This column is part of Globe Careers' Leadership Lab series, where executives and experts share their views and advice about leadership and management. Follow us at @Globe_Careers. Find all Leadership Lab stories at tgam.ca/leadershiplab
If you are sitting at a poker table and someone offers you a tip that might increase your odds of winning by 30-to-50 per cent, would you take it? Most of us probably would. Just such a tip exists in the business world. So what is it? Simply it is to formally plan and track progress against those plans.
Commonly referenced studies, surveys and opinions suggest that formal planning doubles a start-up business' odds of survival or that those existing businesses that operate with formal plans, on average, grow 30 per cent faster than those that do not have formal plans. Of course, for every example that supports these positions, you can find at least one example to the contrary. But let's assume for a moment the 30-to-50 per cent rule applies.
Why businesses don't plan
A vast majority of small businesses do not formally plan (unless they have to in order to secure funding from lenders and investors). As a consultant, I've seen a much higher percentage than this, but in 2015, Wells Fargo reported that a national U.S. survey concludes that two-thirds of small businesses do not plan.
If planning increases your odds, and the vast majority of businesses do not plan, it begs the question, "Why not?"
Some of the common reasons include: they don't see the value, they don't know how, it's too complicated, and it's too time-consuming. Translation: it's too easy not to do it.
Is the risk worth it?
But if there is even the slightest potential to increase your odds by 30-to-50 per cent or more through planning and tracking, isn't it worth it? Asked another way, is it worth the risk to not do it? Is it worth the risk to your dream, to your business, to your livelihood, to your employees and to your family?
Viewing things from a macro-level
Let's look at things at a macro-level but strictly from the perspective of the small-to-medium sized entity or business (SME/B) using information from Innovation, Science and Economic Development Canada's August 2013 edition of Key Business Statistics as well as data readily available from the U.S. Small Business Administration.
SME/Bs are defined in both Canada and the United States as having 500 or fewer employees. In Canada, there are more than one million SMEs, exclusive of the single-owner entrepreneur business with no additional employees or payroll. In the United States, that number is closer to 6 million. When self-employed, no additional employee businesses are added, the total between the two countries is more like 32 million. For the sake of example, let's call that the number of SME/Bs in Canada and the U.S. combined.
SMEs create about 80 per cent of Canadian jobs. In the United States, it's more like 55 per cent. Combined, that amounts to more than 155 million jobs. In addition, SME/Bs account for half or more of each country's GDP. In other words, they are responsible for about $9.3-trillion (U.S.) in combined GDP.
Now let's say that two-thirds of SME/Bs do not formally plan. Forget about the 30-to-50 per cent rule for a moment. If these businesses improve their odds by even 10 per cent through planning, it would potentially mean an additional $620 billion to the combined economies. If simple, straight-line math applied, it would suggest an additional 10.3 million jobs, virtually eliminating unemployment in both countries.
Realistically speaking
Of course, that kind of simple math wouldn't apply, as all types of other factors have to be taken in to consideration. Still, it isn't hard to imagine that if, on average, businesses improve their odds of success by 30-to-50 per cent or more through formal planning, the positive impact to the economy and unemployment would be enormous.
It, therefore, almost becomes a moral imperative to accept this tip on the chance that it will dramatically improve the odds of success for SME/Bs.
If you jump off of a cliff without a parachute, you might survive. Likewise, if you operate a business without a plan, you might survive. But why risk it? Why not take a chance, instead, on something that just might improve your odds?
Jon Umstead is a business consultant and the author of Business is ART (Figure 1 Publishing)