Having a powerful business plan is essential for any small businesses. So, why is it that so few small businesses have one?
For some, it’s a lack of confidence or ability. The business owner and directors simply don’t know how.
For others, it’s a lack of time or poor time management that prevents business owners and directors planning the future, so apart from the odd tweak here and there, the business ploughs on in roughly the same general direction and in much the same way as before.
Let me show you how to approach your business planning. I’ll share a top-tip with you – after all, I want you to grow your small business, increase profits and to earn more.
Why is a business plan essential to you and your business? It’s simply that… All successful businesses plan their business. All average businesses don’t.
I assure you, this is a fact. So, today, right now, while reading this, which type of business is yours?
If you’re not planning the future of your business then frankly, you’re likely to be winging-it – and whilst there is nothing wrong with a winging-it approach, I’ll bet the business is not achieving anything close to it’s potential, or producing anything like the amount of profit that it could – and that will be impacting the amount you earn from your business!
Over twenty years of running my own businesses and as a business consultant, coach, mentor and trouble-shooter to over two hundred others since 2006, I’ve proven beyond doubt that a well-planned business is far easier to run and manage than one that’s not – a lot easier.
And a business that’s easier to run and manage takes less of your time, that you can use for other, profit generating activities. Alternatively, if you’re satisfied with profits and the amount you earn, then you’ll probably use this ‘extra’ time to attempt a better work-life balance.
Two types of business plan
Many successful businesses use two quite different types of business plan. Over the years, I’ve shown businesses how operating both types of business plan can help them run a better and more profitable business. There is a time and place for each type.
Lets understand the differences.
Firstly, there is the business plan that most of us are familiar with; it’s often used where the company needs to convey information to the bank, (perhaps it has an overdraft and meets the bank manager for a periodic update), or the company wants to borrow money, or encourage new investors into the business. The company needs to convey information in a format and style that readers of the plan will recognise.
Secondly, there is the business plan where the directors need a more detailed and flexible view of the business, that combines a plan for the future with the day-to-day work in progress. How far ahead will the plan cover? Typically there will be a relatively firm plan for the year ahead, plus a far less firm ‘direction’ for the one or possibly two years thereafter.
What characterises and differentiates these different types of business plan is that the first is an External business plan and the latter, an Internal business plan. Neither is better than the other, as they do different jobs.
The External Business Plan
Is from the outset, designed to convey information about the company and it’s projected future in a formal way – and to be shared with people from outside the company. It’s a snapshot of the business and it’s vision for the future taken at a specific point in time.
The Internal Business Plan
Is for internal consumption only. It’s unlikely that anyone from outside the company will or should ever see it.
It’s a flexible plan and encourages directors and managers to accommodate the inevitable changes that will occur in the business from time to time. It recognises that deviation from the original plan is acceptable, that not all plans and initiatives will work out; that customers won’t place an order when expected, suppliers will let them down, staff will make mistakes and assumptions will turn out to be incorrect.
The plan is adaptable, dynamic and expects to be updated with the un-planned ‘stuff’ that comes the way of a small business.
For the immediate twelve-months ahead, the timeline of the Internal Business Plan will likely be broken-down into months, weeks, key events and milestones – and contain a lot of useful information about the tasks and activities to be worked on, responsibilities and accountabilities and outcomes – in a way that an External Business Plan cannot.
This then, is a flexible, dynamic business plan that allows the directors and managers to drive the business forward efficiently and is often what sets successful small businesses apart from their average counterparts. I urge you to consider using one when you are next planning the future of your small business.
If you’d like to know more about the Internal Business Plan or you are considering if it’s right for you, then I’ve prepared a free guide.
In your free guide – Why an Internal Business Plan is essential to your business, you can take a deeper dive into the differences between External and Internal business plans – and determine how you might use an Internal Business Plan to increase profits and make running your business easier.
Here’s what you’ll learn:
- How I used the power of business planning to create a seven-figure turnover business in under eighteen months
- How you can using an Internal Business Plan to plan your small business in future