Dwight D. Eisenhower once said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.” Much has been said about working ‘on’ your business instead of ‘in’ it. This is a way of saying that if a business owner does not take time to step back from what he or she does on a day to day basis to think about the direction of the business and the risks and the opportunities it faces, that they are not really planning for the future.
Lack of planning has a distinct way of becoming obvious at the worst possible times. General Eisenhower was a brilliant military strategist, and if one interprets his quote, it was the act of planning that enabled him to see the next 5 moves ahead on the military battlefield chessboard to avoid his being unexpectedly put in ‘check’ by his opponent. Planning allows you to be calm and cool when you most need to be. This can be in dealing with a sudden disappointment such as a lost customer, or in the case of an owner that I recently visited, a three-hour power outage at a metal fabrication plant that began just as the first shift arrived. Due to prior planning for this situation, 90% of the operation was successfully running as soon as the power came back on with only a couple of machines and network stations still having trouble.
Planning becomes especially critical when an owner is considering selling their business. Recently, an owner talked about starting down the path of selling his business to a buyer that approached him directly. After investing a significant amount of time in due diligence and negotiations, the buyer lowered his offer well below the price the owner was looking for because of the company’s customer concentration and the inability to scale effectively. He commented that he found it a stressful and time-consuming process and that he actually got an upset stomach when he saw the scope and number of the items being requested for the due diligence examination. Had he had the opportunity to do it over again, he would have started planning 2 years in advance of entertaining an offer to sell his company. More importantly, he would have engaged an advisor who would have run a sale process to help him feel confident that he was receiving a fair and market-based offer for his company.
Planning is useful for many aspects of a business, and for ‘training’ yourself to think strategically when making important decisions. A key ingredient in planning is accessing advisors with knowledge of the situation that is being planned for. At Water Street Advisors, we regularly help owners plan to sell their businesses or to acquire businesses. We enjoy having these types of conversations to help owners think through the steps of the process, and what they need to work on to achieve the most value from their company when it is finally sold.