Do You Really Need a Business Plan
Does every business need a business plan?
No, not really.
That’s a strange answer from a business consultant, so here’s a story to explain.
Dr. Peter Andrews is a dentist in downtown Vancouver. He believed in preventative dentistry, and had posters all over the waiting room. These posters showed teeth in varying states of decay and underneath each poster was printed the question:
“Do I need to floss all my teeth?”
The answer was also printed:
“No. You only have to floss the ones you want to keep.”
So, our take on Dr. Andrew’s message is:
“You only need a business plan if you want your business to succeed.”
Depending on your source of information, 60% to 95% of businesses fail in their first five years of operation. So that means that as few as one business out of twenty succeeds after its fifth year. There is a large variation between the two percentages of failure, so which statistics should you believe? I think that a lot depends on how you define failure. Many businesses just limp along from year to year. The owner works hard, but is barely making wages. Is that business a success? Don’t think so.
One of our favourite business quotes is from Robert Townsend, who ran Avis Rent A Car in the 1960s. He wrote one of the best and easiest to read books on business, entitled “Up the Organization.” The subtitle of that book in the U.K. was “If you’re not in business for fun or profit, what the hell are you doing here?”
According to Statistics Canada, about 150,000 new employer businesses are started every year. This includes incorporated businesses where the owner is the only employee. Also, every year, about 130,000 businesses stop operating. The most recent data seems to be from 1997; however the 14 years from 1984 – 1997 show a similar pattern.
We would guess that most of those 130,000 businesses that stopped operating did not actually plan to go out of business. A bit more effort on a business plan may have helped.
Let us make sure that yours is one of the more successful businesses.
Call us toll-free at +1 (800) 661-9842 and we will help you make it happen.