I think as an SBDC business consultant I am supposed to tell people that they need to write a "business plan". I guess I'm breaking the rules because I'm going to tell you Not To Write Business Plan! Many entrepreneurs think writing a business plan is an exercise to engage in only when seeking a loan or investors. There is so much focus on the development of a 40 page, 12 point font plan that the true purpose of a plan, to guide the operation of the business, is missed. I've seen plans where the narrative and the financials did not relate to each other, as a matter of fact looked like two separate businesses. Other plans I've seen are full of Gartner references but contained no real guidance on execution of the business. The worst plans I seen are the ones that are sitting on the shelf in the founder's office covered with dust. More than likely all of these plans were written for the banker with no real thought as to using this as a document to drive the business. The problem with that is if a loan is made it is based in part on the plan. If the plan is not followed and the business does not meet it's milestones the bank will be less likely to extend further credit in the future...or worse.
My advice is to forget about writing a plan and focus on the "Process of Planning". Start with a blank pad of paper or flip charts. Write something that you can embrace and use to drive your business, not as a paperweight or a doorstop. You should develop a working, living document that will allow your business to reach the levels that you desire. It should clearly articulate the steps you need to take as you grow the business. I've heard that the keys to running a business are knowing "Who's out there to buy your product." and "How are you going to get them to buy it." Maybe there is a little more involved than that but if you don't have the answers to those two questions down cold it's going to be a struggle.
Here are some steps to consider in your planning process:
- Review Mission: Why does your business exist? What are you doing this for? Good businesses drive margin based on the mission of the business.
- Review Vision: Where do you want the company to be in 12 months, in five years? This would be in many different factors: financial goals, role of the founders, employees, location, etc. This will help you determine action steps to take later and help build your business direction.
Do a Strategic Analysis: This will really allow you to determine where the business is and what opportunities might be available that you are not currently thinking of. A good format is a SWOT Analysis. For each of these you should list items that will impact future strategy:
- S-Strengths: Skills, distinctive competencies, capabilities, competitive advantages, or resources the organization can draw on to build strategy.
- W-Weaknesses: The lack of one or more Skills, distinctive competencies, capabilities, competitive advantages, or resources the organization can draw on to build strategy.
- O-Opportunities: Situations in which benefits are fairly clear and likely to be realized if certain actions are taken.
- T-Threats: Situations that give rise to potentially harmful events and outcomes if action is not taken in the immediate future ~ These must be actively confronted to prevent trouble.
- What products do you want to offer?
This is a brainstorming activity where you can put anything forward. Create a list
of possible product regardless of priority at this point.
- Put some detail around the product offering: Take each product you want to offer and consider what those look like short-term and long-term. Who is the customer? What do these products accomplish? Discuss ROI, revenue, expense (don't forget opportunity costs).
- Start to prioritize the products: Put the products in order of value for the company relating to the mission/vision and financial goals of the company.
- Do any of these products work together? Think about the possible synergies created by coupling products into one offering. You might now decide to create one product that drives higher value than two individual products.
- Validate the market need for the products with database research: Research possible users/buyers of your products. Find who is out there to buy the product. Most libraries have research capabilities and databases that you can access simply by having a library card. If you are in Columbus, Ohio check out the Columbus Metropolitan Library.
- Validate the market need for the products with customer research: Get to the customers and find out what they think of your products. This can take the form of formal focus groups or facilitated discussions or meeting with potential customers one-on-one to gauge their interest. This is critical step because you are gathering the opinions of the market not just you and your buddies opinions. An important note here, it doesn't have to cost a lot to do this. You don't always have to have professional, paid facilitators...just talk to people.
- Layout Milestones/Timelines: You have to hold yourself accountable. Develop milestones for taking your product to the market. These milestone events might include: When can the products be launched based on funding, employee resources and timing for the market, etc. Take each of these milestones at least three layers deep so that you have detailed steps to implementation. Once you decide what the milestones and steps are you need to develop timelines, answer the WHEN question.
- Execute: Take what you have done and bring it to life...Implementation and Execution.
Let's be clear, you can start/run a business without doing all of this. The difference is the level of control over the outcomes of the business that you gain by going through a planning~implementation process. I often have entrepreneurs come to me after being in business for awhile and want to "get serious" about moving their business forward. This allows you to do that. It also makes it easy to create a "business plan" for financing because you have all of the information needed, all you have to do is drop it into the right format.
Did I miss anything? Let me know your thoughts.