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The focus needs to be on PROCESS not on plan. If a continual, ongoing planning process is in place, a written business plan is just not important. Writing a business plan without a planning system in place is a massive effort that is done very infrequently. Many businesses write three to five year plans and update them annually. The plans are reviewed periodically during each year to analyze plan vs. actual variances. Little, if any, thought is given to strategy between annual updates. Strategy should be focus everyday. Setting up a planning system allows and sometimes forces you to focus on strategy. A planning system consists of two functions. One is a goal setting and attaining process, and other is a trend watching or environment scanning process. Setting up a planning system takes several steps. The first and foremost task is to set aside or make time for planning on a regular, ongoing basis. It must become part of your routine, not an occasional event that can be easily postponed. In evaluation phase, owner or management team and company are analyzed. From analysis, key or critical areas of business are identified. These areas are filtered down to focus on most important ones. Performance measures are determined and systems to gather and process necessary data are set up, if needed. A base of current performance is used to set goals.
Now regular, ongoing stuff begins. Strategies are formulated, tested, implemented, monitored, and reworked until goals are achieved. Each planning session is split between working on strategies and trend watching. As goals are achieved, goal setting and strategy formulation process begins again.
Let’s put focus back where it belongs on continuous, ongoing planning instead of writing business plans. As Karl Albrecht said in his book Corporate Radar, “The majority is not always right, conventional wisdom is not always wise, and accepted doctrine could well be flawed. The more fashionable an idea, more it is likely to be exempt from critical evaluation. Breakthrough thinking sometimes calls for contradicting most widely held assumptions and beliefs.”
David E. Coffman CPA/ABV, CVA has authored a number of articles, reports, white papers, and books about small business valuation and planning topics. He founded Business Valuations & Strategies in 1997 to work exclusively with small businesses in these areas. His “Power to Prosper Small Business Planning System” is available at http://www.bus-val-strat.com.