This is the second in a series of articles that will hopefully educate readers and illuminate the process of doing business in a simple to understand, nuts-and-bolts way.
In the first article in this series, we explored the reasons why businesses get into trouble, mainly because entrepreneurs do not have the training to actually do the ‘business of business,’ and tend to micromanage themselves into a corner because that got them to the place they are now – being successful but working too hard for little return.
In this article, we will look at the next step to finding the way out of that quagmire – the Business Plan.
The Business Plan – Nonsense or Good Sense?
There are many good web sites and a lot of software out there to guide anyone in writing a Business Plan, so I am going to simply suggest to search out something that fits your needs and use those tools to write a Business Plan. Many are free, and they all will fill the bill to some extent or the other.
My advice is to do it, and do it immediately. Why? For two reasons.
- It will force you to think through your business in a detailed way.
- You will need it if you ever want to talk to a bank or potential investors or partners.
Most Business Plans are fairly generic. They have a Mission Statement, a summary of what your business is all about, a summary of the financial status of the business – past, present, and future – a marketing plan with some sense of who your customers are (the target market), and a vision for the future in terms of expanding your set of services or products.
Most Business Plans also contain something called a SWOT analysis. For a good writeup of what that is, see http://en.wikipedia.org/wiki/SWOT_analysis for detailed information. This is a clear-eyed analysis of the Strengths, Weaknesses, Opportunities, and Threats relating to your business. To have a complete Business Plan, you must do a SWOT analysis.
It is my experience that most Business Plans are written – usually haphazardly and only in a positive light – and put in a drawer, never to be seen again unless the owner wants to visit a bank to get a Line of Credit or is trying to entice an investor or a new partner. Big mistake!
A good Business Plan is exactly that, a plan. It should be honest, truthful, factual, and objective. Why?
Think about this… All businesses use plans every day. Contractors and builders, manufacturers, architects, artists, accountants, butchers, bakers, and candlestick makers… they all plan out their day, a project, a product, a service, or a meeting. Yet, for some unfathomable reason, I have yet to meet a business owner that either has a current Business Plan or who reviews that plan on any regular basis. We review our plans for those other things regularly to keep on track, yet ignore the Business Plan once it’s written! What is going on?
I believe we come back to what I said in the first article. Owners are so wrapped up in the day to day struggle that they feel that this overall vision that is in their heads does not need revisiting, if they think about it at all anymore. Just like that big picture of their dream I suggested they put on the wall to remind them of the underlying reason they are doing what they do every day, the Business Plan can be forgotten or thought of as a formality. I submit that it should not be.
A proper Business Plan should be reviewed by the owner and updated at least once a year, and preferably every fiscal quarter. The goals of the business may have changed, the vision for the future may be different, the financial picture has surely changed, and the SWOT analysis will be different over time. By thinking these things through regularly, you will be forced to re-evaluate where you’ve been, what you are doing, and where you are going. Taking a long, hard look at these things is invaluable to you directly, considering this is likely one of the most important things in your life.
The Business Plan is a key tool you need to make sure you are on the path you planned for.
The Organization Chart – We don’t need no stinkin’ Org Chart!
Oh, yes you do!
Even a one-person organization needs one. A good Organization Chart is based on functions, not people, and it doesn’t even have to look like a chart.
Here’s an exercise:
List all the functions of your business in any order. It may look something like the list below.
- Customer Service
- Office work/administration
If you are one-person company, put your name next to each one of these functions. If you are a multi-person enterprise, put the name of the person(s) responsible for each function next to that function. There may be more than one name next to a function, and there may be overlap, and that’s ok.
Next, who reports to who in your company. Now we might have something that looks like this:
- Sales – John (owner)
- Customer Service – Bill (partner, reports to Owner)
- Marketing – John (owner)
- Planning – John, Bill, Mary (team, reports to owner)
- Manufacturing – Bill (partner, reports to John)
- Accounting/Bookkeeping – Mary (reports to John, owner & Bill, partner)
- Office work/administration – Mary, John (team, reports to John, owner)
It may seem idiotic to do this now, with a three-person staff, but what happens at the next hire? Something is going to be divvied up, and that new person absolutely needs to be informed of how the company and all the functions are intertwined. When companies are small, this is sadly neglected, since “everyone knows” how it works, who is boss, and what goes on, but I am here to tell you, that is rarely the case. New people take time to figure it out, and in that time, they can be undermined in who they report to and what their duties are, and it gets worse the larger the company grows, both in personnel and in complexity.
Create a functional Organization Chart of some kind, and update it any time there is a new hire, a change in personnel, or any other reason the functions change.
Getting in the habit of being absolutely clear at every step of the way is a way to avoid big personnel and functional headaches down the road.
Next time, we will explore the dreaded Job Description.
Please contact me offline at [email protected] with anycomments, suggestions or ideas for future articles that you may not want to share here.
- Anatomy of a Business Plan(thinkup.waldenu.edu)
- Use SWOT Analysis for Your Next Design Project(onextrapixel.com)
- What to Include In Your Marketing Plan(blogs.sitepoint.com)
- Do you do a regular SWOT analysis of your business? [Ann Andrews CSP](ecademy.com)