Updated: Oct 5, 2020
“Fail to plan, plan to fail”
This pithy saying is shockingly true! Just spend a couple of minutes thinking back on your life to those times where you needed to do something important but you left it too late to plan or prepare, so you just did it at the last minute. I wonder how that worked out for you? I bet the answer is not so well!
Take a really simple example; you’ve been invited to a party and you have to be there for a certain time. As the event is in a couple of weeks time, you forget about it, saying to yourself that you’ve got plenty of time to check the venue, dress code etc. However, as is expected, you get busy with other things going on in your life over the next few weeks and you never get round to checking the details of the party. And then, the day of the party arrives, you have a quick look at the invitation card – you think you’ve memorised the address – however when you get to the location – you find it empty and as you don’t actually know the post code of the location you are now lost!
Eventually, after looking through your emails or phoning your friend who invited you to the party, you discover you’ve driven to the wrong location – the party is not at the rugby club but at the cricket club which is on the other side of town! After a lot of rushing in the car, you finally arrive at the party, late and very stressed, wishing you had planned a lot better!!
Well, this scenario can easily be applied to business situations – when there is a lot more consequences for poor planning! Proper prior planning will help ensure much better performance. Further, it will:
Help reduce stress
Avoid the need for making knee jerk reactions and decisions
Provide clarity of thought, leading to improved decision making and speedier decisions
Boost confidence in you to all your stakeholders – eg, investors, partners, suppliers, etc
So what sort of planning do I mean?
Well, even before you start your business, I would expect you to prepare a business plan which also includes detailed financial plans such as cashflow forecasts, profit and loss accounts and balance sheets. I will go into much more details regarding the contents of each section of a business plan later on, but the main headings should contain:
Objectives and goals for your business
Unique Selling Proposition (i.e. what makes your business stand out from your rivals)
Once you have started your business it does not mean the end of your planning. There are several situations which require you to plan for the future success of your business. For example, each time you are considering major changes; such as selection of a new supplier, changes in marketing or business strategy – all these changes should involve detailed planning. But planning extends to much more than jotting down a few bullet points on what to do next! It also means doing research, carrying out due diligence. As my experience shows, if you fail to do proper analysis, there will be painful repercussions – not just financially but there could be damages to the reputation of your business from doing business in the wrong country or with the wrong partners. Asking searching questions is a key tool to use as part of your planning.
Before I opened my furniture business I did do a lot of planning and due diligence. My business plan was really important to me – and to my stakeholders. For example, when I wanted a business loan, the first question the bank manager asked was -can I see your business plan? I would not have got a loan without an adequate and detailed business plan.
What sort of planning did I do?
As a franchise business, it’s also important to be able to show potential franchisees what is your vision and how you intend to realise it. A comprehensive business plan or excerpts from this will go a long way helping you to secure a franchisee. And that’s exactly what happened in my case.
After initial discussions with a businessman who was interested in becoming a franchisee and after he had been accepted by the master franchise; the next step was to help the franchisee find a suitable location. We made contact with an estate agent who managed to find an excellent retail site in the heart of a very busy shopping centre in a London suburb. However, as the franchisee had no previous experience in retail, it was left upto me to try and persuade the letting agents acting on behalf of the freehold owners to grant him the tenancy. I made a presentation to them, using the relevant excerpts of my business plan to illustrate how professional the Franchise was and also to convey our vision, ambition and size globally. Luckily, the presentation went well and the franchisee was awarded the lease. The agents also gave us feedback and said the business plan had been a pivotal document in their decision to award the lease.
Another vital lesson I learned about the importance of business planning involved the selection of franchisees; how critical it is to do effective due diligence on your business partners!
I had a potential franchisee who was very interested in opening a showroom and becoming a franchisee in another part of London. We met several times to discuss the offering and how the franchisee business model would work and the benefits involved in becoming a franchisee as well as the commitments. Throughout the discussions he always showed a lot of interest and seemed credible throughout. All seemed to be going well – so much so that we invited him to meet the International Franchise Director at the worldwide headquarters in Schezuan Province, China. He would also meet the head of the whole Franchise too if all went well so this was a big step for both of us! But even at those meetings, he impressed the relevant people and they agreed to him becoming a franchisee of mine in the UK.
All seemed to be going so smoothly. We were getting on so well. One of the final checks I had to do was to confirm his qualifications as stated on his CV as part of due diligence. He said he was an architect who had trained and qualified abroad so this was one of the things I needed to verify. We sent an email to his university where he purportedly studied architecture and asked them to confirm he had studied and completed his course there. We soon received a very strange email from them saying they had no record of him ever attending the university, let alone studying architecture! How odd! We thought the university had made a simple error so we asked them to double check…but we received the same response.
So I had to make a telephone call to the man and ask him to please explain the anomaly, hoping there would be a simple explanation. However, I was taken aback by his response; instead of explaining the situation he became very evasive and became extremely agitated that we had checked up his qualifications! So, we had discovered he was not an architect at all! In fact, I could no longer be sure of anything he said or told me! If he lied about his qualifications, what else was he hiding or lying about?? Needless to say, we could no longer continue dealing with him – a critical and fundamental issue of trust had been broken!
You could call this a close call – in hindsight you could argue we should have undertaken these checks much earlier on, before we had introduced him to the International Franchise director. I have to admit that I was extremely keen to grow our business and the eagerness and apparent earnestness of the potential franchisee lulled me into a false sense of security. In truth, the process of checking should not have lapsed. But the episode clearly shows the perils of not doing sufficient planning or due diligence!!
The episode cost me a lot of time and money as I had to make trips abroad, more than once and there was also a reputational cost too which is not easily quantifiable but is, nevertheless vital for doing business.