Jim Horan, a former corporate CFO, says he never really understood the importance of the written word until about twenty years ago.
“I always thought the most important thing in business was the numbers,” Jim said. “I thought if you got the numbers right, the business would be successful.”
Then Jim began to meet business owners who told him that they woke up after being in business for 10, 15 or 20 years, and realized they had built the wrong business. These were unprofitable businesses with lots of headaches. They were a collection of great ideas, but never implemented profitably.
“What I began to observe,” Jim said, “is that if you don’t get the words right, you may build the wrong business. And if you don’t get the words right, you may never get the numbers right.”
This crucial recognition led Jim to write the best-selling book, The One Page Business Plan. His book details the unique concept of creating a business plan on a single page (available at amazon.com). Recently, we interviewed Jim about his concept, and about the importance of having a clear, focused business plan.
E.B.: How did you come up with the idea for a One Page Business Plan?
J.H.: The One Page Business Plan really came about as a result of working with highly creative entrepreneurs and small business owners who were frustrated with the traditional business plan process.
I consistently observed business owners saying they wanted a clear, concise business plan, but they were frustrated they’d never been able to write one. They complained the business plan books and software they had attempted to use were all far too complex, particularly for small businesses.
It’s interesting, most business owners say they don’t have a business plan. But if you listen carefully, you can hear them speak their business plan. In simple, clear English, most business owners can tell you what their business will look like in three to five years. They can also tell you the three to four key strategies they believe are critical to the growth and success of their business and the two to four key projects that need to be completed in the next 12 months. They also can easily recite the key financial, marketing, sales and operational goals they must achieve. It’s a verbal business plan.
The One Page Business Plan was created to capture the “verbal” business plan and get it onto paper using key words and phrases.
E.B.: Why do you think it’s so hard for companies to keep their plans brief?
J.H.: I think it was Mark Twain who said, “Mother Nature invented writing to demonstrate just how disorganized the human brain is.” Most entrepreneurs have more ideas than they could implement in two lifetimes, and when they sit down to write a plan, the tendency is to include all of their ideas in the plan. And, they usually explain all of the ideas in great detail. The result is a long plan with no focus.
E.B.: What are the dangers of having a plan that’s too long?
J.H.: It’s not likely to be read nor understood. It may confuse the people you want to impress, inform or convince. Others may actually think less of you, your abilities, your ideas, and your capability to implement. Worse yet, you may think less of you!
Keep your plan short. Stay focused on one business. Be crystal clear in defining the formula that will make the business successful over time. Tackle no more than two to four significant projects each year that you believe have the highest potential for increasing sales, profitability or the customer experience.
Learn how to say no to “good” ideas-yours and your employees’. You only have the time, money and resources to execute the “great” ideas. The great ideas are the ones you can write on the back of an envelope…and everyone will remember them!
E.B.: How frequently should companies update their plans?
J.H.: Startups and early stage companies will probably update their plans a couple of times a year, maybe more. For more mature businesses, once a year is probably sufficient.
E.B.: Any final insights?
J.H.: You are your words. Get the word right, and your customers will be able to hear you. Get the words right, and your employees will be able to help you build what you want to build. Get the words right and maybe the bankers, venture capitalists and other lenders will reach for their wallets. Get the words right and your Board of Directors may be able to give you really powerful advice and counsel.
Your plan is your word. Take the time to get it right – precisely right – on a single page!
Want to Get Your Whole Team on the Same Page? Download “The Future of Planning and Performance Management – An Executive Briefing”.