Let me open this article by saying I hold the Canadian Banking system in the highest regard. Yes, I worked for one of the top 5 banks in Canada for 22 years but I don’t believe that is the source of my respect. I think one only need look at how the Canadian banks came through the 2008 – 2011 period virtually unscathed to realize that in partnership with the Bank of Canada we have a pretty good thing going. That includes but is not limited to coast to coast; consistency of the product/services delivery and access to our funds. We may complain ad nauseam about their failure to deliver true customer service or any unique value proposition but they have protected stakeholder value and delivered reasonably consistent financial results. But and it is a BIG but they have participated in the BROKEN system that is business planning for business owners.
Here is an excerpt from my soon to be released book, CHAOS; How Business Leaders Can Master The Power of Focus to explain.
Business planning, when done well and consistently, will not set you up for failure but establish the measurable outcomes of success and have you celebrating.
And it can be EASY and FAST to do it and it can be SUSTAINED with as little as 15 minutes weekly.
Having said that it isn’t entirely your fault that you don’t have a business plan. Business planning has been broken!
It must be broken because so few of us do it despite agreeing with me that it is important and because we have all the previously identified ill-conceived reasons why we don’t business plan.
How has business planning been broken specifically?
It’s been broken by those who position it as having to be anything from 25 – 50 pages in length. Who are they? They are; government agencies that purport to support small business, commercial bankers (small business bankers rarely ask for a business plan anymore) who need a business plan to assess your company’s financial request, consultants who want to write the plan for you and Accountants who want to generate cash flows for you.
None of these business plan sources or the business plan formats they recommend helps you be a better, smarter more focused business owner….
Now as to the bankers breaking business planning I have to say I was part of the problem. All too often and in one role or another with a Canadian bank, I met with business owners to listen to their great and not so great ideas. Whether it was a new client or an existing client our response was consistently the same, “Joe that sounds like a really interesting idea and I can see how you believe that might be important for the company, we’ll be pleased to consider any financing requirements you need but we’ll need to have a business plan first”.
I feel you nodding your head in agreement. You’ve all heard it.
Here is what was wrong. First, your banker is a relationship manager not an approver so we tell you anything is possible just in case it has a hope of getting approved so we can meet our monthly target. Secondly, historically we didn’t give you any guidance on what resource to use for that business plan. We didn’t have any (they now offer a do-it-yourself business plan on their web sites and I’ll speak about that in a moment) nor knew where you should find them. It was just a, hey you go figure it out and bring it back to us when it is done. Thirdly, we don’t use it. Okay that’s a bit harsh but of the 25 – 50 pages you created we used maybe 15% of it.
A banker’s decision on whether or not to extend you credit has and continues to be based on the 3 “C”s; collateral, cash flow and character. I guess if you wrote me a 50 page story about your business or paid someone else to do it I was supposed to be impressed with your Character, via your perseverance (place chuckle here as I was being sarcastic).
Remember, rarely did your business plan really have any impact on our decision. It just gave us the opportunity to ask 18 follow-up questions to delay the decisioning on your loan request.
Further proof we didn’t use it? Have you ever noticed how, when you were approved for the loan, no one from the bank ever held you accountable for doing what you said you were going to do in the plan? As long as your payments were current or your operating loan was fluctuating and our collateral was intact, your business plan became as irrelevant to us as it was for you. We knew you didn’t write it!
I’ve learned over my career as a management consultant that the real measure of a business leader’s Character is their ability to be focused on the success factors for their business, measuring the business against those success factors and having some form of consistent and sustainable business plan that aligns and holds accountable their team to the delivery of the success factors….
Now the good thing about banks is they now at least offer a do-it-yourself business plan on their web sites. Or is it a good thing?
A do-it-yourself business plan is better than nothing (we offer our own at https://www.focus31.com called FOCUS Yourself; A 10-Step Business Plan program but it isn’t purely do-it-yourself as we inject our advice into your business plan process twice in the program for FREE) but the problem with do-it-yourself business plans is it is like looking in the mirror.
What did you see this morning when you looked in the mirror? Right, yourself and as long as it is only you that you see you will fail to (as I said earlier) seriously challenge yourself to do something you know you need to do but don’t know how to do and that terrifies you when you think about having to do it? You are going to stay comfy cozy even if it means you remain unhappy, unhealthy and broke.
Here in Canada the top 5 banks offer their small business clients a do-it-yourself business plan in a variety of ways via their web sites. Let’s have a quick look at them and as you do consider do their ideas sound easy and fast:
1. Royal Bank of Canada
Start-up Plan includes; Introduction, The Team, Business Environment, Marketing Plan, Operations, Finance, Risks and Conclusions and each header has links to more detail and each of those links leads to further links of detail.
Growth Plan includes; Business description, Industry analysis, Your team, Marketing plan, Operations, Key risks and each provides some descriptive detail but no deeper links.
Plan for Growth is somehow different then Growth Plan and includes, Mission Statement, Objectives and Action Plans and explanatory notes for each.
2. TD/Canada Trust
Provides only an On-line business planner for planning your finances, cash flow and a charting of the historical Company Balance Sheet and Income Statements.
Provides a pdf fill-in-the-blanks guide that includes; company profile, management team, advisor team, financial history and business plan which is further broken down to; Market Analysis, Business Assessment, Objectives, Strategies and Action Plans each with explanatory notes. The total pdf is…29 pages.
4. Bank of Montreal
Provides a business planner worksheet that is effectively a charting of the company’s historical financial performance and a cash flow worksheet and an on-line pamphlet called Developing your business plan which provides guidance on; setting business goals, statement of goals, planning to reach those goals one year and five years, annual income statement projection and action planning.
Provides an interactive planning tool that includes; Business Description, Marketplace, Sales and Marketing, Operations, Financial Information with explanatory notes for each and input fields that generate a template business plan. It can be exported to Word. It reassembles the blank documents you can access using Word’s document search mechanism.
Thus confirming that there are many differing perspectives on what a business plan is.
The Scotiabank system seems the best of the 5 but when you download the business plan to Word the document opens with a letter to a 3rd party? This confirms they are assuming you are only doing the business plan not for your own purposes but for communicating to an interested 3rd party like them for a loan. They lost me with that.
The CIBC business plan pdf at 29 pages confirms they are thinking bigger is better and RBC seems to think you only need objectives and action plans later in your business’ life cycle. Huh?
I was frankly disappointed with the limited TD/Canada Trust and Bank of Montreal offers/effort.
Now here is the tell-tale sign that the banks have participated in the broken business planning process. If any of their planning processes were any good, any good at all, who would be using them? Their own branch managers would that’s who.
A branch is a business entity with client portfolios, staff and staffing issues, customer service issues with some unique marketing opportunities. They are a business unto themselves just like your business. If any executive of any of the banks thought the planning process they recommend you use was any good any good at all, their Branch Managers would be and should be using it. Their not so don’t!
Here is what I want you to do. I want you to create a single page business plan (see template on page 117) based on my instructions that follow and then follow my prescription for a establishing a management system for sustainable business planning. You will find the experience liberating.
Don’t stop there let’s have some fun. I’d like you to then take that business plan, gather up your last year-end Balance Sheet and Income Statement, your in-house year-to-date Balance Sheet and Income Statement and write a 2-page Executive Summary (I’ll help you). Then go to your bank (even if you don’t need a loan) and when they ask for your business plan say “sure I have it right here. In fact, I have a management system that sustains business planning in my company month over month, would you like to review it with me now?”
Your banker will weep with joy!
WHAT’S THE NEXT STEP?
1.You can find out more about what a business plan is and its importance with the international best-selling book CHAOS; How Business Leaders Can Master the Power of Focus. Get your FREE copy HERE
2. Use our FREE business planning program FOCUS Yourself; A 7 Module Business Plan Program. This is not a business plan template, it is a full business plan that is EASY and FAST, making your plan SUSTAINABLE and entirely PRACTICAL. Start your business plan NOW
3. Not sure why you need a small business plan? REGISTER for a FREE FOCUS Discovery Consultation where you will talk business, your business, with international best-selling author James Burgess
4. Challenge yourself to FOCUS Your Business In Just 30-Days and learn how to build a business that will THRIVE not just survive with our FREE webinar HERE.