Think of a business plan not as a formal document that’s hard to create, but as a lean plan with lists and tables that’s vital for running your business better. It’s not just for startups, loans, or investment seekers.
1. **Manage Strategy**
Strategy is all about focus. Small businesses often struggle to keep focus because new crises or so-called opportunities keep coming up and distracting them. Sure, opportunities are good, but many are just distractions that dilute your focus and weaken your business. Trying to do everything can lead to failure quickly.
So, how do you manage strategy? Use planning. Set clear strategic priorities and use a straightforward planning process to stick to them. Have a monthly review session. Reflect on your results and assumptions, and adapt as needed. Start with a simple plan that lays out your key strategic points in bullet points. Keep it simple—you’re doing this for yourself, not for outsiders.
2. **Align Strategy and Tactics**
It’s common to develop a strategy but then not follow through with real actions and business decisions. For example, a computer store might aim to focus on small business owners who value service but then continue to advertise low prices and neglect offering good training or frequent upgrade reminders. So, the tactics don’t align with the strategy.
To manage this alignment, create a lean business plan with straightforward bullet points listing your tactics—pricing, channels, messaging, product and service mix, etc. Make sure your tactics match your strategy. Then, every month, review these tactics and compare your plan to actual results. Adjust as strategy, tactics, and assumptions evolve. Be ready to make changes often.
3. **Manage Execution**
Think of running your business and executing your strategy as taking steps toward your goals, including short- and medium-term goals or milestones. In your lean plan, list the milestones you can see in the near future. Assign dates, deadlines, budgets, performance expectations, and responsibilities.
During your monthly lean plan review meetings, manage progress towards these milestones. Discuss progress, make revisions if needed, and ensure a steady flow from planning to meaningful activities and results.
4. **Manage People**
People work better when they have clear objectives and specific measurements. They like to see their own performance numbers (metrics) to track progress toward goals. Would you rather have a clear numerical goal you can see and share, or rely on your supervisor’s subjective approval?
With lean planning, you regularly review expectations and results. This forum helps you review team performance, adjust expectations, and apply management or peer pressure where necessary. Once a month, review results and compare them to expectations. If the plan was too ambitious, revise the goals. If there are issues with execution, address them.
Management is about making expectations clear, reviewing results, and holding people accountable. This is all part of a healthy planning process.
5. **Manage Cash**
Cash flow is critical and isn’t always as simple as profits. Businesses with products and inventory might be profitable but have all their working capital tied up in inventory. Businesses selling to other businesses might be profitable but waiting on Accounts Receivable to get paid by their clients.
A good lean plan outlines expectations for cash inflows and outflows to manage cash flow effectively. Each month, review plan vs. actual figures to spot any issues, re-allocate spending as needed, and ensure cash flow is as expected.
**Conclusion: Planning is Management**
Forget the idea of a huge, formal business plan. Instead, think of business planning as a simple, lean plan with bullet points and tables for strategy, tactics, milestones, metrics, and essential projections. Make this a regular process of reviewing and revising your plan.
