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  • Writer's pictureJim Payne

Some Thoughts on Business Planning

  1. Developing an annual plan and budgets is an expense with very little return. While it’s useful to go through the process of thinking about your business and what you would like it to become, those benefits are gone within the first 60 days. To continue comparing actual financial results with the budget becomes pointless in a hurry.

  2. Value statements are pretty much useless. It’s certainly useful to think about what it is you value, but any written statement cannot put those values into meaningful context that would make them applicable to others.

  3. The most useful part of a business plan for people other than the business owner is the Vision Statement. The verbal description of what the company will look when it’s done. The better this view is communicated, the easier it is for people to make decisions to help you achieve it.

  4. The most useful part of a business plan for the business owner/manager is the strengths and weakness analysis. Knowing what your company is really good at versus everything else is the key to what makes your company unique.

  5. You can do business planning without forecasting the numbers. Just producing the vision, strategies and setting goals is incredibly useful for most small businesses without producing a single spreadsheet of expected profits. The riskier your plan, the more important the financial forecast becomes to being able to put that risk into context.

  6. When it comes to strategy, here are my golden rules:

  • Staying the best at what you do well is usually far more important than eliminating weakness. No business can be great at everything, but all great businesses have something that makes them standout. In all other things, you need to strive to being just “adequate”.

  • Strategy is all about being different from your competitors. A strategy of pursing “best practices” just makes you a bland copy of others.

  • Constant small incremental changes to your business processes is safer and cheaper than the big overhaul approach. Sometimes you need to make the big change, but if there are any doubts at all, go for the small change approach.

  • Simplicity in design is hard to do, but has all kinds of cost savings if you can accomplish it. Whatever changes your plan promotes, you should have a go at making it simpler.

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