Why You Should Keep a Flexible Business Plan

What happens when your business veers off course and your business plan seems worthless?

The Unexpected

Imagine you’re on a vacation that involves a long drive. You’ve planned your route carefully to allow you to see the things you want and to make the drive as quick and efficient as possible. Then, unannounced and out of nowhere it seems, detours arise that throw a wrench in your well-made plans. For some this becomes a cause for getting upset, others are frustrated but deal with it as best they can, and still others see it as an opportunity. Making and using business plans can be a similar experience. Those who understand that things don’t always go according to plan and can see that as an opportunity rather than a failure or even disaster are at a distinct advantage. But why is that the case? I touched on this in an earlier posting The Flexible Business Plan but want to take another look to address some benefits of this flexibility.

Seize the Opportunity

If you keep a flexible business plan you allow yourself the benefit of being able to adapt to a changing business landscape. If that product you thought would be a hot seller turns out to be a real turkey, with a flexible plan your mindset is already one that is ready to make changes as needed to get back on track. Perhaps the way you marketed the product was not the correct one. Maybe customer feedback indicates that the product lacks features they are seeking or the pricing is out of line. Again, if you have a flexible mindset to your business plan then you are one step ahead of the game. You anticipate that you will need to make changes. As a result you do not panic and buckle down to identifying what changes are needed. Who knows, the things you learn in the early going may prompt changes that you would not have previously considered and produce even better results.

If It’s Wrong Why Have a Plan

Unless you have a plan you won’t even have a way of knowing just how far off the mark you are. However, I encourage you to keep a simple business plan to which you can refer, even if there is a detailed one behind it. See The Business Plan – Hold On to the Napkin. The bottom line is that without some kind of plan, simple or detailed, you will be guessing as to whether you are on track. More importantly, a flexible business plan makes it possible to begin addressing the unexpected quickly and efficiently.

Scenarios

When you make a flexible business plan it is ideal to perform some “What-If” scenarios. This automatically gets you to consider the possibility that things may not go according to what you hoped. As part of this it is wise to develop alternatives to address when a plan falls short or even exceeds expectations. What do I mean by that? Well, imagine your sales after the first three months are 25% under your plan and as a result you are not producing the cash anticipated. If you have done some what-if thinking as part of your planning process you hopefully have contingency plans for how you will adapt. These contingency plans should help you build into your flexible business plan ways to adjust. It really doesn’t matter if this cash shortage resulted from sales lagging or slow collection of receivables; your plans should allow you to adapt.

What about your company? Is it operated with a pie-in-the-sky attitude with no understanding that few plans actually materialize as expected? Don’t misunderstand me. I have been involved in cases where, for example, budgets and plans created were amazingly accurate. That, however, is not the normal result. Nearly always something is not on target.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

Share

Leave a Reply

Enter your email address:

Delivered by FeedBurner