Business plan, anyone?

Business plans are back in fashion.

It's not that business owners have a renewed belief in their value, rather that banks are frequently demanding them before agreeing to loans.

Unfortunately the response of many business owners is to outsource the plan to someone else - their accountant, perhaps a BusinessLink consultant: anyone, in fact, who claims they can produce something to keep the bank happy.

All too often, the managers of the business then have little input to the resulting plan. The consultant asks them a few questions, checks out the business accounts, does a bit of work on a spreadsheet and then completes their business plan template. The outcome may well be that the bank makes the loan (good!) but the plan will have produced no further value (bad!).

Now I'm all in favour of business plans, or rather in business planning. Because the value lies not in the printed plan itself but in the planning process.

There's an old military saying: "no battle plan ever survives contact with the enemy". That applies to business plans, too. But a battle plan, just like a business plan, remains important because of all the thinking and analysis, the 'what-ifs' that will have gone into its preparation.

But when a business farms out the preparation of a plan to a third party, they may well not have been doing that analysis and thinking themselves and so they will not have learned anything to help guide them when reality hits the fan (or should that be, the plan?).

Using outside help to produce a plan can work well. The consultant can act as a sounding board, making suggestions and pointing to issues that may be missed. But the plan must not be theirs; it has to distil the thinking, intentions and wishes of the business managers themselves.

And you don't need to be borrowing money for a plan to be a good idea.

Plans are something we at Riley can help with. But it's probably a good idea for business managers to do a bit of reading of their own on the matter first.