Why is planning so important? Time
The act of planning, whether in business, for a trip, or just planning out your day, is important because of time.
As we all know, time marches on regardless what you are doing. In business, that means your expenses march on regardless of what is happening on the “revenue” side of the business. If your revenue side does not exceed your costs (expenses) side then you lose money. This is a scenario that cannot go on forever. For small businesses, particularly those with limited resources or without other sources of revenue, this will inevitably lead to the failure of the business.
“The plan is useless, but planning is essential.”
– Dwight D. Eisenhower, Supreme Allied Commander of Forces in Europe during World War II and the 34th President of the United States
To use a mundane (yet very attractive) example, think about planning a ski trip to Chamonix, France. Very few people have the resources, flexibility and, frankly, the personality to conceive of the idea of a ski trip to France (if they live in, for example, San Francisco, California) and just take off the next day for a week in this amazing French mountain paradise 5,864 miles away from their home (yes, I checked on Google maps).
Most normal people would need to plan a vacation from their jobs, coordinate schedules with their family, buy plane tickets, research and book lodgings, and perhaps spend some time saving up some money or researching what else they might do when they are not hurling themselves down some of the most treacherous slopes in the French Alps (or recovering from said hurling).
In other words, taking a trip like this would benefit from some amount of planning
Now you are not going to write up a Business Plan (or in this case a “Trip Plan”), but most people will do some amount of research, preparation, planning and even dreaming well before this trip happens. You might make a list of things to do, create a budget and check the calendar to coordinate schedules.
Planning a big trip or other big projects are not unlike building a business or selling and exiting from a business.
Business planning of course is far more complicated than planning a trip. It is also a far more critical discipline for a successful business venture.
In my experience working with, talking with and researching the activities of small business owners and would be entrepreneurs, two of the biggest failings is a lack of effective, disciplined planning and lack of available resources.
Unfortunately, those two items go hand-in-hand when it comes to running a business. If you foolishly use up your available resources (or fail to appropriately and carefully consume those resources), then you vastly increase your odds of business failure.
Why Not Plan?
Why is it that so many small businesses do not adequately plan out their expenses and revenues, and make the appropriate “business model” work out, at least on paper?
I would suggest that it is because it is hard work to create a real, comprehensive business plan. It is time consuming, abstract and requires discipline. It also requires careful thought and a great deal of creativity to imagine the future and see where you might be able to take your business over some finite period of time.
It is also quite scary for some people to put down on paper specific goals for themselves, and then re-visit those goals after the specified time period, and to measure performance versus goals.
“If you can imagine it, you can achieve it”
– Andrew Carnegie
Let’s go against the grain here and challenge ourselves to perform at a higher level than we believe possible. Andrew Carnegie was an innovative thinker in his belief in the power of the imagination and the importance of written goals.
How about using the business plan to set out some goals that stretch the limits of what we believe we can do. Wouldn’t it be an exhilarating thrill to revisit these goals and see that we achieved (or even came close to achieving) that which we only dared to dream?
Wouldn’t that exhilaration – and success – be worth a little work in the business planning area today?