In business, particularly the formal kind, the importance of planning has become taken for granted that there is an entire group of businesspeople who think that doing the opposite (and working without a plan) is somehow a form of disruption. Time honoured pro-planning adages such as, “Failing to plan is planning to fail” are now getting countered with sceptical nuggets like, “No battle plan survives contact with the enemy”. this is a debate which cannot be settled by an exchange of clever sayings alone. This article is, therefore, a reminder of all the reasons why planning is still important in business.
Maintaining focus
Planning helps establish and articulate both an organisation’s goals and its reason for being. As time progresses and an organisation grows –two occurrences, which, unfortunately, do always go hand in hand—holding onto the organisation’s founding principles becomes even more important. Planning can help prevent the organisation from inadvertently straying too far away from what it was created to be. Changing the destiny and direction of a company away from its founding principles and objectives should be a conscious and well-considered decision rather than the result of an accumulation of compromises over time.
Continuous improvement
Following a plan also allows you to continuously improve your execution. Because a good plan has clear objectives and milestones to be achieved, you are better able to see just how effective what you are doing is at getting you closer to these. For example, a plan with timelines will let you know if you are lagging behind your schedule. When your plan has clear set objectives, you can also note how many have been achieved at any given time, how many are in progress, which is proving to be beyond your capabilities etc. Without a plan, it is all too easy for all your flurry of activity to devolve into what is often described as “going around in circles” –the less potent version of being described as “busy doing nothing”.
Raise money
No matter how good you think your presentation skills are, institutions like banks and other providers of business funding will still require you to provide a business plan for them to go through with a fine-tooth comb before they can even start considering giving you a single cent. Sometimes even when you intend to get your capital from less formal sources like family and friends, a business plan can still come in handy in communicating what you are trying to achieve.
Identify strengths and weaknesses
A business must know most of its strengths and weaknesses before the market or competition can start schooling it on these. The planning stage is where these are identified and assessed. Strengths are all those qualities of the business (and its founders) which it can embrace and leverage to get ahead while weaknesses indicate areas where improvement is needed.
Hire the right people
Having a plan also means that you have a much clearer picture of what needs to be done to run and grow your business e.g. identifying the roles that need to be filled within the company. You will also be better able to come up with the job descriptions and identify the temperaments, skills and qualifications best suited for these. In a company that is just starting, the importance of hiring the right people cannot be overstressed.
Make critical decisions ahead of time
While the concepts of planning and speculation may seem so different from each other, in the real world you cannot do the former without dabbling in the latter. Planning requires that you consider some of the possible scenarios which may lie in the future and in business this is no different. All that this means is that when planning, it is possible to foresee some of the challenges, problems and choices that lie ahead. Forewarned is forearmed, they say, so by the time you get to these you may already have some solutions and answers.
Assess and prove the viability
Many a business idea out there is born out of passion but, unfortunately, not every passion project makes business sense. A business plan should touch on as many of the factors which play roles in the success of a business idea. Such a plan can, therefore, be used to assess and prove the viability of your business idea not only just to other people (e.g. potential stakeholders) but also to yourself.
Communicate the vision
A plan can also be used as a vehicle for the business founders’ vision. This means it can be used to communicate a company’s goals and aspirations between founders, partners, investors, employees, customers and other stakeholders.
In conclusion
People who are sceptical of both the importance and necessity of planning often point out that plans tend to fall apart in the real world. This is true: even the best of planners have a difficult time predicting and accounting for all the myriad number of variables that exist in the world which can derail even the best laid of plans. For your plans to serve you better (whether they are in the prescribed business plan format or simple checklist form) you will have to accept that some adjustments are almost always necessary along the way. Plans are not set in stone and what is more, a slightly adjusted one is still as useful as ever.
