Reviewing your business plan

Business coach and author Roland Hanekroot explains the importance of having a business plan

Reviewing your business plan
Planning is cruicial. No general has ever won a war that didn’t have a plan in place.

The first thing to understand is that there are two distinctly different reasons to write a business plan; two different functions, if you will: internal and external.

External plans
In most cases, when we think of a business plan, it is more of an external document which is used to communicate to a third party what the current state of the business is, what the future of the business is expected to be, and what the future needs of the business are. This type of plan is usually formulated in order to get money, whether it is from a bank or an investor, or to impress a new business partner.

This type of external plan may also include a balance sheet, profit and loss and cash flow statements, as well as an executive summary, various supporting documents, and addenda by accountants or other advisers. It also tends to be an impressive-looking document, presented in a nicely bound folder, and can cost thousands of dollars to produce.

Useful as they may be in order to gain finance for your business, external business plans have little or no impact on the running and direction of the business on a day-to-day basis. Your accountant, business advisers and your bank will be able to provide you with standard templates and samples of this type of business plan. You can choose to complete it yourself, or if you need to apply for a loan or talk to an investor, I suggest you get your accountant to help you create one that shows your business in the best light. However, just to make it crystal clear, the external business plan does little to motivate you and drive your business forward.

Internal plans
Internal plans exist to engage people in the organisation in the operations, strategy and focus of the business on a day-to-day basis. They are live documents and are placed on business owners’ desks where they can reach them easily. They are being constantly changed and updated and usually have coffee stains all over them. Internal plans are often short, sharp documents with mostly bullet points or one-word descriptions. Ideally they fit on one page.
If you need more than two pages it means you haven’t tried hard enough yet. The truth is that it doesn’t matter what the actual business planning document looks like. Effective business planning isn’t about the document at all. It’s about the process of planning.

So, how do you go about writing a living and breathing effective internal business plan?

The simplest process I know is to get yourself a piece of paper or a bunch of yellow stickies and a whiteboard, turn your phone and email off for half an hour, make yourself a cup of tea, and ask yourself the following questions:

• What is most important to me in my business?
• What gets me most excited in my business?
• What do I get out of bed for every day?
• What does my business uniquely exist for and why would anybody else care about that? (Hint: it’s not money and profit)
• Who are our target customers?
• What promise do we make those customers?
• How do we make money, sustainably?
• What are my big goals, for 10–15 years, three years, this year?
• What are the major things I need to focus on to achieve my goals this year?
The outcome of answering these questions and putting the answers together on a single page or whiteboard or mind map is now the basis of your living Internal Business Plan.

Answering those questions for yourself and with your team, succinctly, and committing to updating the answers every month, will mean your business and your life will never be the same again … I promise you.

The most important takeaway
If you take nothing else from this article, I hope you’ll remember this: a great plan is one that is started and then worked on at least monthly. Useful as they may be in order to gain finance for your business, external business plans have little or no impact on the running and direction of the business on a day-to-day basis.

This is a slightly amended version of an article written by Roland Hanekroot, business coach and author of The Ten Truths books for business owners. It has been shortened to make it suitable for web publishing.