One of the key components of what we talk about is how do you secure a better life and better future. So, of course, the thing is how do you decided to have a business and how do you plan for it? That is the business plan. Part of the motivation for this particular episode is that I was actually, on a call last night and somebody asked the question. The person who was moderating the call said, “Oh no you don’t need a business plan.” Part of the conversation was about the fact that that was “old school” or “old hat”. Let’s talk a little bit about why you should have and why you need it. And what it does for you.
You have an idea, you want to put it together as a business. What the business plan does is:
- It gives you and outline. First an outline and then something more thorough. To monitor your progress, hold yourself to what you plan to do and then give you more control of milestones.
- It forces you to take a look at everything you’re doing at once. Think in terms of if you were writing a book. When you’re writing, you write the chapter, you forgot one detail, you go back and write it in or re-write the chapter. Have you ever thought, “I should have said…” or “I wish had mentioned…”? If you had it outlined prior to your presentation or in speaking to others it would have been so much better. The business plan is the focus for your entire business. It will show you how it affects your life, your family, etc…
What is it, what does it do and how do you do it?
- It gives you the chance to decide what your value is to other people. When you’re either selling a product or service, what’s the value proposition (what it’s usually referred to). How can a person use it and why is it a value to them? How will they perceive it?
- Marketing: How will you present it? How are people going to feel? How will they use it? Why would they need it? How will you develop a want and desire for your product?
- Producing the plan: How will you put it together? If you have products, how will you escalate all the different products, at different times? All that needs to be set out so that you have an idea of all that you’re planning. Also as you’re going along what happens if you get off target? We all have biases on our own things. Over time, it’s okay to change your mind but having that business plan narrated out or outlined, it gives you the opportunity to say, “Wait a minute, this is why I thought this in the first place. Do I have a real reason to make a change? Or is this a better alternative?” It holds you accountable not just for timing or finances and staffing but also for your reasoning.
One of the most important thing in a business plan is actually the end. You should treat every business as if it has a life that will end at some point and time. You may want to start a business and think of passing it down to your children or grandchildren, etc… it’s a lofty idea but treat it that has 7- 10 year lifespan – something reasonable. The reason for this is you don’t keep on investing without taking money out and putting it into funds for retirement, children’s education, or whatever you’re going to do. It keeps you more honest to run it as a true business.
On elevator speeches (I’m not a big fan of this) but you do need to be to talk easily to bankers, accountants or attorneys that you might have to deal with. Even more important, you need to be able to talk to people who might be interested on coming on board one way or another. That is really good talent to help you with your business. Whether it’s an actual employee or someone you can partner with. If you’re just saying things off the cuff, that does not sound solid enough for people to have the confidence in joining you. If you had a business plan, you have all that thought out. When an investor or client asks you a question you would have thought out all potential questions. That’s part of developing a business plan. You’ll really sound like you know where you’re going.
Let’s say you now have your business plan. What does it do for you? What’s in it that will help you?
- Cash flow: Detailed plans to be able to tweak your cash as you go along. You’re making choices to where you should allocate cash from one area of the business to another. You can also see if you’re not getting the sales that you needed or if you’re exceeding expectations. This gives you the opportunity for cost corrections. With a plan, you can see if you’re off course on sales or you may see that you’re off course in meeting the expectations of your customers. Or even if your salaries are on course. Big companies budget for advertising as an expense, which I believe is ludicrous. For example, if they have budgeted $100 for advertising and have spent $1,000 but received $2,500 revenue. They say, “I’m going to stop advertising now because I went over my budget.” That’s ridiculous. As a small business, you are able to be more agile. You can make cost directions. You may decide to spend more on advertising because of the positive revenue but you can also see that the money comes in after the expense. This is a problem with cash flow, so you have to adjust things (you may need some advice from your accountant). By being aware of it and having that plan, you’re able to seek advice.
- Having the plan as a hard copy: Will give you the opportunity to see things to make sure that you’re not drifting. We all tend to sometimes drift. If you want to have the attention of a good mentor, advisor or coach, having that business plan will let them know if you’re really someone that’s worth their time to work with.
- Choices: If you decide to change something, you’ll need to decide if you need to shift your focus (whether it’s a cost of time or money), it means it’ll come away from something else that you’re doing. Those choices need to be looked at in context of your entire business.
- Investments: Investments come about in different ways and may happen over time as you are growing and getting bigger. It may also come when you might realize that you need to make something more efficient or you may need help. Either from an employee or a virtual assistant. You’ll have to decide whether it’s worthwhile. You may want to get more equipment or rent more space. All these decisions and choices will be spelled out. If you have to shift over time, you’ll need to be able to put it in perspective. You need to be able to explain this to partners, affiliates or customers or even your website designer. If you’re able to explain this clearly the meaning and concept behind what you’re doing, your web designer will be have the opportunity to create for you an ideal website.
To be taken seriously you need to have a fairly detailed plan so that you have in mind all the arguments, the reasoning, causality of why you’re doing what you’re doing. Imagine writing a book without an outline or doing a presentation without bothering to outline it, just winging it. If you don’t have a business plan, that’s pretty much what you’re doing. Even a simple business plan is good. When it comes to business, you wouldn’t want something to drift out of mind. Good luck and let me know what you’re thinking. Comment on the website, https://www.lifeunsettled.com/ I appreciate all those. Would love to hear from you.