“Failing to plan is planning to fail”
Your life as a business leader is hectic. There are so many daily matters to attend to that the default attitude is: “No one has time to write a business plan, or if there is one, to keep it current.”
We are all quick to criticise organisations, especially governments, when things go wrong with statements like “How could they fail to see that wouldn’t work?” and “Who would be silly enough to do that?” yet when it comes to our businesses, we often don’t have a clear, current written strategic business plan to ensure that we don’t fall into foreseeable issues.
No one would build a house without a plan. Only the fool-hardy set off on a perilous journey without a clear plan on how to arrive safely. The same care must be applied to business.
The business planning statistics in NSW and Australia are alarming. A 2019 report by the NSW Innovation and Productivity Council showed that 6% of ‘micro (1 – 5 Full Time Employees), 13% of Small (6 – 19 FTE), 32% of Medium (20 – 199 FTE), and 72% of Large (200+ FTE) businesses have a written business plan.
An Australian Bureau of Statistics 2022 report shows that only 47% of sole traders survived from 2019 to 2022 in Australia. For the same period, the survival was 64% for micro, 70% for small, 72% for medium businesses, and 68% for large.
There is a strong correlation between the number of businesses in each category that have business plans and those that survived their first 3 years.
Writing a Business Plan requires consideration of the key facets of a business including its purpose, vision, mission, strategy, structure, culture, execution, financial factors, marketing plan, product/service offering, competitive situation, capabilities definition, differentiation, operations, and various other essential areas.
It is essential to write a business plan prior to commencing a business. Once all the respective areas are properly analysed, an informed decision can be made as to starting the business or not.
If the business is operating without a written plan, one should be written immediately. The process of writing one often uncovers previously unrecognised gaps and highlights market opportunities that had not been identified.
If a written plan exists, it should be reviewed each quarter, taking the previous quarter results and external factors into account. Where the performance is outside of the planned limits, whether positive or negative, the business plan should be reviewed. Corrective action must then be taken to capitalise on positive results and rapidly address negative results.
The CEO of the business must take personal responsibility for the business plan, working with their team to assist with input, strategic thought, and its execution. Where a Board exists, it must continually engage with the CEO and the executive to ensure the business plan is current, being executed, and returning the necessary outcomes.
Business plan formats are freely available from business.gov.au, the Big 4 bank websites, Australian Investment Council, and various other sites. If writing a plan can seems daunting, invest in expert advice. Time is of the essence.
Who needs a business plan? The answer is simple: Every business leader that plans on succeeding. “Failing to plan is planning to fail!”
Philip Belcher MBA, FAICD, FIML is Principal of LSE Consulting Pty Ltd, a specialist business leadership and management advisory company.
