In small business, hardly two other words promote fear and procrastination more than “business plan”. It is often considered as an interruption to the day to day tasks of running a business; or, too difficult to contemplate. When entrepreneurs think this way, they are on the road to problems. What is often missed is that the business plan has two primary functions (among several others)—to determine how much you know about your business; and, what you don’t know. To skip the essential process of preparing a business plan exposes you to tactical or “crisis” management—doing tomorrow based upon what you just learned today. It is the roller coaster method for managing a business, and may be part of the reason why 4 of 5 new businesses fail.
This type of outcome is not inevitable. A well-constructed plan can not only avoid the hazards of tactical thinking. It also provides a road map to a more successful outcome. The process of preparing a plan leads the business owner to examine all facets of the business, ask all of the questions that lead to strategy development, and produce an organized approach to the future.
HINT: A business plan is not a static document meant to be done once, then gather dust in a file drawer. The obligation to review and periodically update the document forces the discipline to really look at what you have done, compare it to your expectations, and take corrective action.
Carl Isbits, SCORE counselor. email