Kicking & Screaming

Most business owners and department managers know they “should” have a plan. Yet in all my 25 years of helping business owners and managers grow their businesses, just four of my clients possessed a written plan, and only one was actually using it. Why do so many business owners skip this crucial step? Some common explanations I’ve heard go something like:

• “I don’t need funding, so I don’t need a business plan.”
• “My plan is going to change anyway, so why should I waste my time creating it?”
• “It will take too much time.”
• “I started to and found it overwhelming.”
• “I didn’t start a business to do the types of things I did when I worked for someone else.”
• “I don’t want a big company. I don’t want employees.” (I just created a J.O.B. for myself.)
• “I don’t know which planning program to use; there are so many out there.”
• “It’s expensive to plan and I need to spend my money on other things.”
• “I don’t need to plan; I just want to work in my business.”

Does any of that sound familiar? For the most part, “winging it” from day to day works-until it doesn’t. Many business owners learn this the hard way. Whether at the $60,000 per year income level or at the $30 million level, without a plan, a business or its owner will eventually crash. Owners or managers will often agree to use a plan if someone else creates it for them. That’s a BIG no-no in my book. It’s important for business owners to gain the experience of the planning process. At least once, they must tackle the questions they’ve put off answering. Otherwise they run the risk of never gaining real clarity regarding the direction of their business.

The Care and Feeding of Business Owners & Managers

As the old saying goes, “You can lead a horse to water, but you can’t make it drink.” Clients who come to me for help with their strategic plan are often feeling a “pain”. It is a common experience, often necessary to compel them to take a “drink” from the strategic planning process. Here are a few common “pains” my clients have reported:

• They’re not attracting their ideal clients and are sick and tired of working with jerks.
• They need to be making more money.
• Their spouse informed them that if they don’t spend more time together, they’ll file for a divorce.
• Their spouse wants them to get a “real job”.
• They’re retiring from a job in “x” years and want to have an immediate income at that time.
• They’re retiring in “x” years and want all the work, time, and money they invested in their business to be their nest egg.
• They’ve discovered that a business isn’t just a place to work, but an entity to grow.
• “Someone” told them they had to create a plan.
• “Someone” told them that their marketing is “all over the place”.
• They need help managing their company or department.
• They became an “accidental” business owner or were promoted suddenly, and need help fast.
• They’re turning 50 and want to examine the next 30 years of their business with someone who isn’t as vested in the business as they are.
• They want to work one day per month because they want to start a non-profit.

These and many other possible “pains” or problems will hopefully lead a business owner to re-evaluate the need for planning. But where to begin? The task of planning can seem monumental. Luckily, there is a one-page process which makes planning not only exciting, but simple and straightforward.

When the Light Bulb Flickers

When someone seeks my services, they often need more clients, better clients, or more money. In determining what is hindering their growth, we find they have no vision, mission, objectives, or strategies written down. They usually have no action plan, marketing plan, or financial plan, either. Here are some reasons they’ve given for finally taking the planning plunge:

• “My original business vision was thrown to the wind and all I’ve been doing is looking at ‘today’.”
• “I realized that the business I envisioned is not what I have, and I don’t like the business I have.”
• “I read Michael Gerber’s The E-Myth Revisited and realized I need systems.”
• “I’m getting older. I want to get top dollar for my business in (5, 10, or 20) years, and I know I need to have a turn-key business. My business is anything but turn-key.”
• “I’m getting bored of running my company, and want to get it ready to sell/hire a CEO.”
• “I have tried to grow my business for the last two years and what I’ve done isn’t working.”
• “I want to start my business right; I know I need a plan.”
• “I want to earn more money.”
• “I’m frazzled. I network and market all the time and am not seeing the results I once saw.”
• “I am creating a new position within the company. I need to bring the concept to my boss in an organized way.”
• “Although I work for a company, I’m paid on commission, and I need a plan to expand.”
• “I want to open a branch office, but I can’t see having two unorganized offices. I need the first office organized, and systems created before I start the second.”
• “I don’t like my business model but don’t know what to change or how to do it.”
• “My business does not have an inner brand, niche, or focus.”

Back in 2000, with a year-old business of my own, I had the opportunity to attend a one-day planning program which helped me to create a plan on a single page. This plan would encompass all of the plans mentioned above. As a participant, I realized the importance of planning strategically before attempting execution or implementation. Today, my clients use that same methodology to bring greater success to their businesses. And when someone wants me to create the plan for them, I do it with them. My clients are present during the process, learning a system that can be reused in the future to make their lives easier-and more profitable-in the long run.

How to write a business plan is among the very first decisions you, as a future business owner must make. Do you write it yourself, or give in to the temptation to take an easier path? By taking ownership of this first, most important step in building your business, you will gain far more than a crisp document to be read by others. You will develop a deep understanding of what it will take for your business to succeed. For this reason, it is essential that the business owner be the primary thought leader or sole author of the business plan. Outside help should be reserved for fine tuning, validation and in some cases to prepare financial projections.

Let it be YOUR Business Plan

As the founder and business owner you will be charting the course for the business. It will be important that the business plan be an extension of your personal vision for the company. For most entrepreneurs, the opportunity to call the shots and lead the way was an important part of why they wanted to get into business. Now is the time to start being a leader. Leaders develop their own plans and call the plays along the way. When it’s not your plan, you relegate yourself to performing as an operator. You will find yourself going back to the business plan someone else wrote to occasionally re-read the directions, or ignoring it altogether. Either way, the value of having a plan has been greatly diminished.

The Value is in the Process

The act of writing a business plan is one of forced discipline, problem solving and reconciling the results. When approached and completed in this manner the end product and the process itself will increase your self-confidence and assuredness about where your business is headed.

Starting with a simple business plan template, and there are lots of them available, force yourself to think through all the critical aspects of the business. This will be an iterative process that you repeat, fine tune and re-write. As you develop each section of your business plan, your thoughts about the other sections will evolve-even those that you’ve already written. You go back, edit and in the end, you make it all work together. That’s the idea. You are developing an understanding of the relationships between every aspect of your business.

To underscore the importance of writing your own business plan, take this little exercise. Read the paragraph below as quickly as you can. Then stop, take a breath and move on to the next one.

Who will my customers be? What problem will I solve for them? How much are they willing to pay to have this problem solved? What are my costs associated with each sale? Why will customers choose to buy from my business? How will I find customers? Who will sell, produce, and deliver? Which markets will I go after first? Why? How much will it cost to operate the business each month? What will my break even point be? How fast can I get there? How much startup capital will I need? How will I succeed?

Okay, slow down now and consider this: The most important question isn’t listed. The most important question is, “How are these factors interrelated?”

Imagine that today someone handed you the answers to all of the questions from our fast-read drill above. It would certainly save you a lot of time. Better still, these wouldn’t be just any answers, but they would be the right answers from a solid business plan for a business that had already been proven to be successful, a business just like the one you’re planning to start. You could read and re-read the answers many times over, practically memorizing them. You would know that they were the right answers. Yet, doing so will not help you develop an understanding of how the answers are interconnected.

If you change the way you plan to find customers, how will that impact your monthly operating costs? If customers are only willing to pay 80% of your planned price, what will that do to your break even point? How will the answers to these two questions impact how much capital you need to start the business? This example looks at just two questions. Realistically, the answer to each question is highly dependent on the answers to several of the other questions. In the end they must all work together and you must understand how they all work together.

If you develop your own business plan, section by section, thinking through all of the answers to the critical questions, you will also develop an intuitive sense of how they work together. It will require a lot of thinking and rethinking of your ideas and it will take time. This is not meant to be a fast drill. In the end, it will be the difference between memorizing the lines and actually being the character. Small business ownership is not the place to be reciting someone else’s lines. You are the character. Write your own lines. Be the leader.

When to Bend the Guidelines

There are some times to reach outside for help. For example, perhaps you would say, “I’m not a numbers person; I don’t think I can do the financial projections.”

First, plan to become more of a numbers person because business ownership is about numbers. Sales, expenses and profits are the three that are most important. Even so, many business operators who have a good feel for the numbers need assistance with spreadsheets and financial statements. It is okay to get outside help preparing your financials, just be sure that you understand them when they are complete. If you are going to pay someone to prepare them, be sure that they also save time to go over them with you from top to bottom. Ultimately they are your numbers.

Others might say, “I have great ideas, but I’m not a great writer.” It’s understood that there can be a lot riding on someone else reading the final product of your business plan-such as a loan or an investment decision. For that reason, if you are not a strong writer you should start by going through the process of organizing, writing and rewriting your own business plan as best you can. Force yourself to go through all of the steps of writing, rethinking and rewriting as your ideas evolve. Then, have someone else take your finished draft and craft the final polished document. What is important is that the final document must accurately reflect your concepts, ideas and thought process, not the editors.

What if I Just Can’t Do It?

Finally, some would say, “I want to start my own business. I am a strong operator, but honestly, I don’t think I could write a business plan myself. What do you suggest?” Simple: Buy a franchise! They are perfect for people who are strong operators where someone else provides the strategic plan, the systems and some guidance. This might be the best ownership model for you. That’s a topic for another day.

Business plans can be one of the most effective tools for the small business owner who is starting, growing and even managing a business. The business plan can have multiple uses and advantages. Provided is a list of important reasons to create a business plan:

• The business plan is simply a must have for small businesses
• Helps make important business decisions
• Offer a reality check
• Create new ideas
• Creates a plan of action

Writing an effective business plan is time consuming and enough time and thought should be given to successfully fund, manage and even successfully exit a business. To be successful and taken seriously by investors, your business plan must be clear, concise and must be able to describe what, where, how and why customers will want to buy from you.

Let’s get started by laying out the diagram of a successful business plan.

Executive Summary:

The executive summary will be a summary of the key points of the business plan.

Business Description:

Provide an overview about your business idea, concept/s, products and or services, etc.

Value Proposition

This section outlines what makes your business idea/concept/service novel (better than everyone else’s). This is not about price since you may have difficulty defending this to potential investors.

Industry Analysis

This section will describe what the industry looks like (an overview), trends, what do customers purchase, eat, look like, demographics, etc. The more details you provide the better.

Competition

Who are your competitors? What market share do they have? Even if there is no competition, provide competition that is close to your business.

Marketing Strategies

How will your products and or services go into the market place? You have to think about non-conventional marketing (Note: this is critical) methods that are cheaper than traditional marketing methods (E.g. T.V, radio, print) and have higher impact.

Barriers of Entry

What will stop you from entering the desired market? How will you overcome the barriers of entry? How will you set up your own barriers of entry for other potential entrants into the marketplace?

Distribution Channel

How will your products and or services be entered into the market?

Team Summary

This section often many times is the most important part of the business plan as potential investors want to see who else believes in your idea. Also, potential investors want to see the experience your team possesses in various areas of your business (E.g. technical, business, commercialization, etc.)

SWOT Analysis

SWOT = Strengths / Weaknesses / Opportunities / Threats SWOT deals with the conditions in which your products and or services operate. Strength and Weaknesses are internal (team, company, products/services) Opportunities and Threats are external (market place, trends)

Financial Analysis

All financial aspects of your products and or services.(cash flows, income statements, balance sheet, start up income required). Note: spend plenty of time here. You must be able to justify any assumptions

Critical Success Factors

What needs to be achieved that will enhance your chances of success? Also, insert the possibilities of the chances for success happening.

Exit strategies

Describe how you and you investor, if any, will exit out of the project if you want to and make an excellent return or move on to your new “BIG” idea.

Future Developments

This section describes any future plans for your products and or services.

Appendix

Add any additional information here (Quotes, contracts, statistics, etc.)

There are many different idea and practices in writing a business plan. It does seem like a daunting task but it does not have to be. There are many online resources at your disposal including the U.S. Small Business Administration that will help you to get started or you can use business plan software that will guide you step by step in your endeavor. It will also be good idea to have an accountant help with the financials. It can cost you an up front cost but the benefits outweigh the up front cost accrued. Armed with this information, you are now ready to get started writing your new business plan. Good luck and be prosperous in your new endeavors.