Business Planning It's the Process not the Product

As a consultant I am constantly trying to explain to people the value of business planning. I come up with different ways to articulate it. I devise all kinds of marketing materials and websites trying to explain it. But even if I am successful and someone gets the concept, they may still see it as unnecessary.

When you're a child, you just want the end result. A teen might think, I want to be a CEO." When you explain the additional six to eight years of education and experience it takes to achieve that goal, they see that time as an obstacle, like a stick they have to jump over to win a race or a mom they have to whine to in order to avoid a bath.

As you get older, you learn that even with a degree or certificate, companies also want experience. They want to know you have gone through some processes, some growth, some pain and failure so you know what to do next time. You learn that what people really value more than the degree is experience. And a degree may help an employee earn a $50,000 or $100,000 salary, but it's experience that gets someone the $500,000 or $1,000,000 salary.      

Every adult understands this concept. So why is it that some entrepreneurs and managers want to skip the value of the process? When contemplating starting a new company, buying an existing one, or marketing a new product, entrepreneurs often want to skip a thorough evaluation and move on to starting and buying and running their new toy. Is it because they think they are too smart to have to analyze? Do they feel they have already paid their dues with the schooling and experience? Is it laziness? Is it because it's just no fun to learn when you can just get to the end product?

I suppose that's part of the fun of being an entrepreneur... doing what you want. Skipping the things you don't like or concentrating on the things that are energizing. But if you look at successful large companies that have made it for years, reinventing themselves when necessary, and experiencing long-term profitable success, they are the businesses that don't skip evaluation, strategizing and process. The CEO of Honda doesn't pick the shape and color of his personal dream car. He engages the company in the process of determining what the customer wants and what works best. They then go through the process of engineering to determine how to build the car to meet those needs and be safe.  

Next, they go through the process of determining the best way to effectively market the new car using information learned during the first two steps. This process allows them to develop a car with the best chance of winning over the market. And they are pretty darn good at it based on the historical success of Honda and their models. Now just imagine what kind of company they would be if the CEO just churned out whatever suits his fancy over the years. And imagine if he skipped the process of proper engineering what kind of issues those cars might have and how much money would be wasted by lawsuits and recalls.

It's a silly concept right? But entrepreneurs and managers skip the process every day.

When it comes to entrepreneurs and managers blowing off business plans or marketing plans, part of the problem may be in understanding the specific value of the process. We have determined that it's not the product or finished plan that is of value. That is often times a pretty bound document that no one really wants to read.

The process of doing a plan is nothing more than answering a series of thought-provoking questions. Almost without fail, every time I start going through these questions with a client they have that look or say something like These questions are ridiculous. I knew this was a waste of time. You're asking me who my ideal customer is it is anybody who purchases the product I sell. Then I explain, "Yes, the world is your oyster but we are doing this because we want to grow your company. We are trying to determine who your IDEAL prospective customer is so we can more effectively find them and appeal to them. Then I ask them to humor me and answer the question, that's when the wheels fall off.

Without fail I get strange looks from the client in the beginning of the process. Without fail we eventually hit a question that is seemingly simple yet crucial to the person's business and they have the hardest time in the world answering it. It is at that point that the light bulb goes off and the value starts to emerge.

I don't get very excited until we hit that "stumper" question (whatever it may be for your particular situation) because I know that's where the value is. That is the question that is going to mature the person's marketing or start-up plan to the point of being successful because they will be forced to figure out the answer before leaping forward. This process has saved many an entrepreneur and manager from financial and personal setback or failure just like it saves Honda from putting out ugly cars that break down.

Eric Egeland, CPCU, AU is the president of Capacity Consulting Inc. who provides strategic consulting for multiple industries including insurance, real estate, education, energy, and internet. He has personally created 10 successful startups, including seven insurance groups, and has consulted on hundreds of projects, closures, startups, plans, assessments, turnarounds, and reorganizations. He can be reached at ericegeland@capacityconsultinginc.com  and by phone at  845-430-1347.