They say that failing to plan is planning to fail. Are they right?
Winston Churchill is credited with saying: “He who fails to plan is planning to fail.”
This very simple, but poignant statement is applicable in many areas of life. It applies not only the worlds of government and military affairs but also in the operations of a business. By taking the time to establish a plan, the entrepreneur exponentially increases the chance that their business will succeed.
The failure rate of new businesses in the construction industry is high. According to Statistic Brain Research Institute, approximately 53% of businesses in the construction industry fail within 4 years. Of those businesses, 46% cite the lack of planning as a major cause in the failure of the business.
One critical step that an entrepreneur entering the construction industry can take to insure a greater chance of success is to create a business plan. A business plan provides a resource that the founder and their team can use to guide and measure the progress and success of their endeavor. It is used to support and guide team members in the strategic decision making process.
Writing a business plan can appear to be a daunting and overwhelming task. Most first time business plan writers can feel intimidated by the goal of writing a business plan. They abandon it after they have attempted it because they lack the structure to see it through to completion.
Here are several questions and tips for those who are just starting out writing their first business plan:
Who are you writing the plan for?
Don’t overwrite the plan. It is important to understand who you are writing your business plan for. There are a wide variety of audiences who may read business plans. These include stakeholders (e.g. insurance, creditors, banks, etc.) as well as investors. There are also situations where the plans are an exclusively internal document and will only be read by the founder and possibly some members of their team. The plan should be written to meet the goals of the audience that will be using the plan. Do not write the plan for an audience that will never read it.
Why are you writing the plan?
Understand the purpose of the plan. Is it to seek funding or satisfy stakeholders? Is it to define and share a vision with the rest of the team? Or is it to create a set of goals that drive the founder through the start-up process? Knowing the reasons why a plan is written will help the writer prioritize the different parts of the business plan for development. If it is an internal document focused on goals, the creation of a long-term pro forma may not be as critical as defining the goals that need to be accomplished to grow the business from concept to entity.
Does the plan need to be perfect?
The business plan is a living document. Businesses are subject to an external environment, and therefore, have to be able to adapt to that environment as it changes. Even if the plan written today was perfect, it would be imperfect tomorrow as the external environment changes. Attempting perfection in writing a business plan will only lead to one end result: the business plan will never be written. It is more important to get a plan down, as flawed as it may be, and then continue to work on it as the entrepreneur would work on their business over time. The plan will continue to grow and mature as the leader goes forward.
The biggest mistake in writing a business plan is NOT writing a business plan.
The exercise of writing a plan will:
• Help entrepreneurs work through their ideas.
• Flush out ideas allowing the entrepreneur to look at their ideas from different angles.
• Allow financial goals to be checked by making sure that the numbers add up.
• Develop focus for the entrepreneur to minimize distractions.
• Create a record of goals and allow the entrepreneur to measure their progress and check their assumptions.
The process of writing a business plan is a formalized method of putting goals in place. Mark Batterson, author of The Circle Maker, stated that a goal is a dream with a deadline. All entrepreneurs dream of establishing a new company that is prosperous and successful. The process of writing a business plan helps entrepreneurs convert those dreams into goals by creating measurable results.
It is time to stop dreaming and start writing.