What is A Living Business Plan And How Does It Work?
The big problem with a traditional business plan is that it takes a lot of effort to prepare, and then, when it’s done, it’s forgotten and ignored.
What a crazy waste of time, unless you must do it to get money from a bank or key support from someone else.
Plans Must Change
It was Dwight D. Eisenhower, Supreme Commander of Allied Forces in World War 2 and 34th President of the United States of America who said
“In preparing for battle, I have always found that plans are useless but planning is indispensable.”
World heavyweight boxing champion Mike Tyson said
“Everyone has a plan until they get punched in the mouth.”
Prussian (German) field marshall Helmuth von Moltke the Elder said
“No plan survives first contact with the enemy.”
Business is also a contact situation, even if you’re not killing or punching other people.
What customers say and do, should change your mind and how competitors react will also mean you need to adjust.
Eisenhower accepted that plans change but said “planning is essential“. You must think about what you’re going to do in a structured way.
A Living Business Plan Constantly Changes As The Situation Changes
Your living plan is your thinking guide for managing your business.
It captures what you think is going to happen and what actually happens so that you can learn and adjust.
This idea may fill you dread but it shouldn’t.
The idea is well established in other areas:
- In project management, the project plan is continually updated as things happen and the project manager reacts to keep the project on target.
- In budgetary control, you set a fixed amount to spend on an item or have it as a calculated amount based on something else (e.g. sales value) and as you spend, you adjust the amount left to spend.
- In weekly cash flow planning, you forecast what you expect to receive and pay but things are pushed back or brought forward depending on what else happens.
- In quality improvement projects, the Deming Cycle is based on continually going around four steps – Plan, Do, Check, Adjust.
- In production planning, things go wrong, jobs don’t get completed and customers pull orders forward or push them back so the plan adjusts so that the right things are made at the right time.
- The GPS system in your car continually adjusts as you don’t or can’t do as you’re told.
In all these situations, there is a “plan”, things happen and the plan adjusts to keep on target.
A Living Business Plan Shouldn’t Be Onerous
Make it too detailed, too hard to do and it loses its purpose.
- It needs to capture the overall direction.
- The major objectives and milestones.
- The critical success factors, key performance indicators and targets.
- Any constraints.
- A broad outline of future steps.
- Detailed plans for the next week or two.
The plan is for you, to move you forward and to help learn and adjust as you move forward.
It’s main purpose is to keep you focused on the most important priorities right now whilst feeling confident that you are moving in the right direction.