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The Failure To Plan Is A Plan To Fail ... Or Is It?

Oct 12, 2010

Read any book on small business or take any entrepreneurial course and it's almost guaranteed that sooner or later you'll be hit with; "If you don't have a business plan you're on the road to disaster". Sounds a lot like your mother when you were a kid doesn't it? "What do you mean you didn't change your underwear? What if you're in an accident? What will the Doctors think?" Well I'm not your mother and I'm not going to put a guilt trip on you for not having a business plan! I'm also not going to tell you that you don't need one. Quite the contrary, if done for the right reasons a business plan can be a valuable management tool to make your business more successful!

While all the hoopla about business plans does make some reasonable sense in a lot of situations ... the truth is that few of us ever create formal business plans. That is, unless we are headed off to our friendly banker trying to convince him or her to lend us a few thousand of their depositors’ dollars. So the big question ... “Is the lack of doing a business plan one of the main reasons that many businesses fail”? The answer ... Not in my book.

In fact, in some cases a business plan could actually stifle some great entrepreneurial minds and ideas. It's important to remember that business success is 1/3 blood, sweat, and tears ... 1/3 working smart instead of hard ... and 1/3 taking risks for no other reason than "it feels right". There are some things in business success that can't be explained with anything that you write on a piece of paper. There are some things that make a business succeed for no other reason than flying by the seat of your pants or being in the right place at the right time. Take Steve Jobs, the founder of Apple Computer, for instance. If he had taken the time to create a formal business plan while trying to build a personal computer in his garage, he probably would have concluded that he was nuts and needed to get a real job working for IBM, whose founders probably didn't have a business plan either.

So why do so many small business gurus dwell on the philosophy that a formal business plan, and I emphasize the term formal, is so critical for a business to succeed. My theory is that it probably comes from one of three reasons.

1.   They work for the government or some educational institution and have never run a real business for themselves. For the most part, their "entrepreneurial skills" come from reading what other educators have written or from what they learned by attending an educational skills development seminar.

2.   For those in the minority who disagree with the “Ya gotta have a business plan crowd", they are too embarrassed to go against their peers and admit that while a business plan can be important ... it is not THE critical component to success.

3.   They actually do run a business ... which encompasses preparing business plans for a big wad of money, or ... they are hawking a book or software on how to write business plans and want you to help pay the mortgage on their lakeside summer home.

Does this mean that taking the time and making the effort to develop a business plan is a waste of time or won't give you a better chance for success? Absolutely not! The point I'm trying to drive home is that the benefit of a business plan will vary from person to person and business to business. Actually, a great way to convince someone not to do a business plan is to overload them with all the theory involved in what a formal, textbook business plan entails. Trying to convince an anxious and driven entrepreneur that if they don't spend weeks of research and writing that they would be foolish to even think about starting a business. Or, if they're already in business and operating without a business plan, suggesting they shut-down their business while they still save a few assets left. These are a sure ways to take that entrepreneurial edge of success off someone.

So let’s take a look at business plans from the trenches ... The real purpose of a business plan is not to create a fifty page epistle for some theoretical road map to success. The real benefit of developing a business plan is to lead you through the exercise of thinking about all the steps that might give you and edge on business. Those minor details like:

1.   Who are your customers?

2.   Who are your competitors?

3.   What are the best ways to market?

4.   How much profit will your business generate?

5.   How much cash flow do you need to survive?

These are just a few of the real questions. And yes, these questions are in a formal business plan. But too often people get so caught up in the technical information and data of a business plan that they loose sight of what will bring customers in the door and put money into the business coffers.

So here's the real skinny on business plans. Read all the books on business plans that you have time for and find interesting. Attend as many seminars or college courses on business plans that you can afford. And ... this should be a definite no matter how you feel about business plans ... buy one of the interactive business plan software programs and every week spend an hour or two playing with it.

The secret in all this business plan "stuff" is to use your entrepreneurial sense. Don't make planning the future of your business so difficult that you get paralysis by analysis or try making brain surgery out of driving a car. Develop your business plan around the specific areas that will help your business get more customers in the door and add more profits to the bottom line. Do it in bits and pieces ... marketing one month, competition the next month, and finances the next. Every month take a detailed look at some aspect of your business and when you've gone through everything in your business ... start the whole process over again. And if you have employees, don't make the mistake of leaving them out of the planning process. Get everyone involved in making your business succeed!

And unless you're trying to raise money, get an "A" in a college business course, impress your friends, or sell a book ... don't worry about the spelling, punctuation, or content ... it's the act of going through the process that counts ... not the format.

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