By Timi Olubiyi, Ph.D.
Planning is key to any form of business structure anywhere in the world, be it large enterprise, partnership, small or even start-ups. Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” Therefore, business owners and managers should endeavour to continually plan throughout the business existence without hesitation. It is more pertinent to note that the novel Coronavirus (COVID-19) pandemic has continued to cause unprecedented disruptions to businesses, economies, and livelihood in different magnitude globally. Businesses, in particular, continue to grapple with strategies to stem the tide of the effect of the negative impact of the COVID-19 and the current business situations. This is due to the fact that the pandemic has created a vicious circle of vulnerabilities across all industries and sectors of the economy, particular in developed nations like Nigeria. Therefore, for business continuity, it is important to consider business planning, which is about regularly setting goals, tracking progress toward those goals, making business reviews, and making changes to businesses as the environment changes, customers’ preference changes, and or business resources change.
A good strategy at this time will be to adapt and make use of a well-structured business plan which is a detailed written document that describes business activities, goals, and plans. It involves the process of writing down what is involved in bringing ideas to reality and to a large extent it can help deal with issues scientifically instead of committing them to prayers, assumptions, and or fate. Business plans simply help to unravel and address the why, what, who, how, where, when, and how a business is managed. A business plan usually outlines business operations, finances, strategy, and goals a business is willing to achieve from short, medium to long term and the ways to achieve them successfully. In our clime, from context observation, the central belief is that a business plan is for start-ups and raising capital. This notion is incorrect. A business plan is valuable from the start-up, short, medium, and long term strategic plan of any enterprise, business, or venture to achieve its objectives or to scale up.
Consequently, for any form of business to maintain success or performance, particularly with the current disruptions, having a business plan and regularly reviewing it are important. Doing so will help the business to recognize areas that need rethinking, improvements, revamp or support to ensure it continues to meet its business goals. Hence, with a business plan, it will be a lot easier to review current performance to identify the most likely strategies for growth or sustainability. A well-written business plan is an important tool because it gives entrepreneurs the ability to lay out their goals and track the progress as the business progresses. If your business or organisation is without a well-documented plan that speaks for itself at this time, it is important to consider one as a strategy right-away.
Several studies and much empirical evidence, suggest a link between business planning and performance and most of these studies show positive relationships. In fact, apart from for performance another key importance of a business plan is that it helps to minimize business risk. With one, businesses can have a data-driven approach to business management because adequate information will be gathered and known about customers, competitors, and even about the business operations. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce risk factors. This will assist to a large extent the critical strategic decisions of the business such as whom and when to hire, make improvements on plants and machinery, develop new business alliances, outsource some business activities to professionals to cut cost, dividend payment provisions, create a new business line, have new branches, seek funding and so on.
Apart from decision making, it can really offer deep insight into customer experience, competitors, and adequate information on the chosen industry through market research. Some of the most common reasons businesses fail, such as due to lack of capital, cash flow constraints, and working capital issues, lack of competent staff, inadequate team, stiff competition, pricing, identifying market needs, industry pressures, stiff government policies and environmental challenges, amongst others, can simply be handled or tackled with a business plan. Frankly, a well-structured business plan can help avert most of these challenges.
Another major importance of having a business plan is to prove the viability of the business at any time. This can help attract investors in times of liquidity squeeze, seek a loan from a bank, or raise capital from the capital market. For large firms, in particular, a business plan can also be useful for restructuring and for merger or acquisition. The weakness and inherent risk of a business can be easily identified and significantly managed with the availability of a well-structured business plan. A business plan is a communication tool that can be used to inform all the business stakeholders about the going concern of the business and the projections.
Note that business plans are meant to change as businesses grow or when businesses experience challenges and difficulties. Therefore, actively reviewing and editing the enterprise business plan to keep it up to date with current realities will help greatly. Every good business plan involves SMART goals, SMART is an acronym for: Specific, Measurable, Achievable, Relevant, and Time-based. This has to reflect in any structured business plan and the overall business plan needs to be clear, easy to read and understand.
While business plans have many purposes, remember the primary importance of a business plan is that it helps business owners make better decisions. Consequently, businesses particularly the micro and small businesses need more business plan education to take advantage of the use at this time. Small and Medium-sized Enterprises (SMEs) need to know that business plan is a tool for understanding and improving business situations at any time of the business cycle, because many shun this all important document. More so, a business progress can be monitored with it if reviewed continually as at when due.
Now that the importance and the need to have a business plan have been presented, it is time to decide to improve or sustain business performance with it considering the current realities. Good luck!
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Dr. Timi Olubiyi, an entrepreneurship & business management expert with a Ph.D. in Business Administration from Babcock University Nigeria, is a Chartered member of the Chartered Institute for Securities & Investment (CISI), and Securities & Exchange Commission (SEC) registered capital market operator. He can be reached on the Twitter handle @drtimiolubiyi and via email: drtimiolubiyi@gmail.com
