn't enough to rest on quarterly reviews alone.
Be open to change
As hard as it can be to admit things aren't going according to plan, you have to be prepared to do so from time to time.
For all the reasons we've already mentioned (along with others) you'll find yourself at some point staring exactly that challenge in the face. Sometimes, what seemed possible when you embarked on a project clearly will now be set to fail. That's ok, as long as you accept the situation quickly and learn from the setback.
You and your employees will benefit from shifting gears and ditching those projects that are bogged down and show no visible signs of survival.
Newsflash: all business plans are not created equally.
For many (perhaps most) people, the first thing that comes to mind on hearing the words "business plan" is a multi-chapter volume that sits on a shelf somewhere. It takes months to compile and is rarely looked at once the ink is dry.
Naturally, if your business is in the market for funding from banks or investors, you really do need to create a business plan that covers all bases. Most people who are likely to support your business financially will demand it so they can make an educated risk assessment. At some stage in the development of your business, there's every likelihood you'll need to create a document like this.
But as a tool for creating and managing sustainable growth a "tell all" business plan isn't really fit for purpose.
Far more effective is a short, to the point business and action plan that spells out:
the key tasks that need to be completed in the planning period;
the time by which they need to be completed; and
who in the business is responsible for seeing those tasks through to completion.
The great news is a two-page business plan is all you need.
Any more than that means you're perhaps trying to do too much in the relevant time frame (though much depends on the resources you have at your disposal).
Think about what you ideally want to achieve in each of the following areas:
client related initiatives;
employee related initiatives;
marketing;
sales results; and
financial outcomes.
While these are the key areas for consideration, there may be others you wish to pursue. But the underlying principle is keep things simple and don't be tempted to bite off more than you can chew.
Remember...there's effort involved
Sure there's work involved in creating and maintaining your business plan. The reality in business today though is that without one, you'll struggle to achieve all the things you want to in the time you think you should. There's nothing more soul destroying than feeling you could (and should) have done more to achieve the goals and objectives you want to.
On top of that, all the evidence points to the fact that business who work to a plan achieve better financial outcomes than those that don't.
So it's definitely worth the effort.
What about your business plans?
Are they "fit for purpose"?
GrowthCatalyst can help make sure they are. As a result, you'll feel safe in the knowledge your business growth is on a sustainable footing.
We invite you to contact us to arrange a conversation, face-to-face or virtual.
Alternatively, you can book a time for an initial discussion here.
And how sustainable is your business growth?
If you're keen for some immediate feedback on how sustainable your business growth might be over the longer term, please follow the link to our "Sustainable Business Growth Health Check".
It'll take you no longer than three minutes to complete and you'll get your results instantly.
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