3 Ways a Living Business Plan Supports Decision Making
How many decisions do you make every day in regards to your business? Are the decisions totally in line with the business plan? A leader who cannot make heads or tails of a plan or simply avoids using the plan risks scattering valuable resources, wasting time and/or harming the morale of team.
For a growing business, it makes far more sense to have an easy-to-use document that you can refer to, scribble on, make changes and rewrite without angst or aggravation. The answer…a living business plan.
What is a living business plan?
A living business plan is a stripped down version of your business plan and it is meant to be an internal document for the business owner (and his/her team) to use. These are the areas you want to make sure you include:
- Executive Summary
- Services and products offered
- Marketing strategies
- Desired client profile
- Company goals and objectives
It is far too easy to get sidetracked by day to day work, exciting opportunities or negative events. Having a simplified tool helps you focus and remain agile as you grow your company. By writing it in a format that makes sense, it becomes clear what needs attention now, potential problems and who is responsible for each business goal.
Smooths the path for better decision making
Decision making is part and parcel of making your plan work. Here are three ways that a living business plan supports effective decision making by the leader and/or the team.
Provides only the necessary data for what is happening now and what is likely to happen in the next quarter or even year. By looking at current information and plugging it into the overall business goals, you and your team can know how much progress is being made.
Quarterly (or even monthly) reviews offer you the opportunity to measure, evaluate and/or learn what is and is not working. Regular reviews take the current data and allow for discussion about how things are progressing and where potential problems could arise. There is a process for adjusting the plan as needed and avoiding impulsive responses. An added bonus of regular reviews is the use of accountability partners which prevents everyone from getting distracted.
Provides accountability. Since the living business plan includes specific measurable goals, it is easy to see what needs to be done and by whom. There are clear expectations and a built in mechanism for keeping up momentum and discovering obstacles.
These three ways are just the tip of the iceberg when you use a living business plan. There are common traps that growing companies fall into when they use overly complicated business plans or ignore their business plans altogether. There is a tendency to only look at the positives, only look at the negatives or to get sidetracked by something that is close but does not really fit into the overall business goals. With the living business plan, it is much easier to stay focused on the stated growth plan and to consciously adapt as needed.
Decision making is about managing information
Current research into how the brain works has discovered that more information actually hinders good decision making. This means that leaders can find themselves ignoring crucial information or getting bogged down in trying to understand it all at once. A good decision maker knows that it is necessary to tolerate uncertainty and that most decisions are imperfect at best. Colin Powell probably said it best when he described how he wanted to people to report to him. He said, “Tell me what you know. Tell me what you don’t know. And then, based on what you really know and what you really don’t know, tell me what you think is most likely to happen.” A living business plan does this. With its simplicity, it tells you how the company is performing. Through discussions, the leader and the team can take the knowns and unknowns and make the best decision possible. The living business plan streamlines the foundation of your business, the overall goals and the evaluation of progress so you are more effective as you make decisions during times of growth, change and uncertainty.