Failing to Plan is Planning to Fail

Posted on September 8, 2009 by David Gass 3 Comments

When do you need to put a business plan together for your company? I was sitting around a table with several very successful business owners over the weekend and one of them asked: “Where can I get a business plan written with a professional writer. I’m setting up a new company soon and would like to get one done.” Of course I told her to see me, as that is something we do for businesses across the country. Then I asked if she or anyone at the table had created a business plan for their existing business.

The answers were interesting. There were twelve of us at the table. All twelve had put something in writing before or during their start-up phase. What they put in writing varied, but all included goals with a few action items. The SBA recently came out with a study that those who develop a business plan are six times more likely to succeed than those that don’t.

So having a business plan is critical for future success, but what exactly should that plan have in it and is it critical for getting financing?

Of the twelve at the table only two had actually hired someone to write a complete and detailed business plan for their company. The other ten had just created their own. Everyone had a different idea of what the plan should include, but there were commonalities.

It was unanimous that you had to have goals for the next year. Most felt it was important to have goals for the next five years. Everyone also believed that you needed to have projected financials for a minimum of three years. Without the three years financials there wasn’t any way to really know if the business was worth starting or continuing. There were three people at the table who had other business ideas they wanted to do and after pulling together the three year projections they chose not to move forward with the business.

When developing a business plan for a new business idea, I would highly recommend starting with the financial projections. After all, you are getting in to business to make money so you want to make sure the business can generate a profit. This is also critical for seeking investor capital. If someone is going to invest in your business they will need to see financial statements.

When you apply for loans or other financing the need for the business plan and financial statements may not be needed by the lender. That is to say the lender may not ask for this documentation in every case, but you should have it in order to project if you can pay back the loan you are applying for.

Many of us have heard the quote from Alan Lakein bestselling author on Time Management – “Failing to Plan is Planning to Fail”.

We should take this advice and use it in our business every day. Planning is a must in business, but it’s also not the only part.

Here are a few other quotes from Mr. Lakein:

“Planning is bringing the future into the present so that you can do something about it now.”

“You cannot do a goal. Long-term planning and goal-setting must therefore be complemented by short-term planning. This kind of planning requires specifying activities. You can do an activity. Activities are steps along the way to a goal. Let’s say you desire security. Putting $10.00 in the bank or talking to your stockbroker about your investment plans are activities that will move you toward you goal.”

Take action today on your plan and create a ritual of doing that every day. With a minimum of one step every day you’ll get to your goal. However, having a business plan creates the map so you don’t take steps in the wrong direction. You’ll get to your goals a lot faster with a plan and daily action.