"How to start a business" and "How to write a business plan" are two of the most searched business terms in the world. Everyone wants to start a business and is seeking guidance on how to do it. However, a business plan takes time and energy to prepare and is often overlooked. The fact is that planning a business launch is the most important step you can take for a new business. Even more important is how you manage that business after launch. Unfortunately, I would suspect that more than half of new businesses don't have a plan, and over 80% of businesses that had a plan haven't referred to it or kept it current. More than 50% of all new businesses fail within the first 5 years and more than 70% fail before 10 years. Your lack of planning and strategy is almost guaranteeing your failure. As always, if you have a question or think you might want to work together, please get in touch through my Home Page. Also, never miss a blog by following me on LinkedIn or Facebook.
I get it, you've got a great business idea and you just want to get your hands dirty and go. That's awesome, go for it but remember, a little planning never hurts and can be the difference between success and failure. When I say "business plan", I don't mean a huge plan filled with obvious junk and jargon, those types of plans are obsolete and yours will be outdated before you even finish. To balance some planning with your eager desire to just get started, consider jotting down a "Lean Business Plan". The 4 most critical things in a lean business plan are as follows:
The 4 Most Critical Things for Your Lean Business Plan
1) Analyze Your Businesses Target Market or Describe Your Ideal Customer Avatar
In order for your business to be successful, you definitely need to identify your target market or your ideal customer avatar. You probably have a great idea of what your product or service is, but who will actually buy it and what does your ideal customer look like?
2) Create a Marketing Plan
If you skip Point 1, forget about it, you don't have a chance. In order to develop a marketing plan, you definitely need to know your target market / ideal customer avatar. The marketing plan is figuring out how you are actually going to deliver your message / offer. In my experience, new business owners rarely have a good grasp on marketing plans and often get frustrated by lack of results. The truth is, you need to study up on this topic yourself but don't be afraid to get some assistance.
3) Develop your Operational Structure
Make sure you develop an operational structure that your business will follow. The operational structure should broadly define how your business will ultimately service customers. From taking calls, getting parts and supplies, staffing needs, delivering goods and the equipment you'll need, you should note all of the key elements down, even if they are obvious to you. This exercise is a great opportunity to make sure you actually do have everything figured out. Every business is unique, so make sure you walk through the steps necessary for your industry.
4) Curate a Solid Financial Plan
To round out your lean, simplified business plan, you should take a look at A) What finance tools you are going to need, and B) How you are going to fund your businesses start up period and continuing cash needs. For finance tools, check out this other blog I wrote about my favourite tools and why:
When thinking about your cash needs, make sure you spend some time actually considering the period after start up. It's easy to consider how much money you'll need to get started, but it's much more difficult to determine your need for the 6 months after launch. All too often new businesses run out of cash after launch since they didn't appropriately plan. Or, if they did plan, they were too optimistic and didn't build in a cushion, assuming their marketing plan would go off without a hitch for example.
Why Your Business Plan is Useless
Your business plan is NOT useless. How you use it sucks though. As mentioned above, rarely is a business plan updated as a business grows. More often than not, this causes business owners to endlessly work in the business rather than on the business. Eventually, you might you go from fire to fire, from poorly serviced customer to poorly serviced customer, without ever pausing to consider a better way forward. Your scaling business could have 20 to 40 employees at this point and your continual assessment of your business plan will help keep things in focus. At a minimum, a quarterly review of your business plan and how things are going is necessary. This involves looking at your updated lean business plan, key performance indicators, industry trends, challenges, your operations, and future opportunities.