Has COVID-19 Killed the Business Plan? Do You Really Need One?
Annual planning and business plan updates. It is that time of year. Recently I have experienced a wave of blogs, news articles, pundits, entrepreneurs and business executives saying that business plans are not necessary for smaller faster growing companies–a waste of time in today’s world!
They justify this viewpoint by pointing out that:
- 2021 is unpredictable because of COVID-19
- focus is on survival in the short term
- time and resources are scarce
- planning costs too much
- planning has a small payoff, and
- resulting strategies are short-lived.
Are business plans really dead? Do you really need one in today’s environment?
OK–here is their argument or point of view.
Learning in business schools and textbooks is often focused on large companies because of readily available data. And the erroneous assumption is that every small company should strive to adopt the practices of the large firms.
Best practices for large companies dictate they should plan carefully. They should adopt an annual planning rhythm, survey their environments, build scenarios, set strategies, and monitor their results.
But for small companies the winning recipe may be precisely the opposite.
Lets get on the same page.
My approach is to ask: How are you defining or using the words “business plan?” We need many definitions because our English language only has this two-word phrase: business plan.
To illustrate, take the word “love.” The Greek language has multiple words defining different kinds of love (for example brotherly love vs. romantic love, etc.). The English language only has one word for many kinds of love.
We only have a two-word phrase for business plan. So approach business plans with the perspective that one definition and one size does not fit all.
- For a startup or early stage growing company: You may adopt an adaptable approach to business planning and strategy. You may plan in the hallway, not the boardroom.
- For those seeking any kind of financial investment into your firm: You will probably adopt the rigorous formats of business planning required by your prospective investor.
- For a mid market, established company: You may adopt the “one page” planning approach.
Clarity is your prime directive.
Beware! What trumps all this discussion on relevance of business plans is the need for quality strategic thinking. Whether it is during a retreat, management meeting, Board meeting or in the hallway–strategic thinking develops clarity for your company:
- Clarity on how your customer is changing today.
- Clarity on where your profit zone is moving to.
- Clarity on your best-fit profit model.
- Clarity on how to be successful within the COVID-19 pandemic.
And this clarity is your Prime Directive leading to action planning–whether you call it a business plan, roadmap, blueprint, or whatever.
At the end of the day strategic thinking, action planning, and “who-what-when” are clearly determined, communicated, and executed in any successful company. In what form and how it is labeled is secondary.
The business plan is far from dead. Have you competed yours for 2021 and beyond?
I want to dig deeper into this topic, so if you have ideas or challenges, please share them with me here.
All the best
© 2020 David Paul Carter. All rights reserved.