Don’t make the all-too-common mistake of dismissing the value of planning for your business. Every well-run business needs to manage strategy, tactics, milestones, metrics and essential business numbers.
Do it right, and planning is easy to do, great for managing and developing accountability.
Remember these two key points:
- Good planning doesn’t require a big, formal, traditional business plan document. A lean business plan is much easier than a traditional plan. It just consists of bullet-point lists and tables. You can do it yourself.
- What really makes the difference is keeping the plan live. It doesn’t take more than an hour or two per month. The planning process means you track results, review, and revise often enough to keep your plan fresh.
The Lean Business Plan
The lean business plan is developed by and for the people who execute it, not to be shown to outsiders. It’s just lists and tables, not text. It’s for you and your team.
My favorite version of a lean business plan includes only four essential parts:
- Define strategy. Use any framework you want. This is not finished text, just bullet-point reminders that keep you focused. It’s something you and your team refer to as a reminder.
- Set tactics to execute strategy. Tactics include pricing, distribution, product versions and configurations, launches, social media, working capital, and so forth. Keep them with simple bullets, and make sure the tactics match the strategy.
- Develop the concrete specifics. List your assumptions. Set major milestones you work towards, like the new product, the new store, hiring that key person, getting to 100 customers, getting 1,000 likes, or whatever. Set the metrics, which are the measurements you track, like sales, costs, expenses, and units, traffic, events, output, conversion rates, etc. Define how you will track progress.
- Determine your essential numbers. Good management takes forecasting so you can track and manage results. At the very least, have a sales forecast, spending budget and cash flow.
What about market, market analysis and market research? Planning without knowing your market is dumb. Do whatever it takes to know your market. But you don’t have to add market information into your lean plan if you and your team know the market and don’t need to prove it to yourselves. If you need market research, do it.
The management that follows
Every well-run business has a planning process that sets aside an hour or two per month to review progress towards goals, identify problems and opportunities, and revise strategy, tactics, milestones and budgets as needed. I write this not just as an expert in planning but as an entrepreneur who took my own business past $5 million annual sales without outside investment. The key was a monthly meeting to review actual results, compare them to the plan, and revise as necessary.
All business plans are wrong. The management value isn’t whether we accurately predicted the future, but rather how what really happened differed from what we expected, which leads us to management decisions about what to revise and what comes next.
I agree with former president Dwight D. Eisenhower who said “The plan is useless. But planning is essential.”
The value of a business plan is the decisions (the management) it causes. For that, lean business planning is perfect. It’s a planning process, not just a plan.