The 4 “Must Haves” for the real plan for your business and Why Your Bank’s Request for a Plan is Stupid

If you’ve been in business long enough, someone has asked you, “Can I see your business plan.”  If you’re like most business owners, that simple request triggers several emotional responses in your mind.  Your inner voice says, “That thing hasn’t been updated in years.”  Next, guilt follows as your inner voice transitions to, “Why didn’t I update that thing.  Everyone says how important it is.”  Finally, your inner voice goes to where it always defaults as a business owner, “I’ll get it updated.  It will be painful, but this person expects me to have it so I’ll do whatever I have to do to get it done.”  In five seconds, you’ve gone from fear to guilt and then from guilt to dread.  Finally, respond back, “Sure, let me get you that business plan next week” while attempting to hide the dread you feel about the time you’ve just committed to update what has thus far, been a pretty useless document.

The Reality

We speak with a lot of business owners.  The reality is very few have a business plan in any format other than the original spreadsheet they created when their business was an idea and not a company.  Even those who took the time to update their plan rarely refer to it when operating their company.  This begs the question, “If nobody uses these business plans, why do people write them?  And even more importantly, why are others asking for them?  Is a plan actually valuable?  What purpose do these plan really have?  IS there a purpose?  Or are these business plans simply a means of doling out punishment to owners by prospective investors and lenders?” 

The answer to the problem with business plans is they don’t really lay out an actual plan for your business.  They’re filled with philosophy, conjecture, research, and assumptions.  However, like a good battle plan, the value of a typical business plan diminishes very quickly after your business enters into battle in the market.

What you really need in a business plan is an ACTUAL PLAN to run your business.  I admit, that seems obvious and simple.  But reread that statement.  Then ask yourself the real question, “Do I have a plan to follow that is practical for my business?”  Most owners who are honest answer, “No, I don’t.”  So if you have a formal business plan sitting somewhere unused and not updated, shed the guilt.  The reason you haven’t prioritized following or updating the plan is that the plan isn’t useful.  If you want a useful plan, read on…

What’s Really Needed in a Business Plan

What you really need in an effective plan to manage your business are four things.  These four things are your goals, your strategy, your tactics, and a means to measure.  Each of these four leads elements are critical for you as an owner to identify and understand.  They all unfold in the order listed.  They are all interrelated.  Identify them in the order listed and you’ll be able to drive your business to the place you seek. 


Starting with your goal or a couple goals is critical.  So many business owners are out running their business without a clear idea of why they do so.  Money comes in, money goes out, customers come, some go, and yet they go home each night exhausted and unfulfilled.  You wouldn’t start a road trip without some idea of where you wanted to go.  Your goal is your destination.  To answer the goal questions, ask yourself some questions:

1.       Why am I willing to sign the front of paychecks instead of the back of a paycheck?

2.       What is my definition of success for my business?

3.       What is required in order for my life to look the way I envision it will once I see success in my business?

Good goals include a timeline, a measurable outcome, and a purpose.  Examples of business goals include Earn income at a target to get some needed financial stability for us.  Another goal might be to reach a point by the end of the year where no customer represents more than 25% of our revenue to eliminate the risk of consequences if you were to lose a large customer.  Your goal might even be to take half of a particular competitor’s revenue because they’re not serving customers well, not serving people well makes you sick, and you want it fixed. 

Your business goals are NOT to make $1 million, to hire 10 people, or to sign five more customers.  Your goals are what the outcomes of any of the aforementioned accomplishments will bring. 

Answer the goal question.  Then determine strategy.


Strategy questions are what separates the business owner from the worker.  Anyone can have a goal.  Anyone can execute on tactics. (we’ll discuss tactics next.)  Where a business leader demonstrates his talent is in identifying what strategies will lead to accomplishing his goal.  Get strategy selection right and half the battle is won.  But get strategy selection wrong and you find yourself on that road trip mentioned earlier where you wanted to drive from St. Louis to Houston but you find yourself on the interstate headed north. 

To determine your strategies, start with these questions:

1.       What are the quantifiable things I need to achieve this year to read my goal?

2.       What are the strengths in my business I can use to achieve my goal?

3.       What are the weaknesses in my business that I need to correct to achieve my goal?

4.       What are the drivers that will determine whether or not I achieve my goal?

Examples of strategy you may use to achieve your goals include such things as building a sales process to add 20 customers, hiring and training two new key employees to scale the business, or increasing efficiency by X%.  Strategies are outcomes that are necessary to achieve the defined goal.  Good strategies answer the question, “How are we going to achieve our goal of ________.”  Good strategies don’t possibly cause you to achieve your goal.  They clearly demonstrate that you will achieve your goal.  A goal usually has between two and five strategies.

Once you have strategy nailed down, it’s time to turn to tactics


Tactics are the bullets in the arsenal of a business owner.  Tactics define how you will implement your strategy.  Tactics usually involve a set of assumptions in order to formulate them.  Tactics are generally repeated every day, every week, or every month.  Tactics are the things you will do over and over to assure each strategy is implemented.

For example, let’s suppose one of your strategies is to add 12 new customers this year.  And let’s assume you close 50% of the qualified leads, converting them to customers, when you get a chance to meet and present.  Math tells you you’d better meet and present to 24 qualified leads this year to get your 12 customers.  If one-fourth of your leads you receive are qualified, you’d better have 96 total leads.  Or, 96 total leads a year sounds a lot like two leads each week.  Based upon these assumptions, we need tactics to receive 2 leads a week, qualify the leads, and present to the qualified leads.  If leads generation is coming from cold calling, we’d better have blocked out the time for the calls.  If leads are coming from networking, we’d better have our networking tools in place.

Establish tactics to repeat and set their frequency.  Build out your schedule to make the time to execute on them.  Once you have your tactics set based upon assumptions, it’s time to execute and measure.


As you work your tactics every day, week, and month, you’ll start to see some results.  The result might be good.  They might not be good.  But you will start to see data to test your assumptions.  For example, if we assume one-fourth of our leads are qualified leads, but in reality only one in six is turning out to be qualified, it’s time to adjust our tactics.  We need to increase our lead count to feed more leads to get the same result.  If we are closing 75% of the time instead of 50%, we can decide if we need to back down the lead count so as to not overload operations.

Remember, more isn’t always better.  Far too many business owners see their close rates improve once they start “systemizing” their sales process and think, “Great, I can hit 50% beyond my goal.”  Then they find out there were several additional strategies that were necessary to manage that additional 50% beyond their goal.  Things like human capital, equipment, leadership, time, and other resources are all scarce. 

Don’t overlook the measurement step.  Doing so is akin to not being certain you’re taking the right exit ramp to get on the interstate but never looking at a sign after you’re barreling down the freeway to confirm you’re heading in the right direction.  Neglecting measurement is an easy way to end up in Des Moines instead of Houston.


Establishing a real operating plan for your business that includes your goal, strategies necessary to achieve the goal, tactics, and measurement are all critical if you want to succeed.  Most business plans lack the meat needed to actually execute and achieve real goals.  Building out a plan to accomplish your goals is important.  If your goals are important, why would you sign up for the job of business owner?