Business Plan: Key to Start!

Business planning is a management tool that has repeatedly proven its practical effectiveness.

Moreover, it has a deep theoretical foundation, and you can easily find a lot of "best practices" of business planning online. So why do we most often launch large projects and open new businesses without bothering to create an actual business plan?

Like most simple and short management questions, it has many long and extensive answers that often directly contradict each other. Let's add a bit of personal experience to the vast array of information about business planning practice and apply the simplest logical tools. And the output is the following.

Business Planning and Management Practice

1. We won't make a business plan! It's pointless / a waste of time / the war will show the plan, etc.

A very familiar and understandable argument for everyone. "I don't want to, and I won't" – how often do parents give in to this simple spell from their children, and in this model, the roles of the opponents are almost reversed.

If this is the owner's existential position for running a business, then it is difficult and, probably, unnecessary to argue with it, and most often, there is no one to argue with. If a manager states this, even one sitting at the very top of the hill, and the situation objectively requires calculation and preparation of a decision, then it is advisable to convey the correct position to those who are risking money. That is, the first option for "handling objections" is "repression." An alternative could be to increase the level of education and management culture of the person deciding on the need for business planning, so useful postgraduate management education is, of course, a chimera, but maybe Homer had some exclusive...

2. Let those with huge projects and budgets that allow it make business plans. I won't give more than 10,000 (Ten thousand) rubles for this... The cost of developing a business plan can always be calculated, even if this work is carried out by the company's own employees. Depending on the complexity of the project, the resulting costs can be completely different in scale.

It is logical that local and inexpensive projects do not require the development of business plans, however, the level of "locality" should be determined not only by absolute but also by relative values – at least as a percentage of the total turnover of the company investing in a new direction (or the share of personal capital that a person invests "in the business"). Therefore, sometimes 10,000 rubles is quite a budget for developing a business plan, and sometimes even 5,000,000 rubles is not enough.

Moreover, it is not necessary to make a full-format business plan or pay for all its sections at once. There are also cheaper methods for developing express business plans; on the other hand, often conducting only market analysis and studying the competitive environment provides information sufficient to reject the project idea.

3. We could make a business plan, but there's no time / it's not worth starting, etc.

Developing a business plan is perceived as something terribly cumbersome and complex, a classic task – an "elephant" that can trumpet tediously and heartbreakingly for months under your ear, irritating the most hardened businessmen.

Time management has long informed us what to do with "elephants" – they are eaten exclusively in pieces – maybe not very tasty, but it's less harmful to health. Therefore, firstly, it is necessary to plan the "business planning" process itself as clearly as possible, and secondly, set "checkpoints," passing each of which gives an answer to the question – is there any point in moving forward. A negative result is also a result, and there is no point in writing the entire business plan if the futility of its basic idea becomes clear at the market assessment stage.

4. We should make a business plan, but how and with whom?

This position is inherent to an owner who most often has some wonderful idea that has matured to the state of being "packaged" into a business plan (when you have slept with the business idea more than once, meaning it is no longer alien), and is ready to spend resources on this process but doubts that they will be used correctly.

These doubts are easy to dispel, but with proper preparation. The methodology of business planning is quite simple and accessible, moreover, it is illustrated by many examples, so it will not be difficult for the company's specialists to adapt it and implement it in practice. However, it is necessary to calculate the working time costs that will need to be incurred for its development; moreover, not always all the necessary specialists of the proper qualification are available. It is even more difficult if it is a start-up, and the entire strategy rests on one person. In such cases, it is advisable to attract external resources that will solve the task partially (for example, market analysis) or completely on a "turnkey" basis.

5. We will make a business plan. But within our own rules and procedures, why have excessive / "alien to us" formalization.

With such a premise, the results can be completely different. When creativity or "current tasks" are too captivating, deviations from the methodology can have negative consequences. However, it is quite likely that a symbiosis of the developed management culture and the basic foundations of business planning will give a greater effect than mechanically following a template from a management textbook.

The only, but important, case when this scheme does not work is writing a business plan for external financing of the project (fully or partially). As a rule, such sources of money from outside are either banks or business support infrastructure institutions (state and quasi-state organizations). Often, entrepreneurs do not consider the possibility of attracting "cheap" and "long" money for investments from the state, and in vain – many projects can easily fit into existing support measures at the regional and federal levels and receive additional "financial leverage" for launch.

Writing a business plan for such a "specific" task is better entrusted to a consulting company, especially since an independent marketing assessment of the market from the business plan initiator is often a necessary condition for considering an application for funding.

Basic Rules for Developing a Business Plan

Of course, the business planning process is not simple and holds many "bottlenecks" for the initiator, especially during the first experience of such work. Often, there is a refusal to develop a business plan, but such a decision is not the best. A quality business plan will, at a minimum, outline the growth points of your business. Following simple rules will make business planning more effective for non-specialists in this field.

1. Establish criteria for the significance of the project, when the risks of not launching it are significantly higher than the costs of creating a business plan, and try to follow them.

2. Study the business planning methodology at the level necessary for competent task setting for the business plan developer, or hire a methodology bearer (along with practice).

3. Plan the business planning regardless of who the executors of this process are. Demanding a return on the use of your resources is equally important from both subordinates and contractors.

4. Clearly assess the internal resources of the company (and your own capabilities), involving consulting only to the extent that it is necessary. But if there is a need for "outsiders," it cannot be ignored.

5. Start developing a business plan with an analysis of the external environment and the viability of the business idea within it. If the risks are high, then the idea should be abandoned (or reworked), rather than writing a business plan in full. A beautiful, but contradictory to market requirements and the company's internal resources, financial plan of the project within the business plan will not make the project feasible.

Only a competently and honestly compiled business plan will allow you to confidently utter the legendary phrase: "Let's go!".