To plan ornot to plan
Which of these would you normally find in a business plan?
1 business aims 3 management team 5 staff holidays
2 opening hours 4 financial forecast 6 assessment of the competition
Read the article and answer these questions about the four people: Dan Scarfe - David Hieatt - Rajeeb Dey - Paul Maron-Smith .
When there's no Plan A
by Jonathan Moules
Dan Scarfe, Chief Executive of Windsor-based software development company Dot Net Solutions, says that he has never written a business plan for the company he founded in 2004.
Now, it is one of Microsoft's five key partners in the UK and a leading player in the hot new area of cloud computing - and to Scarfe, that is proof that setting fixed objectives is a complete waste of time. "Writing software, or starting a new business, is incredibly difficult to plan for," he says . "You're effectively trying to second-guess exactly what you may want down the line, based on marketing conditions and varying customer demand."
Whilst short-term business budgeting and strategy is vital , long-term business plans are less so." Twitter, Facebook and cloud computing were not even concepts a number of years ago, Scarfe notes, so there would be no way he could have planned for them.
David -Hieatt , co-founder of Howies, the ethical-clothing manufacturer based in Cardigan, claims that a business plan is really just a guess. "There are some brilliant business plans written, but they fail because the customer wants to do business differently," he says. "The awful truth is we don't know what will work."
He claims that the secret is to be flexible - although this often takes a lot of courage. For example, in 2001 . Hieatt phoned up all of Howies' retailers and said he was going to introduce organic cotton. The initial effect of this spur-of-the moment act was disastrous. "We lost all our wholesale accounts overnight because they said nobody would pay £27 for a T-shirt ,'' he recalls. so Hieatt and his colleagues managed to rescue the situation by launching a catalogue to sell products. It proved to be a turning point for Howies. ''Losing all your shop accounts in one day is not great for business, but it's probably the best thing we did ,''
Hieatt concludes. Now, the company sells 80 per cent of its products through this medium.
Others argue that business planning is often a reason for inaction .
Rajeeb Dey launched Enternships, a student internship matching service. "I never wrote a business plan for Enternships, I just started it," he says- although he admits that it is easier for Internet -based businesses to do this.
Perhaps unsurprisingly, Dey and Scarfe have entirely self-financed their businesses. Venture capitalists and private investors do not usually approve of this casual attitude to planning.
To Paul Maron-Smith, Managing Director of Gresham Private Equity, a business plan is rather like a car's dashboard. guiding the entrepreneur along the road to success.
so But even he admits that problems can arise when business plans become too fixed . "The aim of a business plan is to give the stakeholders a good idea of where
the business is heading." he says. ·'Sure, there arc going to be some forecasts in there that are not going to be accurate, but they are a best guess at the time."
Answer these questions about the four people
1 How many people did not write a business plan for their present companies?
2 Who thinks that setting fixed aims involves too much time and is not valuable?
3 Who says that some plans don't work because we don't know what will work?
4 Who thinks that planning often leads to doing nothing?
5 Who provided the finance for the companies themselves?
6 Which of the four is not against business plans?
Discuss these questions.
1 In which sectors is it difficult to plan?
2 How far ahead should you plan?
3 How often should you review plans?
4 What reasons are given for and against having business plans?
5 What is your opinion of business plans? How useful do you think they are?
