When I started Pacific Direct in 1991, I didn’t exactly have a real plan. I don’t just mean that I didn’t have a formal, written business plan; I mean I had no real purpose other than to pay bills and make a job for myself.
I started off selling shower caps and pre-threaded sewing kits to hotels because that was what the Chinese factory I was representing produced. I had no registered company, it was 1991 so there was no website, and my title was originally Factory Representative. I had a Chinese brochure of products that now makes me laugh.
After two years of doing this alone, I employed another sales person and then one day a hotel purchasing manager asked me if I could also supply soaps and custom shampoo, so I started doing that too. In 1996 the regulations on cosmetics labelling changed, and we had to start printing the ingredients on our bottles. Our supplier in China said he didn’t want to do that, so I decided to give the manufacturing side of the business a go.
That turned out to be a good thing for me, because as we grew we were a global manufacturer as well as distributor, so we were able to compete with the larger companies. That wasn’t by design; I hadn’t written a business plan where I sat down and strategically thought this all out; it was a stroke of luck that the change in regulations essentially changed my business for the better.
You might look at me and think, “well, look at Lara; she built her business from scratch without a business plan so I don’t need to bother with one either.” You would be wrong! Yes, I did start my business without a plan, and we were nine years in before I finally went to Cranfield School of Management, enrolled on their Business Growth and Development Programme and wrote my first business plan. This business plan had invaluable outcomes for me personally, financially and also for my ongoing interest and passion for fast growth people orientated customer-centric business, much of which is common sense, but oddly uncommon in the behaviour I see.
Here is a convincing argument for making a business plan: 9 years in with no plan, the company was making £667k a year – actually, to my surprise I found out I was running the 57th fastest growing company in UK. Nevertheless, after producing a plan only 8 years later we were making making £3.3m EBITDA (earning before interest, tax, depreciation and amortization) – this rather underlines the value of a plan!
As it happened, Pacific Direct was very successful; but how much more successful – and less stressful – could it have been, if I’d had a plan and a strategy from the very beginning? I started off selling to my customers; I didn’t even really realise I was “building a business” – I just went out to sell because that’s what I was good at, and carried on doing that long after the point I should have had a formal plan in place.
In a business race to market, where so much is copied – more now than ever – we need a great plan, a strategy for thinking ahead and the skills to know when we are in the right role in order to maximise gains. Through my time at Cranfield I learned quickly that I was the wrong person to shape the business, to put in the structure and even to generally manage. I was miserably under-qualified at that stage; I was and am a decent people person, but I should have stuck to sales – which I them chose to do, and became much happier.
Before I went to the BGP at Cranfield I found myself doing all the things that needed to be done, and none of the things I had enjoyed doing at the beginning. I hadn’t planned to grow Pacific Direct at the pace it ended up growing, and while it didn’t happen by accident – it took a lot of very hard work and some family sacrifices – it didn’t happen through careful planning and coordination and ultimately, if I hadn’t gone to Cranfield and learned how to manage my business when I did, I may well have just walked away.
In all honesty, I was so miserable in 1999 I would have sold my company for 50p; I just wanted to be rid of all the stress and uncertainty. Whilst I was risking nearly 10 years of hard graft to prove I had a good product, I actually only then emerged with a strategy
There are tons of free business plan templates out there these days. In 1991 we didn’t have the Internet or Google but you can find yourself a template and even a guide for filling in your plan, within about five minutes. Why would you not spend that time focusing on what you want your business to look like, where you want it to go, and how you intend to get there? Look at my example, and rather than see how far I got without a plan, see how lost I was nine years in, without that plan!
Now, I don’t mean for you to spend hours and days endlessly planning; it is all too easy to become crippled at the planning stage and never actually take action. But calculated planning and development are crucial to your business – to any successful business.
A business plan does not have to be set in stone – in fact, the best ones are fluid documents which change regularly as the business grows. But there should at least be an initial plan against which you can measure your goals, targets and achievements to ensure you are headed in the right direction.
A business plan is also really useful if and when you go to the bank to ask for money; they will want to see that you’re not just winging it, and you do have a plan for where your business is going – and how you intend to pay their money back! The same goes for selling your business, if you come to that point: you can show prospective buyers how your business has grown, and its potential for future growth.
When I wrote that first business plan I realised just how lucky I had been, to get to this point without any formal plan. I now value planning very highly when running a business. I may have sold Pacific Direct, but at present I have an interest in seven companies, all of which have an active business plan, and regular planning meetings.
Without a plan you can take undirected, guesswork action, and you might just get lucky like I did – but from what I’ve seen in my twenty-plus years in business, I was an exception to the rule. Without a plan you waste energy, time and you cannot make calculated decisions moving in the right direction. Your actions may well end up being random and a big waste of time and money.
Now, you might say “but Lara, I do have a plan – but it’s in my head, I don’t need to write it down!” I see where you’re coming from on this, but I do still think it’s important to write it all down in a formal document. So often you can have thoughts flying about in your head, and they can change daily without your really noticing.
Did I plan to go in this direction? Well, yeah, I sort of wanted to do this… didn’t I? If it’s written down you can go back to it and say yes, I do want to do this and I’m going to work bloody hard to get there. It gives you a focus point, something to aim for so that every day you’re sitting down at that desk and aiming in one particular direction.
So yes, I built a decent business without a business plan but look how much better we became with a strategy. Go and download a template right now, and plan how you want your business to evolve and develop and who primarily are the people you need to surround yourself with to make your goals happen?