How to Business Plan Your Way out of the Clouds
- by John J. McAdam
After teaching a recent business planning workshop, I noticed something different about the business plan drafts written by these entrepreneurs—other than the fact that most of them were already in business. One group of entrepreneurs wrote plans that were almost entirely about doing business in the future. This future-oriented group of planners was mainly involved in startup businesses. People in the second group wrote extensively about their business, activities, recent history and plans for the present, with little to no planning into the future.
It’s rare as an author and instructor that I see such extremes in one workshop. Why do some people stick so close to the present while others go right to the future?
Business planners who live in the future think of business planning as a vision of what is yet to come. These folks try to predict what their business will look like in five years and describe it in vivid detail. The dreamers are comfortable here. What a comfortable place it is, to ignore that past and the present and simply create the business life that you want in the future.
But the problems with planning in the future alone are obvious, right? Imagine trying to read a map knowing where you want to end up but not understanding where you are. If you are as geographically challenged as I am, then you have experienced not knowing where you are while traveling away from home. I have missed planes because I took a wrong turn and lost track of where I was. Even more fun is thinking you are on the west side of a major city looking at a hotel map when you are actually on the east side. That makes for some interesting conversations—with yourself.
I can’t imagine ignoring my present situation while writing a business plan. You have to make a living today. You have finite resources committed to your business. You only have a specific amount of capital that you are able or willing to risk. You only have so many hours per week that you can commit to the new business initiatives described in your business plan. Accounting for specific resources such as money, time and other people’s time helps us to get our head out of the clouds, think more realistically and place our feet on the ground.
How much of a business plan should be geared toward the present versus future business activities? Finding the balance between planning for the present situation and for the future that you want to create is essential for successful business planning.
If it helps, think of business plan time frames in three stages: the present, the short-term and the long-term time horizons. Short- term planning is generally defined as plans within one year. Long-term planning is generally defined as plans more than one year away. To get from where you are now to where you want to be in the future, you must include present, short-term and long-term time horizons.
One tool that helps us is tying action plans with business milestones, which are significant events at least 90 days in the future. For example, imagine the milestone that states, “Our company will increase revenue by $100,000 by the end of the first quarter of next year.” Technically, this is a quality milestone. It is a significant business event associated with growing sales within a measurable period. Now let’s take the same milestone and add an action plan to it—a sequence of steps designed to achieve a broader business goal.
Step 1: Email 100 business owners. Due 1/6/2015: marketing assistant
Step 2: Telephone follow-up from initial list. Due 1/15/2015: me
Step 3: Divide the list between interested prospects; separate the people who are interested. Due 1/30/2015: me & administrative assistant
Step 4: Visit prospects to provide demonstration. Due 2/28/2015: me & technical support Jeff
You get the idea. The action items keep detailing the steps that will be taken to achieve the broader business milestone. These action steps force us to work in the present and take incremental steps to achieve our future goals.
What milestones and action plans can you think of to achieve your business goals next year?