Why the time you save by skipping business planning could be the most expensive saving you ever make.

There’s an old saying in carpentry: Measure twice, cut once.

It’s a simple principle. Before you cut a piece of timber, make sure you’ve measured it correctly. Because once you’ve made the cut, there’s no putting the wood back together. Get it wrong, and you’ve wasted materials, time and money. Worse still, the mistake might not become apparent until much later, when the consequences are considerably more expensive to put right.

Every experienced carpenter understands this.

Yet I’ve always found it remarkable that business owners, who routinely make decisions involving tens or hundreds of thousands of pounds, frequently fail to apply the same principle.

They recruit employees without properly understanding the financial implications. They invest in equipment without calculating the likely return. They launch products without establishing whether sufficient demand exists. They expand into new markets without considering the additional working capital required.

And often, they do all of this before completing the planning process. Why? Because we’ve developed a business culture that celebrates action, we’re encouraged to move quickly, make decisions and get things done.

Planning, on the other hand, is frequently regarded as something that slows us down.

But I think we’ve got this completely the wrong way round.

The time you save by skipping the planning process is often insignificant compared with the time, money and effort you’ll spend correcting a decision that should never have been made.

And that’s what I want to explore.

1. The Bias for Action in Business Decision-Making: Why We Celebrate Action but Undervalue Thinking

We admire people who get things done. Business owners are encouraged to be decisive, seize opportunities and make things happen. We’re constantly reminded that speed matters and that hesitation can be dangerous.

There’s some truth in that.

A business that spends all its time planning and never implements anything is unlikely to achieve very much. But there’s a dangerous assumption underneath this enthusiasm for action.

That doing something is inherently better than doing nothing.

Consider two business owners.

The first spends Monday morning reviewing the financial implications of opening a second location. They examine likely demand, staffing requirements, overheads, cash flow and alternative trading scenarios. By lunchtime, they haven’t signed a contract, recruited anybody or purchased anything.

The second owner spends Monday morning viewing premises, negotiating with estate agents and discussing lease terms. They’ve been busy. They’ve taken action. They’ve made visible progress.

But which owner has actually moved closer to making a good decision? We don’t know.

The first might discover that the proposed expansion would place unacceptable pressure on the company’s finances. They might decide not to proceed. To an outside observer, that could look like a morning wasted.

But if they’ve just avoided entering into an expensive lease that the business couldn’t support, those few hours might turn out to be among the most productive they’ve ever spent. Meanwhile, the second owner could be moving rapidly towards a commitment they haven’t properly evaluated.

This is the problem with the bias for action.

We can see the cost of planning. We rarely see the value of the mistakes it prevents.

A few hours spent reviewing financial forecasts appears to be an overhead. A lease signed, a machine purchased, or a new employee recruited looks like progress. Yet the financial consequences may tell an entirely different story.

2. Why Poor Business Planning Leads to Expensive Mistakes: The Planning Process Is Rarely Finished Before the Cutting Begins.

One of the most common weaknesses I see in business planning isn’t necessarily that owners don’t plan. It’s that they begin implementing their plans before they’ve finished developing them.

An owner has an idea.

Perhaps they want to introduce a new service, expand into another market or invest in additional capacity. They discuss the opportunity with colleagues, produce some rough calculations and become increasingly enthusiastic.

• Then, almost without realising it, they start implementing the idea.
• They speak to suppliers.
• They obtain finance.
• They recruit staff.
• They make promises to customers.

Before long, the business has committed resources to a decision that hasn’t been properly evaluated. The planning process is still underway, but the cutting has already begun. And once that happens, something important changes. Instead of asking whether the business should proceed, the owner starts asking how to make the decision they’ve already taken work.

That’s a fundamentally different question.

When planning becomes an exercise in justification

Imagine a manufacturing business considering the purchase of a £120,000 machine. The owner believes it will increase capacity, reduce costs and allow the company to win additional work. They obtain a quotation, arrange finance and place the order.

Only afterwards does someone prepare a detailed financial forecast. The forecast reveals that the business needs substantial additional sales to justify the investment. Unfortunately, nobody has established where those sales will come from.

At this point, the owner faces an uncomfortable choice.

They can acknowledge that the investment may have been premature, or they can start adjusting the assumptions to make the numbers work.

• Perhaps sales will grow faster than expected.
• Perhaps utilisation will be higher.
• Perhaps costs will be lower.

Before long, the forecast becomes less of an objective assessment and more of an attempt to justify a decision that’s already been made. I’ve always believed that a business plan should inform a decision, not justify it retrospectively.

The value of planning isn’t simply the finished document.

It’s the questions you ask, the assumptions you challenge and the potential problems you identify before committing resources. And this brings me to what I believe is the central issue.

3. The Hidden Cost of Poor Business Decisions: The Cost of Planning Versus the Cost of Correcting

Let’s imagine you’re considering a £150,000 investment. You could spend two days examining the opportunity, challenging the assumptions, speaking to potential customers and preparing a financial model. Or you could make a relatively quick decision and begin implementing it.

The second approach might save you two days. But what exactly have you saved? Perhaps sixteen hours of management time.

Now consider what happens if the investment proves unsuccessful.

• You might spend the next twelve months trying to recover the money, generate sufficient revenue or find an alternative use for the asset.
• You might need to renegotiate financing arrangements, reduce other expenditure or postpone more attractive investments.
• You could spend countless hours in meetings, reviewing forecasts, dealing with suppliers and attempting to resolve problems.

And there’s no guarantee that any of this effort will recover the original investment. Suddenly, those two days of planning look remarkably inexpensive.

Of course, planning doesn’t guarantee success. You can examine a decision thoroughly and still get it wrong. But if those two days identify a fundamental flaw in the proposal, the return on that planning time could be enormous.

The real cost isn’t always financial

There’s another element that businesses frequently overlook. Management attention is a limited resource. Every hour spent correcting a poor decision is an hour that cannot be spent developing the business.

Imagine a company that launches a new service without properly considering how it will be delivered. Six months later, the service is causing operational problems. Employees are overstretched, customers are complaining and margins are considerably lower than expected.

The owner now spends ten hours a week trying to resolve the difficulties. Over six months, that’s approximately 260 hours. More than six full working weeks, based on a forty-hour week.

And that’s before we consider the time spent by employees or the direct financial losses. What could the owner have achieved with those six weeks?

They might have developed new customer relationships, improved existing services, introduced more efficient processes or worked on the company’s longer-term strategy. Instead, they’re correcting problems that better planning might have prevented.

The cost of a poor decision isn’t simply what you lose. It’s also what you could have achieved with the resources you spent putting it right.

That’s opportunity cost. And I believe it’s one of the most underestimated costs in business.

4. The Hidden Consequences of Poor Decisions

When business owners evaluate decisions, they often focus on the immediate consequences.

• What will it cost?
• How much revenue will it generate?
• What profit might we make?

Those are sensible questions, but they don’t go far enough. Many decisions create second- and third-order consequences that aren’t immediately apparent. Consider three examples.

Recruiting before understanding the economics

A business owner is overwhelmed with work and decides to employ another person. The proposed salary is £35,000. They conclude that the business can afford it because profits are comfortably above that figure. But salary isn’t the total cost.

There are the employer’s National Insurance contributions, pension contributions, equipment, software, recruitment costs, training and management time. The total annual cost might approach £45,000 or more, depending on the circumstances.

And even that doesn’t tell the whole story.

The new employee needs sufficient productive work. They require supervision. Their output must justify the additional cost.

• If demand falls, the business is left with another fixed overhead.
• If the role was poorly defined, the owner may spend months managing performance problems.
• And if the appointment doesn’t work out, there may be further recruitment and training costs.

The original decision to recruit might have been entirely sensible. But a few hours spent examining the role, the financial implications and the alternatives could have prevented a much more expensive mistake.

Reducing prices without understanding margins

Suppose a business operates at a 30% gross margin. For every £100 of sales, it generates £30 of gross profit. The owner decides to reduce prices by 10% to win more business. With costs unchanged, gross profit falls from £30 to £20 per unit.

That’s a reduction of one-third.

To generate the same total gross profit, the business now needs to increase sales volume by 50%.

Not 10%.

Not 20%.

50%.

And that’s before considering whether the additional volume will create more administration, capacity constraints, overtime or working capital requirements. A decision that took five minutes to make could take months to correct.

Winning a contract that creates a cash-flow problem

Imagine a company wins a substantial new contract. The owner is delighted. Turnover will increase, and the contract appears profitable. But the business must purchase materials, employ additional labour and pay subcontractors before receiving payment from the customer.

The contract might generate an attractive accounting profit while creating a serious cash-flow problem. The business then spends months negotiating with suppliers, chasing payments and managing its overdraft.

A relatively simple cash-flow forecast prepared before accepting the contract might have revealed the problem. It might have prompted the owner to negotiate stage payments, deposits or different supplier terms. Instead, the business is left correcting a problem that should have been anticipated.

These examples demonstrate why I believe the cost of a business decision is rarely limited to the decision itself. Good planning considers not only what happens next, but what might happen after that.

5. Business Planning: Why Setting Targets Isn’t Enough: A Target Is Not a Plan

Another mistake I regularly encounter is the confusion between setting a target and developing a plan. A business owner tells me they want to double turnover.

That’s an ambition. It’s not a plan.

They might want to increase revenue from £2 million to £4 million over the next three years. Perfectly reasonable. But how?

• Where will the additional customers come from?
• How much will it cost to acquire them?
• Does the business have sufficient capacity?
• Will additional employees be required?
• What equipment or premises will be necessary?
• How much additional working capital will growth consume?

And perhaps most importantly, will the business actually be more profitable?

I’ve seen businesses increase turnover substantially without achieving a corresponding improvement in profitability. In some cases, growth has actually weakened the business. Higher sales have created greater complexity, additional overheads, increased working capital requirements and more pressure on management.

The owner has achieved their sales target. But they haven’t necessarily built a better business.

A proper business plan connects the ambition to the commercial, operational and financial activities required to achieve it. Without that connection, we’re not really planning.

We’re hoping.

And hope isn’t a particularly reliable business strategy.

6. Business Decision-Making Under Uncertainty: Planning Is Not About Predicting the Future

One objection I frequently hear about planning is that nobody knows what’s going to happen. And, of course, that’s true.

We can’t predict precisely what customers will do, how competitors will respond or what economic conditions will look like in twelve months. But I’ve never understood why uncertainty should be used as an excuse not to plan. Surely uncertainty makes planning more important.

The purpose of business planning isn’t to predict the future with perfect accuracy.

It’s to understand the range of possible outcomes and prepare accordingly. This is where probabilistic decision-making becomes particularly useful.

Rather than assuming that one outcome will occur, we consider several possible outcomes, their likelihood and their consequences. Suppose a business is considering launching a new product. The owner believes it could generate £200,000 in annual revenue. That’s a starting point.

• But what happens if sales reach only £100,000?
• What if the launch takes six months longer than expected?
• What if costs are 20% higher?
• What if customers require extended payment terms?

And what happens if the product fails completely? 

A good planning process explores these possibilities before substantial resources are committed. I would normally want to examine an optimistic scenario, a realistic base case and a pessimistic scenario.

Not because I expect any one of them to predict the future perfectly.

But because I want to understand whether the business can withstand the downside while retaining sufficient upside to justify the risk.

Good planning doesn’t eliminate uncertainty. It helps you make better decisions despite it.

7. The More Expensive the Mistake, the More Carefully You Should Measure

There’s an important qualification to everything I’ve said so far. Not every decision deserves the same amount of analysis. Some decisions are relatively easy to reverse.

Others are not.

Think about the difference between testing a £500 advertising campaign and signing a ten-year commercial lease. If the advertising campaign doesn’t work, you can stop it, examine the results and try something different. The potential loss is limited.

A ten-year lease is an entirely different proposition. You may be committing the business to financial obligations that are difficult or expensive to escape.

These are sometimes described as two-way and one-way door decisions.

• A two-way door allows you to change your mind relatively easily.
• A one-way door is much harder to reverse.

I think this distinction is extremely valuable. It suggests a simple principle.

The greater the consequences of being wrong, and the harder the decision is to reverse, the more thoroughly you should plan before acting.

This doesn’t mean every major decision requires months of analysis. It means the planning process should be proportionate to the risk. 

• For small, reversible decisions, the best approach may be to act quickly, test the results and learn.
• For major investments, recruitment decisions, acquisitions or strategic changes, more rigorous planning is justified.

The objective isn’t to slow the business down. It’s to avoid spending months or years correcting mistakes that a few hours or days of planning could have prevented.

8. How Financial Modelling Improves Business Decisions: Financial Modelling, Measuring Before Cutting

If a carpenter uses a tape measure to establish whether a piece of timber is the correct length, what should a business owner use? One of the most valuable tools available is a financial model. And I’m not talking about a complicated spreadsheet containing hundreds of formulas.

I’m talking about a practical model that helps an owner understand the financial consequences of a proposed decision. Let’s consider employing a salesperson.

The proposed salary is £40,000.

The owner believes the salesperson could generate £250,000 of additional annual revenue. At first glance, that sounds attractive. But let’s examine the numbers.

• Assume the business operates at a 30% gross margin.
• The additional sales would generate £75,000 of gross profit.
• Now assume the total annual cost of employing and supporting the salesperson is £55,000.
• That leaves £20,000 of additional annual contribution.

But what happens if the salesperson generates only £150,000 of revenue? At a 30% gross margin, that’s £45,000 of gross profit.

The business would be £10,000 worse off annually, before considering any further costs. And that’s assuming the salesperson starts generating revenue immediately. In reality, there might be a three- or six-month period before they become fully productive.

A financial model allows us to explore these possibilities.

More importantly, it allows us to establish the conditions under which the decision makes commercial sense. We might conclude that the salesperson needs to generate at least £200,000 of additional annual revenue to provide an acceptable contribution. The owner can then assess whether that target is realistic.

• Does the market opportunity exist?
• Is there sufficient demand?
• Can the business support the additional sales?
• What happens if the target isn’t achieved?

These are the questions that should be answered before recruitment begins. The financial model isn’t making the decision. It’s helping the owner understand what they’re committing to. That’s what measuring before cutting looks like in business.

9. When You’ve Already Made the Wrong Cut

There’s another important aspect of the carpenter’s lesson. What happens when you’ve already made the wrong cut? In carpentry, the answer is often straightforward. You acknowledge the mistake, assess whether the timber can still be used and, if necessary, start again.

In business, things are rarely that simple.

Once an owner has committed money, time and personal credibility to a decision, admitting that it was wrong can become extremely difficult. Psychologists describe part of this behaviour as the sunk cost fallacy. We allow resources already spent to influence decisions about whether to continue investing.

Imagine a company that has spent £80,000 developing a new product. The original budget was £100,000. Unfortunately, the project is behind schedule, and the business now expects to spend another £70,000 before the product can be launched. Worse still, customer research suggests that demand may be considerably weaker than originally anticipated.

The owner faces a difficult decision.

Do they abandon the project and accept that £80,000 has been spent? Or do they invest another £70,000 in the hope of recovering the original investment? The £80,000 has already gone. The relevant question is whether the additional £70,000 represents a worthwhile investment given the information now available.

But that’s not how people naturally think.

They focus on how much they’ve already invested. They tell themselves that they’re too far down the road to turn back. And sometimes they continue investing in a project that no longer makes commercial sense.

This is why I believe good planning should include clearly defined review points and exit conditions. Before beginning a project, establish what evidence would cause you to reconsider.

• What level of sales would be unacceptable?
• What cost overrun would trigger a review?
• What assumptions must remain valid for the project to continue?

By agreeing these conditions in advance, you make it easier to assess the decision objectively when circumstances change.

The fact that you’ve already spent money is not, by itself, a reason to spend more.

Sometimes the best decision is to stop cutting.

10. Planning Can Become Procrastination

Having argued for better planning, I need to acknowledge the opposite problem. Some business owners spend so much time analysing decisions that they never actually make them.

They continually request more information.

They revise forecasts, commission additional research and postpone decisions until they feel completely comfortable. But certainty is rarely available in business. At some point, you have to act. And in some situations, acting is actually the best way to obtain the information you need. Suppose you’re considering launching a new service.

• You could spend six months conducting market research, analysing competitors and producing financial projections.
• Alternatively, you might be able to offer the service to a small number of existing customers and test demand in the real world.

The second approach might provide better information at a fraction of the cost. This is where experimentation becomes valuable. Rather than making a large, irreversible commitment, design a smaller, reversible test. 

• Before recruiting an entire sales team, test a new sales process.
• Before opening another location, explore whether you can serve the market using existing resources.
• Before investing heavily in a new product, establish whether customers are actually willing to pay for it.

The important distinction is between taking action to reduce uncertainty and taking action without understanding the risks. A well-designed experiment is part of the planning process. It’s not a substitute for it.

And that leads me to a slightly different interpretation of the carpenter’s principle.

Measure twice before making the big cut. But don’t be afraid to make a small test cut first.

11. A Four-Step Business Decision-Making Framework: A Practical Approach: Measure, Decide, Cut, Review

So how can business owners apply these principles in practice? I believe most significant business decisions benefit from a simple four-stage process.

Stage 1: Measure – Understand the Decision

Before committing resources, establish precisely what you’re trying to achieve.

• What problem are you solving?
• What outcome would represent success?
• What assumptions are you making?
• What are the likely costs, benefits and risks?
• What happens if your assumptions prove wrong?
• And importantly, what alternatives are available?

Recruiting another employee might not be the only solution to a capacity problem. Investing in new equipment might not be the best way to increase output. Reducing prices might not be the most effective way to win additional customers. 

Sometimes the greatest value of planning comes from discovering that you’ve been asking the wrong question.

Stage 2: Decide – Evaluate the Options

Once you understand the decision, evaluate the available options.

• Compare the likely financial outcomes.
• Consider the probabilities, potential downside and consequences of failure.
• Assess how easily the decision could be reversed.
• For major decisions, establish what conditions must be satisfied before proceeding.
• You don’t need perfect information.
• You need sufficient information to make a reasoned judgement.
• And if the evidence doesn’t support proceeding, be prepared to say no.

Not every opportunity is a good opportunity.

Stage 3: Cut – Execute the Decision

Once you’ve made the decision, act.

• Allocate responsibilities.
• Agree budgets and timescales.
• Establish measurable milestones.
• Communicate expectations clearly.

And, importantly, avoid reopening the same debate every time a minor difficulty arises. Good planning should make execution more effective, not create endless hesitation. The purpose of measuring is ultimately to enable you to make the cut with greater confidence.

Stage 4: Review – Learn from the Outcome

This is the stage I believe many businesses neglect. Once the decision has been implemented, compare the actual outcome with the original assumptions.

• Did the investment generate the expected return?
• Did the recruitment deliver the anticipated capacity?
• Did the pricing change improve profitability?
• Were the original assumptions realistic?
• What would you do differently next time?

It’s important to distinguish between a poor decision and an unfavourable outcome. A well-reasoned decision can still produce a disappointing result because circumstances change.

Equally, a poorly considered decision can occasionally succeed through good fortune.

The objective is to improve the quality of the decision-making process, not simply judge every decision by whether it worked. Over time, this creates something extremely valuable. A business that learns from its decisions rather than simply repeating them.

Final Word: The Most Expensive Business Mistakes Often Begin Before the Work Starts

I started with a simple principle from carpentry. Measure twice, cut once. It’s a lesson that has survived for generations because it recognises something fundamental.

The cost of checking your work before acting is usually much smaller than the cost of correcting an avoidable mistake afterwards. I believe the same principle applies to business.

Too many owners begin implementing decisions before they’ve properly understood the implications. They confuse targets with plans, assumptions with facts and activity with progress. And when things go wrong, they devote enormous amounts of time, money and energy to correcting problems that better planning might have prevented.

But there’s something else worth remembering.

Every hour spent correcting an avoidable mistake is an hour that could have been spent building a better business.

That’s the real cost.

It’s not simply the money lost on an unsuccessful investment, the additional overhead created by a poor recruitment decision or the margin sacrificed through badly considered pricing.

• It’s the opportunities that were never pursued.
• The improvements that were never implemented.
• The customers who were never developed.
• The time that management will never recover.
• I’m not advocating caution for its own sake.

I don’t believe successful businesses are built by people who are afraid to make decisions. They’re built by people who understand the difference between a calculated risk and an unnecessary gamble. People who know when to investigate, when to experiment, when to commit and when to change direction.

People who recognise that planning isn’t an obstacle to progress.

It’s what makes meaningful progress possible.

And perhaps most importantly, people who understand that the objective of business isn’t simply to do more things. It’s to do more of the right things. The next time you’re contemplating a major business decision, ask yourself a simple question.

Have I actually measured this properly, or am I already reaching for the saw?

Because in business, just as in carpentry, the most expensive mistakes often begin with a cut that should never have been made.