Business Planning

Business Planning

by David Wright (dwright@artmaze.com) - Artmaze (http://www.artmaze.com)

With the beginning of each year you should dedicate extensive time to plan for your future, both personally and professionally. It is time to be truthful and note all positive and negative experiences about the events of the last year. Formal planning (writing it down) is the only way to achieve goals, for without a past plan, how would you know that you achieved anything? How do you know that it was a good year? How can you compare one year with another without comparing plans? The more we discuss formal planning, the more enthusiastic and motivated you will become about this subject. There are many books that will teach you about writing business plans; I strongly encourage you to read one.

As with many of my articles, there is never enough time or space for me to explain in detail how to do things; I intend to motivate you and so to get a better understanding of the internal processes of planning and its ramifications.

So what is planning all about?

First of all, planning is mainly strategic; it is often as structured as a computer program and describes who you are, your partners, your competitors, your products or services and what do you want to achieve. Additionally it is a detailed schedule of events, but usually without going too much into the technical details affecting a goal. Also, the part of the plan that deals with the business aspects, mainly about financial projections, it is a purely fictional part, although it contains all the hopes and desires of you and your company’s goals.

A plan is usually made to justify an investment of time and money and ensure that the least risk is taken while achieving the most return on the investment, whether external or internal in origin to the enterprise.

To start with, a business plan is a logical and systematic document. Some portions are easy to produce, such as the pages dedicated to information that comes from common sense, like describing your services or products, or by stating that you will establish a sales force, or preparing the executive profiles. However this factual section, of biographies, descriptions and so forth, will not drive your company forward by itself.

Many entrepreneurs have problems understanding and dealing with the fictional part, since it is something over which you do not have much control. You may indignantly ask, “What fictional part?”. Although you have strong beliefs about some positive scenarios for your financial year, such as projecting financials to reach 250K revenue by the 3rd quarter, (which is something that may or may not turn out to be true), nonetheless you do have to create these future events, that hopefully will come true, but are still fictional.

A plan that is based only on strict reality may communicate a lack of passion and rigidness and little desire for risks. Generally, business people with experience in reading business plans, do appreciate dreams, and do like that energetic passion behind entrepreneurs. The trick is to achieve a balanced, well-supported plan. Nevertheless a plan that is only enthusiastic and entirely fictional may then communicate that you are a dreamer, amateur; someone that is out of touch with reality. A good plan is a balance of both worlds, such as combining an architect’s hand-drawn sketch with the final building blueprints; or of poetic passion and precise science. Overall, you have to control both worlds and understand when you are being factual and when fictional, but always objectively in control. This is not done by warning the potential reader as to when you are being fictional, but by showing how the known facts and the fictional potential outcomes are orderly interrelated by the set of actions you plan to take to achieve those goals.

How do you start?

Planning starts with questioning yourself and any partners, about what do you want to do. This will directly let you know about what it is you want to achieve; then by using a mixture of facts and common sense, and mainly by asking yourself many pertinent questions, you find the appropriate and correctly sequenced actions for these goals; such as when, after drawing random dots on paper, you suddenly see an invisible line that seems to flow through these points in a way that ties them together logically. The main reason for a business plan is make a timetable of actions and events, and not just a document to obtain or justify investment money, which is actually a secondary goal within the plan.

Of course, some entrepreneurs carefully write plans for any kind of fund-raising, and yes, many decide to invest time in writing plans only because they need support; those that do not may never write a plan since they may not see the point (nor later profits). Many small business managers seem get along on a day to day by relying only on common sense; but how common is common sense?

While writing your plan, I would guess that will encounter many details that you have never met before; many that are important and affect your revenue, and some of which may really bring you down to earth. With a plan, you will know actions to take and be better prepared for most unexpected events. Also, planning is very useful for having a better understanding of your resources, and for looking back to compare against past achievements, and so what and where to do better in the future, thus channeling your creative energy towards reality.

As I mentioned, there are numerous books that propose to teach you about planning, there is even software “out there” that may help you to plan, but no book or software will ever write for you, since planning is highly creative. Whatever else, you really need to be clear about your goals and what is it that do you want to achieve and how quickly. Ask yourself many “how do I?” questions; hopefully, many will eventually get answered in due time; but you do need to raise the question.

Asking yourself many such questions will at least clarify your thinking and create a little order in your needed actions. The idea of asking yourself all these plan-related questions is more important than anything else, because you need that kind of attitude, rather than becoming paralyzed over unresolved questions. I suggest that you questions will be resolved eventually, and these questions are the real forces moving your creative ideas forward; and giving the actual push. So, what kind of questions are we talking about?

What do you want to do for a living? What really motivates you? What do you enjoy doing best? Do you enjoy your current work? Some other kind of work? Can such-and-such be improved? Can the enterprise grow? Do you desire to grow? Will that bring problems? Increase the number of employees? How do I get from here to there? This last question is the hardest and typically makes you want to quit because it seems to cover everything form start to finish; so change it to “from here to just there, then on to there..”, and so on, by pieces.

You make progress by asking more and more simple questions instead of trying to resolve big problem areas all in one go; so go back to the basics and say yourself: “If I need to add one more employee” (instead of saying “I want 10 now”), then you ask yourself: “but that will force me to get additionally business to cover costs?”. OK, we are moving forward, so then perhaps you ask, “and how much will that cost me?”, and to the answer of “$75K (minimum) in additional revenue”, you ask “Is there a contract I could take on soon with that extra manpower that will yield something over $75k?”. If your brain responds “perhaps, but is that a good plan?”, you ask again, and the response may be “No, not really, perhaps you need to take a partial risk!”, and so you continue with “How much risk?”. This may produce a range of possible answers, requiring putting up more of your personal savings, or reducing your own salary (and saving tax, known as gearing), and or a combination of other events, like increasing your sales goals, putting more money into B2B marketing, creating a new service and so forth. These last burst of ideas, something that looks and sounds overwhelming is second potential for paralysis. The way to work this out is by weighing the risks and outcomes, then taking one decision and let go the other alternatives. Taking a decision is the beginning of taking action.

This last paragraph illustrates in part the events and feeling that typically internally happen while you write a plan; the more aggressive and fearless you are about it the better the plan will be.

Planning is like drawing a map for your success, but it is useless if we do not include the last and perhaps most important ingredient: that of executing it. A plan without action is not a plan, is a forgotten dream on paper, more tangible than a dream in your head but nonetheless still useless. A plan becomes a real one when you act, when you actually do what you said you would. I don’t mean to say that you can’t change a plan; of course you can because plans evolve and change, but the efforts and actions you put behind it are the final real push, the ones that will move things forward.

Planning is not complicated; any book out there on the subject will give you a good idea on how these are done. Remember there are no formulas and only some guidelines for plans. Hopefully, if you have not done so, you will now buy a book and start formally planning your business, for even if your business is simple, everything always has room for improvements.

David Wright is a long-time 3D user and CG artist and has succeeded in the A/E/C (Architectural / Engineering / CAD) market with “Artmaze”, becoming a leading provider of integrated 3D animated visuals and multimedia services. Comments or suggestions about this article are welcome; David can be reached via email at dwright@artmaze.com

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