USING YOUR PLAN

Focus on the plan as a monitoring tool (or the basis for one). Make sure you have systems in place to gather the information you need to assess how your business is doing. Make sure those systems can provide the information to you in time for it to help. And, make sure that the information you gathered is the right information.

A whole new field of specialists (business information specialists, etc.) has evolved to make sure that business owners get the information that they need when they need it. As a small business owner, you'll probably be the information specialist as well. Just another back office responsibility. Let's look at how you can effectively use your business plan to run your business.

Monitoring your progress
A well-written business plan defines the goals and objectives that you wish to achieve over the next few years in specific, quantifiable, terms. It may project a certain level of sales by a given date, the acquisition of a certain number of clients, or any of a number of other objective measures of success. Whatever the conditions that spell success, you'll want to watch your progress toward those goals over time. If you're on track, great! If not, you're in a position to take steps to get back on track before it's too late.

When things go according to plan
Congratulations! As many race car drivers say, "I'd rather be lucky than good any day." If you've written a plan and your business developed just as you projected, you're definitely one or the other. So, what do you do about it?

First, make an effort to extend your planning horizon further out in time. Begin to "firm up" the numbers for periods beyond the initial planning window. Fine tune the plan to get an even better picture of where you're heading. For you, keeping the plan current is easy.

Second, and more important, begin looking for ways to improve on what you've done so far. You've begun to build a track record of success and you want to keep on building. Your basic business idea was, most likely, sound (never completely discount the luck factor), and you now have an opportunity to expand, refine, and innovate. If you haven't considered the long-term future of your business, start thinking. If you've set aggressive goals (and most business owners do), consider what you'll have if your business stays on track for three years, or five.

When things go better than planned
So, it's a great feeling to succeed better than you had even planned, but success beyond what you reasonably anticipated means two additional jobs for you. First, you need to examine your original assumptions and projections and find out why you're doing better than expected. Second, you need to assess the impact this unexpected success has had on your business. To do this, consider these issues.

Operational impact. Can you meet the unexpected demand and maintain service levels? Can your vendors and everyone "upstream" of your business handle the added demand that additional business means? Just as important, can your business handle the burden? Will you need more production capability, more help, or a larger establishment?

Marketing plan changes. Does the better-than-expected business require you to adjust your marketing plan by changing your price structure, your promotional or advertising plans, or sales force? Or does the good business permit you to revisit those factors and optimize them for the unexpected business results?
 
New opportunities. Are there new opportunities open to you that weren't available before? If sales are better than expected, can you be more aggressive in setting your goals? Can you expand into new markets quicker than planned or otherwise accelerate your plans? If you're in manufacturing, does the increased business justify equipment acquisitions that weren't worth while at lower sales volumes?

When things go wrong
Despite your best efforts, sometimes a business just doesn't take off the way you expected. The unfortunate fact is that a large percentage of new small businesses fail. But then, most small business owners don't bother to create a written business plan unless they are absolutely required to (as is usually the case if you need outside investors or bank financing). Without the benefits that a written plan can provide, it's just that much harder to cope when your business isn't meeting your goals.

You, however, have a written plan, so let's see how it can help you out when things go wrong. The starting point will be to review the contingency plans you created at the time you drafted the business plan. Your contingency plans identify and evaluate those factors likely to have an impact on your business. Unless something new and unexpected has arisen, it's very likely that you already have at least potentially identified the problem. Just as you used the planning process as a way to organize and develop your business plan, you can now use the plan as the foundation for a process to assess the adverse results and to determine how best to respond.

Keeping your plan current
A prerequisite to deriving the benefits you get from using your written business plan is to keep it current. You should treat your business plan as a dynamic document that should be kept current as your business evolves. While you might have initially created your business plan for a specific purpose (such as obtaining financing), the plan can serve you well in a number of capacities. It provides the baseline against which to measure your business's performance. It can help you to anticipate the impact of changing market and economic conditions. You can keep your plan current by Updating and Revising it timely.

Back to 'Need For A Plan'