Bill Taylor: The value of a business plan

Bill Taylor

We've all heard the old saying that failing to plan is planning to fail.

The internet is full of material about the wisdom of business planning and templates to help you prepare one.

I am frequently asked by people beginning in business to either prepare or help them prepare a business plan. Quite often the sole motivation for preparing the business plan is because the bank has asked them for one for loan purposes.

Equally I often speak with business people who have returned refreshed from their summer holidays and while full of enthusiasm start thinking about what they want to achieve in the forthcoming year. In many cases these thoughts do become committed to a formal business plan.

My guess is the large proportion of business plans are banished to a drawer never to see the light of day again. Things like mid winter holidays, day-to-day business firefighting and then the eventual countdown to Christmas take priority.

Of more importance to writing the plan is the actual implementation of the plan or in other words the 'doing' part.

No matter how well informed you are, by its nature planning is essentially guessing. It can be based on some very good data and interpretation but with unforeseen events or circumstances these can be dramatically impacted on. I heard a futurist say there are no future facts so therefore we are all guessing.

Given we are guessing when we fill in the blanks our human nature is likely to be on the optimistic side and allow us to under or overestimate many factors imagining that everything will go well. Factors like significant downtime, business growth pains or disaster may not enter the planning process.

The reality is that people do get sick, go on holiday and act irrationally, all of which will impact on even the best of plans.

Nevertheless planning is worthwhile. A business plan helps predict where you are going with better accuracy. The preparation of a plan makes you think and understand the many factors and co-dependencies that relate to your business.

In my opinion the true value of planning comes through the thought process that is required to create the plan.

Equally there is value in having the ability to adapt the plan as circumstances change and opportunities arise. Think about some major corporate failures ranging from the Pony Express Company through to Kodak and beyond. I am sure business plans were in place but there was a failure to adapt to the new business environment of the time.

So is a lack of planning, planning to fail?

There is famous quote from former US President Dwight D Eisenhower: "No battle was ever won according to plan, but no battle was ever won without one."

A business plan on its own won't ensure business success but writing one, implementing it, reviewing it regularly and adapting it as circumstances change will help any business.

Bill Taylor is a Dannevirke accountant and businessman with extensive experience in these fields. He is an active member of the community having sat or currently sitting on several boards and committees. All opinions are the writer's and not those of Hawke's Bay Today.