The Fallacy of Business Planning

I recently read an article in the Minneapolis Star Tribune business section that talked about how with unemployment up more and more people are looking into starting their own businesses and certainly during most recessions you see a spike in business startups. The article was stressing the importance of having a business plan and was going through the various steps of creating a traditional business plan and how important it was to have this document that painted a picture of your business so you would have something to use in working with you banker or investor. The article also went on to talk about the process of creating a plan and using the same basic format that has been used for years and years how this plan would really help you get your business off the ground. Herein lies the problem with this whole approach, the last numbers I saw said that almost 90% of all business startups never make it more than two years, with that being the case why in the world would we continue to stress the importance of this business plan format when it obviously doesn't work? I have worked with countless businesses that create very well thought out business plans that go into a lot of detail about what the business will look like however in those plans I have never seen a section on how we are going to execute the plan. The fallacy of business planning is that if you don't have one you won't succeed where the reality is that the format that we have been using for years does nothing but create a static document that gets stuck in a binder or file folder and is never used to help grow the business.

What I suggest and work with my clients on is to create a business plan that is all about execution, it gets the business owner clearly focused on the actions they need to do to make that business successful and keeps them on track by measuring those actions using key milestones. This business planning approach gives the business owner a much greater chance of success by keeping them clearly focused on strategies and priorities that will grow their business. I call the approach the Business Planning Funnel , this planning process takes the business owner through a specific progression on the priorities, strategies, tactics, and tasks and timelines that will allow them to create a true business action plan. With this plan and a good set of financials I would give them a much greater chance of success then the traditional business planning model will ever give them, and I'm guessing that their bankers and investors would also be very interested is seeing the how rather than the what of the business!