How an annual plan can help your small business grow
"You can't reach a goal you haven't set." During Small Business Week, I'm helping you "Make This Your Year to Grow." If you want to grow, one of the most important steps is to develop a plan for growth — and then make planning an ongoing process of your company.
Now, don't get worried that I'm going to make you sit down and write a long, detailed business plan. It's the PLANNING, not the PLAN, that's important. The planning process itself brings you the biggest benefits — examining your business, figuring out what's profitable, identifying threats and opportunities, making decisions.
Of course, some great companies have been developed from detailed, written business plans. VistaPrint — the online printing and marketing company for small businesses — was started when founder Robert Keane wrote a business plan for a graduate business school class. Seth Goldman wrote a business plan with his Yale School of Management professor for the company they named Honest Tea. They later sold it to Coca-Cola.
Both Keane and Goldman made decisions during their business plan process that led to phenomenal growth and still underpin their highly successful companies today. (You can read Honest Tea's original business plan here.)
Business planning isn't just for start-ups, either. It's a vital tool for long-term survival and success, especially for a small business. I recommend developing a business plan every year.
I'm such a strong believer in planning that this year, I've hired a strategic planning consultant, Joy Taylor of Taygan Point Consulting Group, based in Lambertville, N.J.
"Hope is not a strategy," said Taylor. "You must plan for what you wish to achieve. There are elements to success and you must plan for them. You need a vision for growth and know the strategic imperatives for achieving that growth. It won't just happen. And you must take small pieces at a time."
Although Taylor often works with huge global companies, she stresses the importance of ongoing planning for small businesses.
"The smaller the business the more focused you need to be, the more you need to plan," Taylor said. "If you don't plan, then any 'shiny object' seems like a good idea. In order to maintain focus, you must have a plan. And planning is not a one-time thing."
That's why I recommend that every business — no matter how small, even a one-person company — develop an annual plan.
Developing an annual business plan is a way to step back from the daily grind, set goals, and decide on the best strategies for reaching those goals in the coming year. It's like looking at your GPS to check where you've been, where you want to go, and the best way to get there.
Remember Rhonda's Rule: If you don't know where you're going, you won't know when you're lost.
During your planning session for growth follow these steps:
• Evaluate the past. What's worked and what hasn't.
• List your goals. How much money you want to make; changes in products/services and your marketing and operations.
• Get specific. With each goal, add a specific number.
• Identify the steps necessary to achieve objectives.
• Estimate costs. Put a dollar figure next to each step.
• Estimate time expenditure.
• Delegate responsibilities. Determine who'll be responsible and how many people are needed.
• Prioritize and conduct a reality check. Are you overly ambitious?
• Gain consensus. Are all affected parties willing to commit?
• Set deadlines.
• Write everything down. You now have an action plan with goals, deadlines, and job assignments.
One tool to help in your annual planning is to do a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. A SWOT analysis is a quick way to evaluate your business and see where you're vulnerable and where you can likely succeed.
At least twice, my annual business plan process saved my own company.
Years ago, I was hired by a large software corporation to conduct business planning workshops for their resellers around the world. It was a great gig — Barcelona, Sydney, London. But I got far more than some fabulous trips. As I helped other entrepreneurs craft business plans for growth, I asked one of my employees, "Why aren't we doing this?"
So we put an annual business plan process in place. In our first planning session, we identified a threat — too much income coming from one distributor — and diversified. A few years later, that distributor went bankrupt, but the decision we made earlier saved our company.
In our January 2009 planning session, we were faced with probably the greatest threat. It was the height of the recession, sales had plummeted. In our planning meeting, we evaluated every potential income stream. We declared it our "spaghetti year" — we threw everything against the wall to see what would stick. A lot did. The following year we had record-breaking sales. Planning works.
Do-It-Now Action Items
1. Download the SWOT worksheet to identify your company's strengths, weaknesses, opportunities and threats.
2. Make a list of your goals for the coming year — be specific.
3. Set a date for your planning session — even if it's just you.
4. Find an offsite location — your home, a conference room, a café
5. Consider hiring an outside consultant to help you plan
Small Business Week with Rhonda Abrams:
• Monday: Finding a niche. How to make your business distinct from your competitors.
• Today: Business planning. How to be strategic and create a roadmap for success.
• Wednesday: Marketing. How to get more customers through your door.
• Thursday: Building your team. You can't grow alone.
• Friday: Going mobile and to the cloud. How to run your business from anywhere.
Every day this week, you'll get:
• A five-step "do-it-now action checklist" so you can start growing immediately.
• An article focusing on the topic area with practical, real-world advice.
• A free downloadable worksheet.
Join the conversation: I'm posting on social media. Use the hashtag #yeartogrow and follow along on Twitter (@USATODAYMoney and @RhondaAbrams) and Facebook (www.facebook.com/USATODAY and www.Facebook.com/RhondaAbramsSmallBusiness).
Engage with me: On Thursday I'll host a Facebook chat at 2 p.m. ET to answer your specific concerns and to discuss small business growth and issues in more detail.
Rhonda Abrams is a globally recognized small business expert and president of PlanningShop, a publishing company specializing in business planning. Register for Abrams' free business tips newsletter at www.PlanningShop.com and follow her on Twitter @RhondaAbrams and www.Facebook.com/RhondaAbrams.