April 18, 2012
One of the biggest strikes against a small business having a business plan is that everyone knows someone who was quite successful in the absence of one. Quite often, they also know someone who had a business plan and that business somehow failed. Given that both ends of the spectrum exist, small business owners question why the time and effort should be put into creating something which seems so capricious. The problem dwells in a misunderstanding about the purpose of the business plan. It is not a requirement for doing business and it certainly is not a recipe for success; to use any comparison similar to that is to breed misunderstanding. The most fitting analogy for a business plan is that of a very basic tool (one of many you can rely upon): a roadmap created through the website MapQuest. As an illustration, imagine that a dozen individuals needed to leave from downtown Anderson and make their way individually to the Golden Gate Bridge in San Francisco. The odds are good that someone in the group would have an innate sense of direction and be able to find their way from here to there solely on instinct (start heading west, stick to interstates, and look for signs). The odds are good that someone else in the group would print off detailed turn-by-turn directions in MapQuest and still wind up in Ohio. Another member of the group may have just come from California a few days earlier, and know that construction is really heavy in certain areas where alternate routes (that appear to take longer on paper) can be used to save time. Most of the rest of the group will find the MapQuest directions useful and even more so if they take the time before printing them to customize the route by adding in restaurants, lodging, worthwhile things to see along the way, and gas stations. Just as there is often a person in a group with an innate sense of direction, there are also those who can do very well without a business plan- it is not something they need. Just as there are those who can get lost even when you spell directions out for them turn-by-turn, there are those who will fail at business no matter how many tools (or even how good the tools) at their disposal. The vast majority fall between the two extremes. The underlying purpose of a business plan is to document what you know now and how you plan to respond to take you from now to some future point. The exercise of creating it helps you prepare for what comes along just as adding lodging and restaurants to a roadmap would. It is possible to plan poorly and use wrong assumptions with both plans: you can put more miles between gas stations than your vehicle can go just as you can expect more response from each marketing dollar than is returned. It is not a perfect tool — and that individual who just came this way from the west will have an advantage over you every time thanks to the experience they have — but it is a tool that most will benefit from. Anderson University is a private Christian university of 2,600 undergraduate and graduate students in central Indiana. Anderson University continues to be recognized as one of America's top colleges by U.S. News and World Report, The Princeton Review, and Forbes. Established in 1917 by the Church of God, Anderson University offers more than 65 undergraduate majors and graduate programs in business, education, music, nursing, and theology. The Falls School of Business is one of Anderson University’s largest academic departments offering eight undergraduate majors as well as MBA and DBA programs. The school is accredited by the Accreditation Council for Business Schools and Programs (ACBSP) and is a member of the Christian Business Faculty Association (CBFA). Columns from Anderson University’s Falls School of Business are published Tuesdays in The Herald Bulletin. Tuesday’s columnist is Emmett Dulaney, who teaches marketing and entrepreneurship.