The Press, October 2004
"Business plan" must be one of the most dreaded phrases in the corporate dictionary. Only restructuring, downsizing or bankruptcy are feared more than the annual punishment that is producing the business plan. Why do we hate them so much, and are they necessary at all? A marketing plan isn't essential, but without some marketing planning you are seriously limiting your chances of success.
So what are the biggest problems with business plans? Maybe it is because plans are seen as so incredibly sacred - the hallowed strategic plan, asset plans, financial management plans, sales and marketing plans. Some people worry more about producing the document than what it actually means for their business. Look at local government - the Christchurch City Council's latest plan is over 400 pages long, but does that mean their performance is substantially better than an organisation with a less comprehensive document?
It is easy to get obsessed with the process of creating a plan. Gathering piles of data, having great brainstorming sessions on SWOT (strengths, weaknesses, opportunities, threats), creating endless KPIs (key performance indicators) or developing clever new promotional taglines. While gathering the necessary information is important, too much data can make it difficult for us to determine what's really important. What we miss is thinking clearly about what our business is trying to achieve, why it exists.
Another common problem is the folly of thinking we can plan everything down to minute detail. As failed planned economies like the Soviet Union discovered, the world's simply too complex. Building a business plan that will reflect your business for the next 12 months is like trying to achieve the perfect weather forecast. At best it can be a snapshot of where you are at the time, and the best you can do is make approximations based on available evidence. Arthur C Clarke sums it up: "To predict the future, we need logic; but we also need faith and imagination, which can sometimes defy logic itself."
Then there are those that eschew plans entirely. "I haven't got time to plan I'm too busy selling/marketing/managing etc". For them the annual planning process is too slow; doesn't allow the business to react to changes; is based on linear, predictable thinking and suppresses innovation; or are simply accountants' tools, all numbers but no reality.
Is the answer to the pain of business plans to have no plans at all? Are they important to marketing your business well?
Plans themselves are not, but the process of planning is absolutely essential. To quote legendary US general, and later President, Dwight Eisenhower: "In preparing for battle I have always found that plans are useless, but planning is indispensable."
Planning isn't about fancy bound documents filled with buzzwords and graphs, it is primarily the act of thinking about what you want to achieve as a business. It is a process of determining how you will allocate your resources (time, money, activities etc) to achieve a desired goal. How you communicate that, in a document or on a table napkin, is another matter.
Doing some planning isn't the ultimate solution of course. But doing some work on understanding what your market is and how you are going to satisfy its needs helps. Like the gold prospector looking to strike it rich, you want to know enough to be in the right valley with the right equipment before you set-up camp and start digging. It doesn't guarantee you will strike gold, but you will have a better chance.
Whether it's recorded in one paragraph or one thousand pages, doing some marketing planning can help drive your business. Each day every employee of any business makes numerous decisions (should I call this person, should I buy this supply, should I take this promotional opportunity). The ultimate goal of planning is to ensure that all staff have a good framework for making these decisions - that they know what the business is trying to achieve and how they can contribute to that.
So how do you go about planning, rather than just documenting a marketing plan? Leave all of those templates and planning books at the door, just find a quiet place and do some thinking:
- What market are you in: where is it, how large, what are its main characteristics, how do customers buy?
- What products are you delivering to what customers and how?
- How do you find, attract and service these customers?
- What sort of pricing and promotion will help you achieve this?
- How will you define success - revenue, investment, quality, acknowledgement of peers?
- What kind of company do you need to achieve these goals - people with what skills, what sort of processes, what sort of intellectual property?
- Once you have done some of this thinking, whether you document it in a business plan is only important if you have a defined purpose (to inform staff, to attract capital). By doing some planning, the experience of producing a business plan can be far more satisfying.