Consequences of Not Following Your Business Plan

19 07 2010

Last week we talked about not forcing yourself to review your business plan on a regular basis.  After a while you believe that you know the plan so well that you don’t need to refer to it anymore.  This week we are going to continue to review the consequences of not following your business plan and how to rectify those consequences.  By year 3 we started adding other products and services to our business without cross-referencing with our original business plan.  Since we had been reviewing the business plan so much, we figured we didn’t have to keep reviewing it. 

Diversification is a good thing, but you need to do it and still keep it within the confines of your business plan.  If you add more products and services, you really do need to go back to your original business plan and modify the plan to include the changes.  Not only do you need to include the additional products, but you should be doing more market research and then taking a step back to determine if what you have added to your product line will enhance your overall business position and help you to move your company forward.  You need to validate that you have not picked up additional products that do not complement your core competency. 

Diversification can be good for your business, but diversification, like change, for change sake may not be a good thing for your business.  You don’t make changes “just because”.  Any changes or diversification you do should remain in line with your overall business plan and goals.  By the end of year 3 and into the beginning of year 4, we had focused so much on diversifying that we lost sight of who we were and what we stood for. 

We looked at our business plan, finally, and discovered that we were so far away from what we had originally planned, that we did not recognize the business we were working anymore.  Our profits showed the same loss of focus too.  We were profitable, but we were working harder for those same profits and we didn’t feel the same sense of accomplishment as we had when we first started out.  In year 4 we discovered that we had to go back to basics and re-work our business plan

By now, all of the original plans and backup plans were defunct.  We pretty much had to start the process of writing a business plan all over again.  The good news is that we had the original template, so now all we had to do was to review where we were and confirm where we wanted to go.  Then we needed to write a business plan that would get us back on track and back to growing and developing the business.  At this point we had almost lost our business identity.  Our loyal customers had been trying to warn us, they would periodically ask what we had in mind for our business.  It took one customer asking us what our business focus was.  He said our business looked like a mish-mash of everything and nothing in particular.  That comment stopped us short.

After that wake-up call, we went back to the drawing board and started asking the hard questions.  We went to our business plan and re-confirmed our goals and strategy and reiterated who we were as a business.  We spent the remainder of the year striving to regain control of our business and to get it back on track with our business plan.  It is amazing how hard it is, once you lose sight of your business plans and goals, to get your business back on track.  Part of our challenge was the re-aligning of our business coincided with the downturn in the economy.  The downturn in the economy helped us to streamline our business processes and really focus on what we wanted for the business.  We are coming out of this stronger and better prepared than we had ever originally envisioned.  

We have now included an annual review of our business plan, whether we need it or not so that we do not fall into the same rut we did.  It is a good idea to review your business plan after the end of your fiscal year anyway, most large corporations do that, so there is no reason why, as a small entrepreneur we should not do the same.  It is an excellent habit to get into and you should then not experience the same challenges that we did when we lost sight of our business plan.  Never assume that you know your plan inside and out.  It will always change as your business and the external environment changes.  Always remember to follow your business plan, no matter how well you think you know it.

If you are interested  in starting your own business, please feel free to visit our website at www.hawgwash.net.  We may have a business opportunity that would fit your lifestyle.

 Until next week…

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One response

28 07 2010
DonySoft

Good article on the topic of business.

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