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Is Business Planning Overrated?

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To Plan or Not To Plan

In reading the book “Anything You Want: 40 Lessons for a New Kind of Entrepreneur“, I came across a chapter titled, “You don’t need a plan or vision”. What is Derek Sivers talking about? Did I read this right? What about the following quotes?

By failing to prepare, you are preparing to fail.” Benjamin Franklin

In preparing for battle I have always found that plans are useless, but planning is indispensable.” Dwight Eisenhower

Plans are of little importance, but planning is essential.” – Winston Churchhill

The basic point of this chapter is that when he put a plan together for his business, CD Baby, he thought that one day he could have 1,000 artists on the site and would eventually need to hire a 3rd employee. Now, years later when he had over 100,000 artists selling CDs on their site and 85 employees, he made fun of this forecast with his business partner.

Here are some thoughts to keep us from going down the wrong path.

1. Don’t Go to Extremes

It is easy for analytical and financial types to put together complicated spreadsheets and models that very few people can figure out and understand. I had one sent to me that would have taken me a day to figure out where all the cells were linked. I do think this is overboard. In some cases, it is required if you are trying to raise venture capital, but I do agree it can lead to analysis paralysis.

On the other hand, one of my clients mentioned in a speech that they had never had plans since the beginning, but they survived. I am not sure if he was claiming this was good or bad. I do know that they need some financial help right now.

My thought is to have a simple and focused plan, but you need to have something to track and aspire to.

2. Planning is Different than a Plan

A plan is a document that is set in stone and put on a shelf and nobody looks at it. An annual budget is similar to this. Believe it or not, I am not a fan of this. The best method is to develop a forecast that is changed regularly. My favorite analogy is the weather forecast. You would not look at the forecast a week ago and rely on it for today. The best forecast for today is actually last night or maybe this morning. The data is changing and so is your forecast.

Let’s not confuse planning. All forecasts are wrong, but the act of doing the plan is what makes all the difference.

3. Exaggeration vs. Reality

Sometimes, book and chapter titles are meant to exaggerate so people will read them. In reality, Derek Sivers did have some planning and some metrics that were used to run his business. Yes, they were very short term and it worked for him. For example, in further reading of the book, he had to determine much to charge the music artist that sold CDs on his site. He did some research. The reality was a bit different than the title of the chapter.

We all hear stories of people with no plans who became successful, and it seems like it all fell into their lap. I do think this happens sometimes, but rarely. Most of the time, if you search deeper, you find that the person who is successful worked very hard and tried many different things before it looked like it “fell into their lap.”

In summary, I am still going to talk about the importance of planning for success in your business. There is a lot of great information in Derek Sivers’ book, so I recommend you pick it up.

There is a simplified way to build a flexible Forecast (plan) that changes with your business. If you want to know more about this, I  invite you to be a Founding Member of a course called “Forecast Your Profits“. Click the link to learn more. I will be sending out details of a free Webinar called “5 Steps to Take Control of Your Business Finances in 30 Days (Simplify, Focus, and Grow Profits).

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