Failing to plan doesn’t automatically mean planning to fail, but it’s risky

Some of the most profitable companies I know have what would definitely be considered inadequate business plans. Over the last few years I’ve worked with some that have never written a business plan or constructed a cashflow forecast. For one or two this hasn’t stopped them being hugely profitable and growing strongly, for now. Conversely I’ve worked with MDs whose fixation with plans and budgets has been so intense and detailed that they haven’t had the time to run their company resulting in little return and stagnation.

So what’s level of business planning should you do?

I belong to the school of thinking, shared by late-Beatle George Harrison, that ‘if you don’t know where you’re going any road will take you there’. Not a journey I’d want to be on. Equally, I believe that less is more. Minimum effort for maximum return.

So some vision of where you’d like your business to end up, or milestone stages along the way, is a prerequisite to any meaningful effort to move it forward. The very act of developing a business plan forces so many good practice behaviours that will help you see and manage the best way forward. And a financial forecast is a necessity, because cash is King and if you can’t predict it reasonably accurately you could well be making decisions you’ll regret.

Many of the executives I’ve spoken to over the years say they don’t plan properly because it takes too much time and it’s out of date before it’s done. Therein lies the solution. You need a business plan to drive your business, not a War and Peace tome that will only ever gather dust. Effective business plans should be precise but brief, setting out the goals and forecasts of the business for the next year or so. The budget should reflect the expected reality, not a pipedream. Then it acts as a living document as it is referred to throughout the year when comparing what’s actually happened with what was planned.

A simple template that makes sure you cover all the bases is all that’s needed. Most of the banks provide resources to help with planning and budgeting and increasingly bank managers are willing to give proactive advice in this area. I know, it sounds too good to be true! However, I met with Clydesdale Bank recently and their SME offer is definitely worth a look. Strathmore offers all clients a streamlined business planning toolkit.

A good business plan helps you manage the business proactively and can highlight both potential problems and opportunities. The larger a business gets to greater the need for a bit more formality and discipline, but done properly it shouldn’t be a burden or impose bureaucracy.

So, light touch but realistic plans and forecasts help to ease the challenges of running a business, make life that bit easier and tend to result in better outcomes.

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The Institute of Directors, not as boring as it sounds

I was sitting in the Directors’ Room at the IoD in Pall Mall just before Christmas waiting to meet a couple of ex-colleagues for a drink. I had arrived a bit early so grabbed a newspaper to pass the time. Before I got to page three I heard a shrill voice shout ‘Miss!’ as one of the waitresses passed by, dressed as always in the fashion of Upstairs / Downstairs.

My attention broken, I looked round the room and listened. An amazing hubbub of noise and activity was taking place as 150 or so people chatted at dozens of meeting tables scattered around the large room. It reminded me that it had always been like this, the room so loud that I couldn’t make out the detail of anyone else’s conversation. Not for the first time it crossed my mind to wonder who these people were, men and women of all ages, sizes and, presumably, backgrounds. What noble or scurrilous deals were they concocting? Would they get the job that was being discussed?

I’ve used the IoD as my London office for more than 20 years, an impressive and professional place to meet clients and associates for both business and pleasure. I’ve also used their premises in Edinburgh and Nottingham to impress contacts. Membership costs next to nothing and the services are fantastic, not just the surroundings and the catering facilities, but the research services, legal advice and reference library that are included in the price. It provides a wealth of opportunity and benefit for smaller companies whilst allowing the business owner or director to project a successful and confident image.

I recommend the IoD strongly. It’s an exciting environment in that old-fashioned British way where I’ve progressed many a good deal. Should you be interested in joining however please let me know, because when a member introduces a new member he receives six bottles of champers! And because I’m a team player that translates to 3 bottles each.

I wonder what the other contributors to the hubbub think I’m up to when I’m ‘in residence’.

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