Four Reasons Why Small Business Fail To Plan and Why They Need To Think Again

It is so widely acknowledged that a robust business plan is one of the key ingredients in small business success, it seems remarkable that anyone serious about their business could considerable it optional. For example, Business Link say, “It is essential to have a realistic, working business plan when you’re starting up a business”. A recent survey showed that small businesses were twice as likely to be successful with a written business plan as compared with those without one. The Times in their annual round up of 100 up and coming UK businesses suggest that “poor business planning” is a key reason for failure. Indeed, it’s almost impossible to find an authority that would advocate the opposite idea, a clear signal that this idea is accepted wisdom. Despite this, a recent survey shows that two thirds of small business owners run their businesses on gut instinct alone.I had a very interesting discussion about this a couple of days ago with a good friend of mine who has run several successful small businesses in which he posited the idea of a “planning gene”. He felt that the only possible explanation for the lack of proper planning in small business was genetic.According to his theory, the majority of people are born without the “planning gene” and this explains why so many people don’t have any written business plan, despite the overwhelming evidence of a high correlation between a robust and vigorously implemented business plan and business success. The majority of us are simply not biologically and genetically wired to plan.This is certainly one explanation, although I have to say I have a few reservations as to the validity of his theory. I talk with small business owners about planning every day. I’m part of a small business myself. I’ve owned several small businesses over the last ten years each with varying degrees of success. In all those conversations and all that experience, this was the first (semi) serious discussion I’d had about the planning gene.If I was to aggregate the results of the conversations I have had with actual and prospective customers on this topic, four distinctive strands emerge explaining why small business owners fail to plan. Whilst I have heard a few other explanations for the lack of effective small business planning, I am treating these as outliers and focusing on the most significant.I’m Too Busy To Plan – More often than not, the small business owners we talk to tell us that proper planning is a luxury that only big business can afford. For them, business planning, if done at all, was a one-time event that produced a document for a bank manager or investor which is now gathering dust in the furthest recesses of some rarely opened filing cabinet. There just aren’t enough hours in the day and if forced to choose, they would do the real, physical work and leave the mental work undone, which seems to be the poor relation at best, if it is even dignified with the status of work at all.Traditional Planning Doesn’t Work – The “I’m too busy to plan” excuse is often supplemented with this one. I’ve heard the stories of the most legendary construction overrun of all time, The Sydney Opera House, originally estimated to be completed in 1963 for $7 million, and finally completed in 1973 for $102 million, more times than I can remember. Sometimes, this idea is backed up with some actual research, such as the fascinating study by several eminent psychologists of what has been called the “planning fallacy”. It seems that some small business owners genuinely believe that mental work and planning is a bit of a con with no traction on physical reality.My Business Is Doing Fine Without Detailed Planning – A minority of small business owners we speak to are in the privileged position of being able to say they’ve done pretty well without a plan. Why should they invest time and resources into something they don’t appear to have missed?Planning Is Futile In A Chaotic World – Every once in a while, we hear how deluded we are to believe that the world can be shaped by our hopes and actions. This philosophical objection to planning is perhaps my favourite. It takes ammunition from a serious debate about the fundamental nature of the universe and uses it to defend what almost always is either uncertainty about how to plan effectively or simple pessimism. This is different from the idea that planning doesn’t work as these business owners have never even tried to form a coherent plan, but have just decided to do the best they can and hope that they get lucky as they are knocked hither and thither like a steel ball in the pinball machine of life.As with all of the most dangerous excuses, there is a kernel of truth in each of these ideas and I sympathise with those who have allowed themselves to be seduced into either abandoning or failing to adopt the habit of business planning. Most small business owners feel the same dread in relation to business planning as they do to visits to the dentist, so it’s unsurprising that so many simply don’t bother. However, by turning their backs completely on planning, they are in danger of throwing the baby out with the bathwater. Taking each idea outlined above in turn, I’ll attempt to show why business planning is critical, not just despite that reason but precisely because of that reason.I’m Too Busy Not To Plan – Time is the scarcest resource we have and it is natural that we would want to spend it doing those things that we believe will have the greatest impact. Of course, we want to spend most of our time producing, but we should also invest at least some time into developing our productive capacity. As Stephen Covey pointed out in his seminal work, “The Seven Habits of Highly Effective People”, we should never be too busy sawing to sharpen a blunted saw. Planning is one of the highest leverage activities we can engage in, as when done effectively it enhances the productive capacity of small businesses, enabling them to do more with less. Nothing could be a bigger waste of precious time than to find out too late that we have been using blunt tools in pursuit of our business goals.If we as small business owners weren’t so busy and time wasn’t so scarce, then we wouldn’t have to make choices about what we did with our time and resources. We could simply pursue every opportunity which presented itself. However, for the busy entrepreneur, the decision to do one thing always has the opportunity cost of not being able to do something else. How can we be certain that our business is going where we want it to go without pausing regularly, scanning the horizon and making sure not only that we are on track but also making sure that we still want to get to where we are heading? I believe more time is wasted in the single-minded pursuit of opportunities that are not right than is wasted by over thinking the opportunity of a lifetime.In short, small business owners are extremely busy and their time is precious. So much so that to waste it doing the wrong things with the wrong tools would be tragic. Small business owners that cannot afford the luxury of making expensive mistakes simply must regularly sharpen the saw through continuous business planning.Traditional Planning Doesn’t Work, So We Need a New Approach That Does – There are some fairly large question marks over the effectiveness of traditional business planning techniques. In an age where business models are becoming obsolete in months rather than years, a business plan projecting five years into the future cannot be viewed as gospel. Nobody has a crystal ball and if they did, they probably wouldn’t be writing business plans but using their remarkable predictive powers to some more profitable end.Dwight D Eisenhower said “plans are useless, but planning is essential”. Whilst producing a document called a business plan is far from useless, the real value lies in the process by which the plan is created in the first place. If this process can be kept alive in a business then the dangers associated with traditional planning can be minimised or avoided all together. In an environment of continuous business planning, small businesses can be flexible and adaptive to the inevitable changes and challenges they will face. Rather than quickly becoming obsolete, their plan will simply evolve with the changing circumstances.Accepting that the plan is a living thing that will evolve necessitates a change of approach to business planning. An effective business plan is the response to the repeated asking of the questions what, why, how, who and how much. It is not a 20 – 30 page form to fill in for the benefit of a bank manager or some venture capitalist, who will probably never fully read it. A business plan should help you, not hinder you, in doing business. If traditional business planning doesn’t work for you, it’s time to embrace the new paradigm of continuous business planning.My Business Could Do Even Better With Effective Planning – If you are one of the lucky few whose business has thrived despite an absence of traditional business planning, then I say a sincere well done. I hope that you can say the same thing in five years time.Business life expectancy in Britain and across Europe and indeed the world are in rapid decline. A study done at the end of the eighties and then again as we marched into the new Millennium showed that life expectancy had more than halved for British businesses in those ten years, from an average of 9.7 years to 4.1 years. Just because a company once enjoyed market leadership does not mean that its future is assured. Many high street institutions have fallen victim to the recent recession. Five years ago it was inconceivable that UK retail institutions like Clinton Cards, Game, Borders, Barratts, T J Hughes, Habitat, Focus DIY, Oddbins, Ethel Austin, Principles, Allied Carpets, Woolworths, MFI and Zavvi/Virgin Megastore would all be either out of business or teetering on the brink of oblivion in 2012. Yet that is exactly what has transpired.Any business from the smallest to the greatest is not impervious to the winds of change. A new competitor, a technological breakthrough, new laws or simply changes in fashion and consumer preference can all re-write the future of a company regardless of how bright that future once seemed. It is precisely because these risks exist that business planning is critical. To survive in business is extremely hard, but failing to effectively plan for the future or adapt to current realities surely makes it impossible and failure inevitable.Of course, it is not necessarily the absence of plans that did for these companies but the quality of their plans and most especially the quality of their implementation. Even a poor plan vigorously executed is preferable to the finest planning and research left to rot in a drawer. Continuous business planning is effective business planning because it emphasizes implementation and regular reviews of real results as part of what should be a continual process of improving company performance rather than simply attempting to predict the future and wringing our hands when our prophecy fails to come true. We believe, like Peter Drucker, that the best way to predict the future is to create it.Planning Is Essential In A Chaotic World – We sometimes feel small and insignificant as we try against all odds to translate our dreams into business reality. It’s easy to feel all at sea when we consider some of the challenges we face. However, whilst it is true that we cannot control the direction of the wind, we can adjust our sails and change the direction of the rudder. Difficult and challenging circumstances may come in our lives, but we can control the outcome of these circumstances by choosing which path to take.The truth is that we are fundamentally achievement orientated as human beings. When this is taken away, we lose much of the energy and motivation that propels us forward. There have been numerous studies carried out on life expectancy rates after retirement, which show that when clearly defined goals and daily action moving in the direction of those goals are removed from our lives, the result is literally fatal. The individuals studied who failed to replace their career goals with a new focus for their retirement simply shriveled up and died. The implications for small business owners are clear. Those business owners with clear goals who take action daily that propels them in the direction of their goals are far more likely to thrive and survive than those who take any old goal that comes along or move from day to day with no defined objective other than survival.It seems to me that precisely because life is so chaotic and challenging that effective planning is essential. Without continuous business planning, our businesses and the small business owners that work in them may find that bit by bit they are atrophying and on their way to becoming another business failure statistic.There undoubtedly exists an antipathy for business planning felt by many small business owners. Clearly, this cannot be fully explained by the lack of a “planning gene”, but it equally cannot be fully justified by the reasons most commonly put forward by small business owners to not engage in the business planning process. These reasons must be critically re-evaluated and a commitment made to a continual and never ending process of improving the condition of their small businesses. Without such a commitment, the future for small businesses in the UK is uncertain.

I Need a New Phone System, Now What?

If you consider all of the different business telephone system manufacturers, the different system options available from each, the different technologies used, the many configuration and feature options, multimedia integration with your network and data systems, and then throw in figuring out cost to value for each variable in order to come to a good purchase decision, it becomes a daunting task for the typical business owner or office manager to figure out whats best for their needs and budget.The way the process often goes is to start with the Internet or Yellow Pages to find two or three local system and service vendors and ask for proposals. Then sift through all of the options and recommendations presented to you and pick what looks like the best solution for the money.Some times this process leads to the best choice, and sometimes it doesn’t. Often companies end up buying a lot more system than they actually need, or choose the least expensive and end up spending money on an inadequate system. Either way, you can and end up not getting the functionality that you need or best value for your investment.Whats the best way to figure it all out?My suggestion is to flip the process on its head and work backwards. In other words, start with where you want to get to and work backwards from their to reach the best options to meet your requirements.There are Two Primary Considerations that all of the details to consider fall under:Functionality and Cost.Functionality: Until you have determined what you need the system to do, you can’t develop specifications, and without specifications you can’t determine cost and develop a budget. Functionality considerations should start with, what do you need the system to do, and what additionally would you like it to do?Once you know your functionality needs and wants, work with your telecom vendors or consultant to develop base specifications and options, and corresponding pricing.Some basic questions to answer in determining base specifications are:
How many telephones do you need and with what features?
What is the typical maximum number of simultaneous phone calls expected at the highest calling time of day and week? A good way of judging this is to look at your current phone bill and make adjustments on that base line with any change assumptions added.
What kind of messaging do you want, e.g. voice mail, receptionist, multimedia messaging?
What are networking and multimedia requirements, e.g. multiple offices, connect to vendors or customers, remote workers, and other business systems integration?
Once you have the system specifications, and design and pricing options its time to look at cost factors and figure out a budget baseline to measure your options against.To develop your Budget Baseline add together all of your current monthly recurring cost factors including: equipment, services, support, and if possible, quantify and include lost opportunity costs due to any inadequacy of your current systems and services that you plan to remedy with the new project. Although lost opportunity cost may not be readily apparent, they are definitely a cost factor and should be included if possible. For purposes of this analysis all current costs need to be broken down to a monthly recurring number. If your system is already paid for use the initial cost and apply a term lease or finance factor for a term that corresponds to the number of years it has been in use to get your monthly cost assumptions.Next, identify the projects business goals, e.g. reduce cost, keep cost the same but upgrade to newer similar functionality equipment, accept increased cost to add functionality, accept increased costs to improve business revenue and/or profit. Again, work with your telecom vendors or consultant to develop a “Return On Investment, Analysis, “ROI”, to quantify assumptions that meet your goals.Costs: New system costs break down into two primary categories, Nonrecurring and Monthly Recurring.Initial Nonrecurring Costs includes: any new cabling required, the one time cost of the new system and installation, less the trade in value of the old system.Note: You can get the value of the old system by contacting a company that purchases and recycles telephone equipment and requesting an offer.Monthly Recurring Costs may include: a lease or term purchase payment for the new system, a service contract, dial tone and telephone usage service, Internet, and networking services.As with your baseline, once you have developed your scope of project with your telecommunications vendors and have received the proposals for the different options you will consider, you need to first convert all nonrecurring costs to monthly recurring costs, even if you intend to buy. In order to do that use a lease factor or financing rate with a term that matches the life term you expect from the new system. Also ask your telephone system vendor to give you a term service contract quote over the same term, again even if you plan to pay for service and support per incident.Now you can easily and quickly start plugging in the different system and network services options to compare against your baseline budget, in order to give you a clear cost to benefit analysis of all options being considered.Another thing to consider is Internet Protocol, “IP”, systems and service verses traditional analog or digital. IP is prevalent in telecommunications now and almost any system that you look at will be labeled IP. However, there are many different flavors of IP, so make sure to identify and understand the real functional and cost advantages to using any given proposed IP solution before committing to it. Also, don’t assume that one IP-based system or service functions the same as the next and be aware that there are a lot of systems labeled IP that use traditional analog and digital dial tone and networking circuits and usage, not IP. Also don’t assume that quality of service between different IP systems and circuits will be equal either, it isn’t.One last suggestion is to find and read reviews and ask for references from the different service providers and system manufacturers you are considering. They are not all equal either, and it is important to do your homework to make sure to get the vendor companies and systems and services with the best reputation in order to insure that you get the best value and are happy with your decision for the life of the system.Good Luck!

Purposeful Networking – A Stack of Business Cards is Not a Sales Strategy

In the era of relationship marketing, we cannot passively connect in face-to-face networking opportunities. Presence has power and engagement is the fuel. Individual approaches to networking vary, but the successful among us strategically plan to optimize the value for sales and customer loyalty.According to a recent survey conducted by International Association of Business Communications, Millennials (individuals born between the year 1980 and the year 2000) frequently, use electronic communications. However, they are equally comfortable in face-to-face situations and the preferred method for Baby Boomers remains face-to-face. Face to face networking is our premiere opportunity to become memorable and relevant. Regardless of the venue, business owners, job seekers, or community builders are best served to treat the networking activity as yet another part of high-priority work assignments; planned with care, goal-driven, and strategically designed with action-step details.Much like a job search, we network for an opportunity to work with someone. Consequently, we must prepare with the same diligence and serious intent to cultivate the most benefit. If you want the job, the client, the opportunity, prepare to earn the relationship!Where do we network?Everywhere! We can choose to interact with people each time we leave our office or home. We “choose”. Interaction with others is a choice. Until we make a decisive effort to begin or develop a relationship with another person, we have not begun to network. There are countless possibilities, wherever there are people! However, let’s focus on the proverbial networking event; an occasion specifically designed to provide people with an opportunity to cultivate mutually beneficial relationships. Formal networking events are social venues that occur before, during and after a business conference or training event, sponsored by community agencies such as the Chamber of Commerce or trade associations or clubs, or career fairs. Research tells us that that the majority of our human communication is nonverbal. In fact, as much as 90 percent of face-to-face communication is nonverbally conveyed. Networking events provide excellent opportunities to go where you can best influence others utilizing all of your engagement tools, your words and actions.Value is the driver for networkingMutually beneficial relationships emerge from the perceived value of its members. Like our image in a mirror, value is reflected. If there is no seeming need (or want) for a thing, then the thing will have no value, or the investment/cost will appear to be unnecessary. According to Julie Schwartz, Marketing Strategist for ITSMA (IT Services Marketing Association), there are three fundamental types of value propositions for the stages of the buying process:Segment-based- The epiphany or awareness stage when people are inspired to learn more,Role-based- The interest stage where deeper levels of understanding occurs, including needs, desires, motivations, expectations, goals, fears, skills, and biases, andClient-specific- Designed to move people from interest to confidence, or buy mode. Particular needs and deeper understanding of the client occurs, such as; knowledge of educational background, personal pursuits, association memberships, business goals and how they are measured, the client’s definition of success, and, of course, the client’s pain points.In the networking process, consider that we are working to meet as many people as possible within a fleeting timeframe. The focus for networking is most certainly on the segment-based value proposition stage, epiphany, awareness and inspiration. You will meet and interact to know more about the people with whom you interact and to establish some engagement groundwork. The effective framing (or value) statement establishes your significance during the networking communication. Keep in mind that the fundamental task to prepare for the networking process is the value statement. In other words, what is the value of you and/or your business to others?Strategically Plan for Networking eventsPlanning for networking events includes some personal and professional preparation. Too often, when left with serendipitous meetings, significant encounters may slip away. Set goals around networking activities. Networking events are opportunities to show others who you are-what sets you apart from others. Thus, how your new relationship with them differs from the competition.Plan your participation in a networking event as you would plan a business meeting, a team building activity, or a prospecting appointment. This event may be your first, and possibly, only chance to impress someone. Demarais and White, authors of First Impressions: What You Don’t Know About how Others See You, recommend that we assess our social gifts, recognize and appreciate our unique combination of core social benefits. For example, earnestly address, and provide examples, for questions such as, “Do I make others feel appreciated?”, “Do I smile and lean toward others when I listen to them?”, “Do I elevate others’ mood?” [Demarais, A. and White, V., (2004)]Networking GoalsOf course, as with all planning, set a goal for the event. Do you plan to meet specific people? How many people do you plan to meet? Keep in mind, your goal for the event is NOT to make a sale. Remember the segment-based value proposition? A goal for this event is to create an opportunity to be liked, to begin relationships. The goal for meeting people is to get permission to move to the next step and create an opportunity to meet again. Networking events are loaded with potential to fill your calendar through the gateway of “I enjoyed this conversation so much, let’s get together again”.Your Framing StatementFraming, or creating your value statement, is a primary step for networking planning. Conversations at networking events are often fast-paced and open to interruption. Prepare a framing statement that comes naturally and expresses your passion for what you do. When we are enthusiastic about our business or career, we sometimes use words and phrases that overly express our processes or attributes. Develop a succinct statement, no longer than 20 seconds, to describe what you do and how it has value. Keep in mind, excitement is contagious, so develop an invigorating statement-a message that fully expresses your enthusiasm.Prepare for the EventBe relevantTo be relevant is to be aware. Create a pattern in your day-to-day activities that keeps you inspired and interested in community and world events/happenings, new trends, and understand the workings of various occupations. Become familiar with the businesses and industries in the network community. Learn about the nature of various areas of work, what kinds of roles people fill in their work, any information that may be relevant to your framing statement. You cannot tie your value to another person’s life or work unless you know about what he or she does and who they are.Be Aware of LogisticsIf you are one of those people who find themselves dreading such events, give yourself a “job”. Arrive early with appropriately placed nametag (right lapel or shoulder) and business cards (easy to reach pocket). Take a few moments to peruse the nametag list and identify anyone you may want to meet. Look over the event room and become familiar with the layout of activities. Greet people as they arrive and assist in making them feel comfortable and welcome. In other words, “own” the room. Early arrival is very important to avoid entry after people have begun to cluster into groups. As you welcome people, make eye contact and focus to remember their name. Restate the name often and offer a firm handshake at the onset.Be the Naive ListenerAsk friendly, unassuming, open questions that force people to talk about themselves. Focus on the person you are with at any given moment. Do not look around the room or become easily distracted. In fact, demonstrate deep respect in the conversation as you listen closely and “watch” their words. Remember, you are at the event to learn about others. Be the intentional, nave listener. In other words, as you focus on their words, mentally tie in your value statement to the person’s business or concerns. Train yourself to remember meaningful details. Make notes as you take breaks away from the crown while the information is fresh. Identify areas of mutual interest and ask permission to follow up. You may need to advance your listening skills to periodically update your framing statement. Understand that you will not be relevant if your value does not reflect the changing needs of your network. Naive listening helps you to receive and process others’ wants and needs.Value your network with routine maintenanceDevelop a system to record and maintain your contacts. Within one day after the event, process your notes and business cards to an electronic file system to provide ease for returning calls and sending mailings. Most email providers such as MSOutlook, Gmail, or Yahoo, include areas on the interface to make notes. Utilize the organizational tools for quick reference. Write down pertinent facts and log the details into your contact database. Personal notations can provide an excellent starting point in your next conversation with that person. Your reference to a prior conversation validates that they are memorable!As you begin your contact regiment, integrate methods to nurture your base with periodic newsletters, social networking tools such as Facebook, Linked, Blogs, Twitter or other preferred media. If you are diligent to maintain relevance with your contacts, keep in mind their interests. As you research the internet for information pertaining to topics that may be of interest to others, reach out with an email and link for them to see. Keep in mind: Stay away from political or culturally charged topics. And please, do not spam! Messages received with long lists of others’ email addresses in the “Forward to” block are insulting and do not flatter your contact. It is difficult to feel special in a forwarding list.Your well-maintained network supports follow-up with contacts. Establish your integrity and value as you are the first to ask questions, as you provide useful resources, and you are the first to say “thank you”!A stack of business cards is not a sales strategy, but don’t leave them behind!Effective networking is a skill. Strategic planning for the process can pay off in remarkable ways. How can you achieve the rich benefits that face-to-face networking? Be intentional! Identify the events that may be most beneficial. Develop and practice your framing/value statement. Recognize and appreciate that the value of your network is what you learn from others through naive listening. And, when asked, give your new friend your business card.