Planning is mandatory for business success. Fail to plan and you plan to fail.
Planning is difficult because there is no immediate feedback as to its value. But if you think of starting and operating your business in the same way you might think about climbing a mountain, the purpose and advantages of planning become clearer.
When you start up the mountain you never know what to expect: sudden change in weather, lost or broken equipment, mistakes in maps, an injury. Planning for these eventualities will allow you to deal with them and still reach your objective in spite of temporary setbacks. On the other hand, lack of planning can spell disaster. The more careful the planning, the more likely problems will be anticipated and not allowed to interfere with your ultimate business objective.
The Business PlanCountless books have been written on how to write an "effective" business plan. The traditional business plan is a very well defined and structured document. It is written as a presentation to lenders, potential investors, and bankers in order to raise capital. As such, it is sort of an advertising document and, well, maybe tends to exaggerate a little.
Although many will argue the business plan is a planning document, it frequently is not because of these exaggerations. After a while YOU will start to believe the business plan ... even if you know that what is contained within the document is absurd in places. (Yes sir, there is no doubt about it, sales will easily double each year ... as long as we can obtain adequate financing.)
If your business is going to require investor capital at the onset, you will need that traditional business plan. But BEFORE you even get to this point, or if you are like so many of us and are starting a small business venture where little or no formal investment is needed, you need another plan ... A plan for YOURSELF ... A HONEST plan for you. You need a strategic plan.
The Strategic PlanA strategic plan is your plan for success. It will define your business mission, your present situation, and where you want to be in three to five years. A strategic plan, like the traditional business plan, should be well-structured, and include a number of short succinct statements covering the following areas:
Scope of Business
Goals and Objectives
Progress Reporting Methods