Practical Planning in Small Business | Up and to the Right | Episode 043

The Up and to the Right | Small Business | Practical, Actionable, Sustainable Improvements

Does Planning Matter to Small Business?

The first thing we need to establish is whether or not planning matters to small businesses. At first, you might be thinking to yourself ‘Well of course planning matters!” but let’s be real here… as small business owners we have a tendency to fly by the seat of our pants more than we might like to admit.

A lack of planning and over-planning can both have a negative impact on small business performance.

So for us, planning has to be done in such a way that we create enough structure to achieve the desired results but we don’t unnecessarily spend time and resources.

I’m a planner. I can’t get enough of looking at a project, digging into the details, identifying possible roadblocks or methods of achieving goals. This is the trap I call ‘Plancrastination’ and combined with not planning at all we find the need for a practical solution to planning for small business.

What is a Plan?

My definition of a plan for small business owners.

“A plan is a series of listed milestones & actions that, when complete, will achieve a specific outcome.”

This definition is important because there are three key elements here that will make your planning easier and more effective while minimizing the effort required.

1. Stated Outcome - this helps prevent us from taking action without knowing exactly what we’re trying to achieve.
2. Listed Milestones - help identify significant points of interest or achievement.
3. Listed Action Steps - this is where the rubber meets the road and the work actually gets done.

Planning Horizon

For small businesses with limited resources (I think that’s all of us), one key element is the concept of only planning detail to the extent of our ability to act.

If you have a project that will take six months but have three people in your company it probably won’t make sense to plan specific action items that you expect to happen in week 20 of the project.

This means we only plan specific action within the timeframe we can reliably expect to complete it.

Small Business Planning Process

1. Identify the Outcome - Where do you want to go?
2. Determine Your Starting Point - Where are you now?
3. What’s the Difference? - Using the business vernacular “Gap Analysis”.
4. List Milestones - What are the major guideposts along the way?
5. List Actions - Who’s going to do what and when?

Identify the Outcome

This first thing I like to do is take some time to think about what outcome I expect. This may seem like a ‘no brainer’ but I’ve seen a lot of work go down a road to a destination no one looked at in the first place.

This can be a single sentence.

“We want to coordinate and structure customer interaction.”

Now you can begin a search for a Customer Relationship Management (CRM) system.

“We want to eliminate the production bottleneck of building the front panel of our instrument.”

Now you can start looking for a CNC machine.

It’s much easier to have a successful plan if you understand your endgame.

Determine Your Starting Point

In order to get to a destination you need to know where you’re starting from. Again, we need to keep this simple.

“We currently have three people who deal with customers and each has his/her own communication methods, schedule and information storage. Joe uses sticky notes to document everything on the wall over his desk; Suzanne enters everything into a spreadsheet and Stacy writes it all down in her planner.”

What’s the Difference?

In business terms we call this step a ‘gap analysis’ which is shorthand for what’s the difference between what we want and what we have.

This can actually be the hardest part of the planning process. As you can imagine that makes a key step. This is where you figure out what will have to be different from the way things are to achieve the way you want them to be.

In the customer service case we might say we want everyone to have the same communication process so customers receive a consistent experience. We might also decide that all three of them need access to all the customer records so if one person is out of the office the other two can continue to cover all the customer requirements.

We can answer these two issues by developing a customer communication plan and use a common database such as a CRM application to share information across the company.

List Milestones

Once we understand what needs to be different we can create the basic milestones it will take to get there. These are not specific tasks but guideposts along the way.

1. Research Database Options
2. Determine Our Database Needs
3. CRM or Other?
4. Research CRM
5. Select CRM
6. Train Staff
7. Enter Data

You’ll note that each of these would have a number of steps associated with it (some more than others).

For the most part we won’t add details to these steps until we’re ready to actually begin that step (See ‘How Much Planning is Enough?’ below.).

List Actions

My framework for action planning is to get through the first four steps of the planning process above and then be very selective about planning step number five.

Only plan specific action within your capability to complete that action. Personally I only plan details within about a week.

How Much Planning is Enough?

The amount of planning that will work in a specific case is variable. For small business owners I encourage you to plan but… not too much.

In Episode 021 of Up and to the Right I offered the following guideline:

“If additional planning will not provide a significant increase in the odds of success… then we’re done planning and it’s time to act!”

I know… it’s subjective… that’s business for you. I have an inverse cost rule that might also be helpful.

The more a project is likely to cost or the higher the risk the more time can be spent in planning.

So, if something is going to cost 10 hours and $1,500 then you should spend as little time as possible planning.

Conversely, if a project has a high risk of not working out or will cost 1,500 hours and $25,000 then it makes sense to allocate more time to planning it.

Practical Action

So the next plan you need to make just break it down into the five step process I listed above and keep the following guidelines in mind.

“Only plan details within the capability of your business to act.”

“If additional planning will not provide a significant increase in the odds of success… then we’re done planning and it’s time to act!”

Write your plans down but keep them short. A plan that takes more than one page (single sided) could and should be trimmed. Come on… we have businesses to run… we need to plan so we can effectivel...