Philip Walcoff - "The Fast Forward MBA in Business Planning for ...

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Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"Page 4Figure 1.1U.S. business size distribution.(Source: U.S. Small Business Administration, 1996.)When considering the planning process, I prefer to define a small business as a company that istypically striving to achieve growth and stability. It has a small management team most often consistingof the owner and perhaps one or two other managers, is usually doing less than $1 million in annualsales, and employs 1 to 15 people. In contrast, I view a medium-sized firm as having a managementteam (infrastructure) in place and diversifying and gaining maturity. These companies are seekingcontinued growth and increased profitability, are doing between $10 million and $50 million in sales,and employ up to 500 people. Companies between $1 million and $10 million are typically in transitionfrom being owner controlled and managed to building a management infrastructure. They can beconsidered small or medium-sized depending on how quickly they are making the transition to sharedmanagement.In terms of business planning, my experience has shown that the small firm almost always relies on itspresident to develop and implement the business plan, whereas the medium-sized firm typicallyinvolves a management team in the development and implementation of its business plan.Most Companies Don't PlanOver the last 8 years, I have worked with more than 70 small to medium-sized companies (most of themhaving less than 500file:///C|/Documents and Settings/gasanova/Local Settin...Forward_MBA_in_Business_Planning_for_Growth/e-book.html (20 of 219)16.02.2005 13:54:23
Philip Walcoff - "The Fast Forward MBA in Business Planning for Growth"Page 5employees), ranging from start-ups to companies earning $400 million in gross sales. I have helpedthem make something of their companies through the development and implementation of actionorientedbusiness plans. In my capacity as a business consultant, it has become clear to me that mostowners of small to medium-sized companies or organizations do not have documented business plans—and, further, see little value in them. And as for the small number of companies or organizations that dodevelop plans, they typically do not implement them.Chances are, you are in the majority of businesses that don't plan, or that plan but don't implement theirplans. Their owners and managers see the planning efforts of the housing developer, the football coach,the military commander, the airline pilot, and others as special cases that are, therefore, not applicableto their businesses. Notice that large companies are not included in my reference to nonplanners, andthis should tell you something—a business doesn't become large or stay large without planning. I'm notsuggesting that every successful company started off with a business plan, but I can say that, by far, themajority either succeeded because they had a documented business plan in their early history, or theydeveloped one along the way and have it in place today.(At this point, I want to note that I understand that readers most likely either own or manage a business,manage an element of a business, or are considering going into a business. In the interest of brevity,when I use the term business owner, understand that my remarks apply as well to business managers,managers of business elements, and would-be owners and managers.)Business Failures Are Linked to Lack of PlanningThe U.S. Small Business Administration reports that although almost 1 million new businesses arestarted each year, almost as many close theirdoors each year. 4 Figure 1.2 reflects the SBA's data on the failure rate of businesses over a 10 yearperiod. As indicated, almost a quarter of all businesses fail in the first 2 years, over half after 5 years,and almost 80 percent after 10 years.Page 6file:///C|/Documents and Settings/gasanova/Local Settin...Forward_MBA_in_Business_Planning_for_Growth/e-book.html (21 of 219)16.02.2005 13:54:23
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