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Better Management: A Business Planning Test

Having a simple plan for internal management can be key to business success. Do you have one?
March 1, 2011
URL: http://www.entrepreneur.com/article/219234

As I look at the world of small business management and entrepreneurship, I'm worried that confusion about business planning is getting in the way. Too many people think a business plan needs to be a specific kind of long formal document, something that follows a recipe, and something you wouldn't do unless you had to in order to get a loan or outside investment. Bottom line: Lots of people dread doing a business plan.

Planning is good for you and your business, whether or not you need the plan document. This means that a lot of people lose the benefit of planning because they confuse it with the big formal document called a business plan.

To help get over that mental block about plans and planning, I've created this simple test of business management. If you're a small-business owner, please answer 'yes' or 'no' to the following questions. You might be surprised what you find out. 

Section 1: For all business owners.

Section 2: For businesses with more than one person.
(If you're running your own one-person business, skip to the next section.)

Section 3: Making a point.
Brace yourself: I'm about to ask you whether you have a business plan. But before I do, let me make some important distinctions about what a business plan is or isn't. It's about planning, which is critical to management. 

  1. If you can answer most of these questions with 'yes,' then you have real business planning.
  2. If you answer 'no' to many of these questions, then you aren't practicing true business planning -- even if you've developed a physical business plan document.
  3. The plan in planning can be very simple and even fun to do. Understand that the goal is to manage better and to optimize. The plan is a collection of related modules, like a sales forecast, expense budget, trackable milestones and measurements, strategy summary, and other factors.

And that leads me to my final question: If you can't answer 'yes' to most of those questions in sections 1 and 2, why not? More importantly, are you satisfied with that? 

The goal with this questionnaire is to help make the point that using good planning processes is good for you and your business. You might even be doing it already, perhaps thinking you don't have a plan because you don't have the formal document. If you're not doing it, then you should get started now. All you need to start with, as a bare minimum, are:

You don't have to sweat the editing or formatting. You also don't have to work on explanations of your company history or backgrounds of your management team -- which are all normal components of a formal plan document. This kind of simpler plan for internal management can consist mainly of bullet points and numbers. It isn't there to explain your company to outsiders. Its goal is to help you manage better.