Ask the Expert: Do I really need a business plan?

We ask Gordon Stone, Founder and Director of the Agri Business Development Institute: Do I really need a business plan? How do I stick to my goals?

In my experience, SME (small to medium enterprise) farming operators and those in the value chain are highly effective at managing diverse daily and seasonal business operations. They’re less keen to tackle formal business planning, even though at some level all business operators know it’s critical (a generalisation I know).

Now we’re right into 2021, these are worthwhile questions to consider:

  • Truthfully, do we really need a business plan?
  • There’s so much going on, how do I stick to my business goals?

So, here goes:

1. Why a plan?

If you’re committed to growing and expanding your business (any business) during 2021 it’s critical to have a plan so that:

  • There’s a very clear plan of attack
    As businesses become more complex, there are increased variables at work (just think arrival of COVID 19). Because there’s much more that can go wrong, a defined plan helps everyone in the business stay on track, knowing what the variables are. Then, if it’s essential to deviate, there are clear reasons why/why not a change of plan can be justified – and the implications of doing so.
  • A common approach
    With increased complexity (including financial, climate and other risk) it’s critical that everyone in the business is ‘on the same page’. This includes family business owners, as well as operational personnel (even casuals/backpackers). That’s where open lines of communication and a common communication process are critical.
  • Very clear outcomes during the year = SMART
    With specific plans comes the need for clarity around goals and ability to communicate them. I love the acronym Specific, Measurable, Achievable, Realistic and Time-based (SMART).

2. The Business Plan:

Planning is generally quite personal. We use the term ‘size appropriate’ (in other words use only the level of work or complexity that’s required and no more).

  • A business plan creates context
    In other words, consider what the business goals are in 5 years. Relate that back to plans for this year, build on last year (the past) and ensure there is a logical flow from (say) 2020 to 2025
  • The plan ought to cover all bases – key issues affecting the business, such as money (cash flow and profit), products (financial contribution and future possibilities), personnel (business owners and personnel, including advisers) and other issues specific to your business. The ABDI 12 Pillars of Business Best Practice provides a useful checklist.
  • Bite-Size Chunks
    ABDI always recommends use of a 180-day plan to break plans into operational chunks.

(ABDI has a series of templates available on request).

3. Staying on track:

Having a clear plan with SMART goals is a huge step forward. However, keeping plans up-to-date, communicating them with others and making sure they’re fit for purpose is the next big challenge. There are two key, critical ways of staying on track (my experience).

  • Engage with significant others in the business – using the common plan as the communication tool. This provides feedback and new perspectives.
  • A Management Advisory Board – the formality of a monthly meeting, with fixed agenda, creates discipline and focus; and there’s nothing like having to report to others. The MAB brings in business members and preferably a small number of relevant advisers/outsiders (as sounding boards).

Finally, ‘someone’ with responsibility to create discipline and focus around planning, reporting and meetings is a must.

Good luck with your planning and here are some resources to assist you:

Gordon Stone is the Founder and Director of the Agri Business Development Institute or ABDI, based in Toowoomba, QLD. ABDI works mainly with small to medium enterprises in the farming sector and food and fibre value chain Australia wide. The company provides advisory services, plus professional development and education programs, which support their clients implementing Best Practice business management and growth plans.

ABDI’s work is built around the ABDI 12 Pillars of Business Best Practice.

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