Stuff the Business Plan | BTalk Australia

(16min 00) Linda Hailey is a business consultant, author and motivational speaker who says Business Plans should go the way of the dinosaur and end up stuffed and put in a museum.

Instead, she suggests we develop Vision Plans for our business. Linda explains to Phil Dobbie how this more nimble document can easily identify where your business is heading. So what should you put into it?

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• Today’s Transcript

Phil Dobbie: Hello I’m Phil Dobbie and welcome to BTalk Australia. Today let’s have a look at that weighty planning document that no one ever seems to read and it costs a fortune to produce.

Let’s have a look at the business plan, a useful tool or a waste of time? Well Linda Hailey sits firmly in the latter camp. She’s a small business consultant. She’s also the author of two books, Kick Start Marketing and Your Business Your Future and she thinks marketing plans are the dinosaurs of the business world. They should be extinct and maybe stuck in a museum as a warning to future generations. So Linda’s on the phone now. Linda what’s wrong with a business plan? I mean you’ve got to have some sort of direction for your business haven’t you?

Linda Hailey: Yes you do and I’m not saying we don’t need planning. I just think that it’s business planning that’s the dinosaur that needs to be stuffed.

Dobbie: Because it’s just over the top?

Hailey: Partly that, but in this respect I think it’s probably irrelevant in today’s world. If you think about it we communicate differently now. Things move at a different pace. We’ve changed all sorts of things in our business, but we’ve never really changed the way that we do business planning.

Dobbie: Right so you think the time scale for the business plan is too long term. We need to be more reactive in the way our businesses operate. Is that what you’re saying?

Hailey: I think the traditional business plan was developed for a world of the 60’s and 70’s when everything moved at a much slower pace. So I think partly it’s the process takes too long but I think also we need a process that’s more relevant to today.

Dobbie: A lot of the time I think people write a business plan, don’t they, because they have to because they’re trying to secure a loan from the bank for example so they say we’ll tell the bank what they want to hear rather than what I’m necessarily going to do. I think that’s quite a common situation, isn’t it?

Hailey: Well in actual fact I had to do this for a client the other day. We needed a business plan and the planning that we’ve got, although it’s fabulous, didn’t fit the format. So we sat there for three days writing this absolutely boring, turgid document that may suit the bankers but certainly doesn’t suit people who are working in the business. I tend to think that if you’ve got a planning document it should be motivational.

Dobbie: Yes absolutely although the turgid one for the bank — they’ll love that. So you’ve got an approach which you’ve called a vision plan and isn’t this just a fancy way of saying it’s a business plan with less pages?

Hailey: No not really because the process is different. When you business plan you tend to focus on the now and a lot of business planning is about OK so what is our process to getting X to Y? What’s that capacity for this, that and the other? I like to have fun when I plan so with vision planning I actually take the client out two sometimes three years and I get them to stand on a date and then look backwards and say OK what does my business or my business division look like and act like on this date?

Dobbie: Right

Hailey: It’s fun because you get to be really out there and you can say well I want to have new premises and I want them to have pink walls and I want 15 staff and it’s going to work this way.

Dobbie: But what’s to stop you being unrealistic in that? I mean as you, you can go through your life with sort of unrealistic expectations unless you have at least one of your feet firmly grounded in reality.

Hailey: Yes that’s only the first part of the process. What I tend to find with traditional business planning because it’s done in the now we instantly had to see the future because people say oh well you know I’ve got this trip coming up or I’ve got this client won’t renew their contract until then. So they can’t see into the distance. When you go out a couple of years and look back, all those speed bumps disappear. So in actual fact you can create this great vision but the trick is the next process, which is what I call a gap analysis, and we then do a quick look at where you are now, where you want to be and then we say what needs to change to get you that vision?

Dobbie: So when you’re looking ahead those two or three years what is it you’re looking at? Are you looking at, apart from what coloured walls which I didn’t realise was that important, but you’ll be looking at products presumably and who’s buying those products?

Hailey: Yes, the sorts of things I ask people is what will their core business be? So I’m a great example of that. If you’d asked me when I started my business what my core business was going to be I would have said consulting, when actual fact consulting is no longer my core business.

Dobbie: Interior decorating?

Hailey: I wish. I’d like that. No it’s keynote speaking.

Dobbie: Right

Hailey: But it wasn’t until I actually got to the stage where I went forward a couple of years and thought do I really want to be just doing face to face consulting for the rest of my business life and the answer was no. So the writing books and doing the keynote speaking actually came part of that vision. So we look at the core business, the mix of all the other products, target markets, will they be different from today? What will happen to those existing clients, so will they still be there or will you have gotten rid of them or passed them on to someone else?

Dobbie: Is that important? I mean that goes without saying if you’ve looked at new customers and you have offered your product is it important to think back at those you know pre-existing customers? Is there a reason to look particularly at them?

Hailey: Yes absolutely because they’re your revenue. And they’re often going to be people who pay to get you where you want to go so with existing clients if you are not going to be targeting those in the future then part of the gap analysis is developing a strategy for getting them through the process with you as well.

Dobbie: How do you string them along for as long as possible, in other words?

Hailey: Yes although that sounds a bit mean, doesn’t it? I’ve got a client who decided that one of their target markets they didn’t want to target any more. So what we actually did is we put together a marketing campaign for those clients basically explaining how it would work and transferring them over to new people. And what was really interesting is the perception was that they’d done them a great customer service not that they’d been dumped.

Dobbie: And word of mouth obviously, particularly in small business becomes important. So once you’ve established all of this you’ve got an idea of where you’re heading, what products you’re going to be selling, who your going to sell it to. I guess channels are important as well and that’s actually an area how you’re going to sell it is an area which is often not even just in small business, in big business it’s often underestimated as well. Channel planning can often be the big constraining influence on how successful you’re going to be.

Hailey: And that’s also why it’s important to look into the future because technology is such a key part of delivery these days. I mean I know on your site you’ve got all your podcast and your vidcast. You know 10 years ago would you have thought that that was a way of delivering information?

Dobbie: No absolutely not and when I say to my mother, I do podcast she still doesn’t have a clue what I’m talking about. So quantifying all of this, so you’ve got an idea of what you’re going to sell and how you’re going to distribute it, you’ve always got to try and quantify stuff and this is an area where businesses struggle, isn’t it? How can you actually put some solid numbers against your vision?

Hailey: I’m not a fan of things like market share especially for small businesses or small to medium size companies. It’s usually almost impossible to locate your market share. I would much rather people had goals tied to the markets. Things like we know that this type of client, say it’s a real estate agent, has an average spend with us of $12,000 so therefore the goals might be: I would like to generate X thousand of dollars out of this market. That translates to five new clients per year for the next three years at an average expense of XY and that way you can actually tell whether you’re achieving it or not.

Dobbie: So it’s really you’re working bottom up rather than top down is what you’re saying?

Hailey: Yes I like a bit of a combination of both, but I don’t like to see any planning that doesn’t have some of that real nuts and bolts stuff.

Dobbie: Then there’s the people side of things and I guess one of those people, if you’re running a small business the most important person in the whole thing is you. But if you’re growing your business you will have to have other people as well, so what should you be looking at when you’re planning for the people side of things?

Hailey: One of the things I get people to do is a future organisational chart where basically we say what will it look like in the future so that we look at capacity. So if all of those goals come true what volume will you be working with? And if you’ve got that volume, how many people are you going to need to deal with that volume?

Dobbie: Which may be different people to the people that you’ve got now. It’s almost like the same issue, isn’t it, as with your clients? You might be selling different products you might need different people working in your business.

Hailey: And if you’re using a different distribution method you could well need a different skill set.

Dobbie: Right, but do businesses sometimes get held back by that because when you’re a small business you’ve got loyal people. You don’t want to let them go and they can really influence the direction your business takes.

Hailey: Yes, I’ve had clients over the years who haven’t been out of the plan because they’re so attached to their staff that they’re building their business around their staff capabilities. What I try and do is say nobody wants to lose a great staff member so let’s look at what their role might be in the future and then what skills we need to supplement.

Dobbie: Right, so it becomes a training exercise for them?

Hailey: Yes basically and also sharing some of the vision.

Dobbie: Now you also said you need to ask questions about brand, what are brand values, how will your business be known and respected? Now small businesses generally don’t give a lot of consideration to this area, do they? Brand they think is for big business only.

Hailey: And you never hear the words small business image and brand in the same sentence. But I mean the brand is simply the values that are attached to your image, so we all have a brand. And what I tend to say to SME’s is you’ve got a brand whether you like it or not and it’s actually the customer that’s giving you that brand. So if you don’t drive it you could end up with the brand that says you’re the grumpy old woman who’s always mean to me before 10 o’clock in the morning.

Dobbie: That makes the point, doesn’t it? That brand in small business is often the personality of the person who’s driving that business.

Hailey: Absolutely, it’s the old classic of the retired guy who worked at a bank who takes up a job at a newsagency and suddenly realises that he doesn’t like talking to people and he doesn’t want to get up at four o’clock in the morning.

Dobbie: So we’ve looked at all of this. We’ve looked at what we’re going to sell, how we’re going to sell it, how much we’re going to sell, how we’re going to change the people in the business to do all of that, I guess the other thing is the timetable then, putting in the milestone so you know what you can achieve when and are you on track?

Hailey: Yes and that’s where the gap analysis, I think it looks over about 20 different elements of the business and being your action item. So there you sort the things that you have your strategies around so that could range from sorts of things that I would typically look at to what sort of research do you have to do? Who are those target markets going to be? What action items do you have to do to get those target markets on board? Do you have to change product? Do you have to change pricing? Do you have to package it differently? To give you a really good example, I worked with a software company and what we actually found was when we do the gap analysis that there was interestingly enough a gap in the marketplace for a product that was more expensive than there’s. And so one of the things we did is we actually reversed engineered the product, changed it, repackaged it and brought it back in to fill that gap in the marketplace.

Dobbie: Now after you’ve done all of this, this is sounding a lot like a very large business plan to me. Everything we’ve talked about, see I’m up to 80 pages already. I’m just about to take it off to show to my bank manager. How do you keep it down to size?

Hailey: No, no, no. Part of it is actually it doesn’t work if it’s too complicated. So often I find with the action part it’s simply a gain chart or a checklist that says these are the action plans so these are the action items. I mean I’ve got one for myself because I tend to believe you’ve got to practice what you preach and I think mine’s four pages.

Dobbie: Right and then associated documents like your project planning document and all that sort of stuff.

Hailey: Yes, mine is basically I think I have three pages of vision so it basically says these are the target markets I’m going after, this is the product mix and then the rest is just a little checklist saying, OK pricing, what do I need to do? I need to review my pricing for this sector. I need to have it up to such and such by so and so. So it’s really almost an aid to memoir rather than a big chunky plan.

Dobbie: Yes and related to that then so how do you keep it alive? How do you stop it, how do you make it become part of your day-to-day operations rather than just that bulky document or even a three- or four-page document that gets forgotten about and stuck in the bottom of the drawer?

Hailey: I actually use the little notepads in Vista. You know the little stick-on’s that you can see on the side of your screen?

Dobbie: Yes I’ve not been brave enough actually to load Vista on to my machine so I’ll take your word for it.

Hailey: Every month I pull two or three items out of that and stick them on the post-it’s.

Dobbie: Right and I guess you could just as easily use Outlook or something like that and just put memory drops in there.

Hailey: Yes I’ve got one client who runs it in Tasks under Outlook. I’ve got another one who has it stuck on the staff notice board and she highlights what they’re working on at that time. What I find interesting is because it’s such a small document, it’s easy to give other people to have a look at. Other people can read it without thinking, oh God I’m going to have to read 45 pages.

Dobbie: Right, so you get a bit of free outside consultancy from your friends and colleagues in that case.

Hailey: Yes, if you’re game enough to show it to them.

Dobbie: Do you think a lot of companies are making a motser out of consultancy fees because they are producing these very lengthy documents? How do you stop your company falling into that trap?

Hailey: I think, whether people are making a motser out of it, I don’t know. Plans can be very, very time consuming to write and there are some people and some organisations who can’t live without those big chunky plans. I suppose I’m looking at the more entrepreneurial people, the ones I call the speed boats not the tankers. How do you actually physically do it? Quite often I’ve got clients who do this with their team.

Dobbie: Yes, it’s a collaborative process, isn’t it?

Hailey: Often I find as long as the owner has a vision, like they’ve got to have that core vision because really it’s up to them to drive it, then the team is great at helping them workout how to do it and adding other bits to the vision. So sometimes I mean I’ve got one client and they do a one day planning session once a year. That’s it. It’s done. And then they do little top ups every three months.

Dobbie: Now it sounds like a lot of sense and I think the answer is once you’ve got your four-page document just photocopy it 15 times, stick it all together and send that off to the bank. They probably don’t read past the first four pages anyway and they’re probably thinking gee this is good stuff. Here’s a company that probably knows where they’re headed. It makes a lot of sense.

Hailey: It could well be.

Dobbie: Thanks very much for your time today. It’s been a pleasure talking to you.

Hailey: Thank you. Thanks a lot. Bye.

Dobbie: That’s Linda Hailey.