How many times have I heard small business management tell me “I don’t need a business plan”?

Let’s get this straight. All businesses plan. Whether they like to think they do or not. As soon as you order additional inventory or take on new staff in expectation of a greater workload, then you’re planning. So the issue is not whether you should plan or not, you can’t help but plan. The issue is how do you go about business planning ?

The only businesses who may legitimately say ”I don’t need a business plan” would be small scale and steady state – in other words not growing in turnover or contracting. In such a case everything stays more or less the same week in week out. Thus all the information is probably in the proprietor’s head anyway and that’s fine.

But as soon as growth or contraction is imminent, you can no longer say that you don’t need a business plan.  It becomes critical to make assumptions about how that growth is going to look and that means, you guessed it, planning.

Let me put it this way. Let us suppose that I have in my possession a piece of software that allows me to input your personal details. And from that I am able to map out a model of the next ten years of your life. Wouldn’t you at least be a little curious?

What if you could see that at the age of 39 you were going to die of sclerosis of the liver from excess alcohol intake. Wouldn’t you like to know that? Wouldn’t you like the chance to do something about it now and avert such a calamity?

Well that’s exactly what business planning is. Modelling the future of your business to avert a calamity, ie its premature demise. You will be able to look into the future – by making assumptions – and see what your business looks like in a few years time before parting with your life savings. Or, perhaps, those of your investors. Do you still feel that you don’t need a business plan?

Of course, the more accurate your assumptions, the better your planning and hence the better the model of the future of your business. If you’re not happy with what that looks like, then change your assumptions until you are.

When you get to a point that you can’t change the assumptions without losing touch with reality, then you’ve just discovered that plans for your business are fatally flawed.

But look on the bright side, it hasn’t cost you much to find out. Never forget, it really is a myth that, in business, you don’t need a business plan.

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