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Why most business plans are Crap!

By October 13, 2014Business

Crap Business Plans

In recent years there has been much written about the need for detailed business plans, and in fact a whole industry has sprung up built on developing business plans at great expense to the business owner, who has somehow become convinced that this is an essential ingredient for success.

I have myself been guilty of writing a few door stoppers which have never seen the light of day once they have been presented to the client. These have been full of:

  • Mission and Vision statements (neither of which the business owner knew he had till we started with all of this);
  • SWOT Analysis (which I had to explain to the business owner before we could do it)
  • Line by Line Budget forecasts, Cash Flow projections, Capital Analysis, up to ten years out with sensitivity analysis, seasonal variation, the whole nine yards. (How I can possibly know what is going on in 2024 I will never know, but thanks to the power of the spreadsheet, I can make a pretty good fist of predicting it)
  • Lots of unrealistic goals and targets with supporting KPIs (which will never actually be measured)

In short, these “Business Plans” were not worth the paper they were written on, even though they were developed with the best of intentions, and in the hope that the client would grow a better business as a result of the work we did on them.

The danger in overly complex and detailed plans is that they are such weighty documents that the business owner loses track of what the whole planning process was about, and as a consequence the plan becomes irrelevant.

The key issue for me, and the reason why these “Business Plans” fail so miserably is that the “process” has in some fashion become a replacement for the “outcome”. What a business owner really wants from a business plane simply comes down to three key questions.

  1. Where am I today
  2. Where do I want to get to
  3. What am I going to do to get there.

All the other stuff is just support really.

This is not to say that there is no need for business planning, far from it. What I advocate is that for a business plan to become a really useful blueprint, it needs to be distilled down to its pure essence. The overall objectives of the business in a few dot points, the measures we are going to use to determine whether we have met those objectives (perhaps four or five of them), and a set of actions which we are going to undertake in order to achieve them (with timeframes and responsibility). All of this can be presented on an A4 sheet of paper one sided and kept close at hand to remind us (when we are dealing with the 380 emails, the recalcitrant debtors, the disappointing suppliers and the disgruntled employees) exactly what it is we are trying to achieve, and how we are going in terms of getting to our goals.

Read my article on how to fix your business plan!

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