There are a number of reasons why entrepreneurs struggle with efforts to operationalize their innovative ideas, but poor planning is probably the most preventable reason for small business failure. Good business planning provides essential structure to any new venture and serves as a strong foundation for fulfilling goals and objectives, meeting revenue and profit targets, and anticipating future opportunities and challenges.
So how does an entrepreneur go about establishing a strong planning culture in her new small business? There are several things to keep in mind.
• Although it is important that everyone in an organization understand the importance of planning, it is the owner who sets the example for all others to follow. Small business owners who are not organized, not consistently prioritizing selected goals and objectives, or not reinforcing identified business milestones and targets will establish a very negative mindset for the workforce as a whole.
• Proper business planning begins with a solid understanding of effective administrative, operational, and marketing models that have been successful with similar types of businesses. Spending time upfront to conduct research, brainstorm with other entrepreneurs, and contact / interact relevant mission-similar associations will pay off in a big way by helping to identify the things to prioritize and those things to avoid.
• Identify the areas that require solid planning. A good place to start is the product or service being provided by the small business. It is essential to ensure a comprehensive understanding of the product / service, what population segment(s) to target, and how it will be presented or distributed to customers. Financial stability is another area to prioritize. It is not sufficient to understand how much capital will be needed to open the business. An entrepreneur must also think about financial resource needs for 6 months, 1 year, and even longer down the road; taking into consideration various revenue and profit projections.
• Planning is a fluid, ongoing process that must anticipate and be influenced by changing conditions and opportunities. A regular schedule of examining / revising business priorities, staffing, operations, and revenue / profit targets must occur to make the planning process relevant over the long-term.
One last ingredient to successful business planning is to put everything in writing. It doesn’t do much good for an entrepreneur to keep great planning in her head. It all has to be documented for the benefit of later reflection and for employees to see and follow. A well designed business plan will cover essential elements including organizational staffing and structure, operations, marketing / sales strategies, and financial objectives and milestone tracking. In short the plan will document why the business exists, why the mission is important, and goals and objectives that will lead to attaining required revenues and profits along with having a process defined to reevaluate / revise all of the above.
There are a variety of resource books / software available to help entrepreneurs create successful planning environments in their small businesses and to develop effective business plans. So there is little excuse for allowing poor planning to become a reason for small business failure.