Business Plan: Foundation or Fodder?
The rate at which business changes today is much faster than it used to be.
Traditional business plans had you create 3 year pro-forma’s that all ended with a “hockey stick” growth curve. From there, they attempted to plan out every week of revenue and provide a full analysis of all the “surprises” a business owner might encounter.
A business plan before revenue is only a best guess.
Today’s business plans need to be more nimble and able to respond to changing markets, consumer preferences, and overall business challenges. Strategic Planning is vital to the success of any business, but have to start with the purpose of the business and get the product to market as fast as possible.
Any entrepreneur who thinks he can “predict” what his business will do over the next few years is a fool.
Starting a business requires a lot of work; getting a business open and taking a more dynamic approach to planning yields greater results.
Last year I had the great fortune of meeting Jack Dorsey, founder of Twitter and Square. Jack talked about how the traditional business plan is dead in Silicon Valley. “Get your product to market as fast as you can,” he suggested.
What hit me was how smart his thinking was. A business plan without a business is a guess. Until you have clients and are able to see what the market returns for your products or service, you don’t have a business, and you can’t really plan.
Simon Sinek tells us to start with “why.”
Why is this business in business? Who is it meant to serve and how should it connect with people on a deeper level than just a transaction?
My bet is that business owners who spend their time building a group of passionate promoters of their business fare much better than those who spend their time in an office planning.
So what does a new entrepreneur do?
Each year, I work with hundreds of businesses in a wide variety of markets. What I have learned is that those who have a core purpose and mission fare much better than those who try to run their business just by the numbers.
Numbers keep score, they don’t drive a business. Here’s my approach that I have found works well:
- Why is your business in business?
- What are your Mission, Vision, and Core Values?
- Who do you serve?
- What is it about your business that is different from other businesses competing for your exact target market?
- What do you sell?
- Are you planning to compete on price, speed, or convenience?
- How much do you need to charge to be profitable?
- What is your recurring revenue model? Don’t have one- figure it out.
- How does what you sell get packaged to make it easier for people to buy?
- Who is your ideal client?
- Where do they shop?
- What do they read?
- Who do they follow (influences them)?
- What are they willing to pay for your service?
- What do they believe?
- What is important to them?
- How do they like to buy?
- What revenue targets do you have to hit in order to stay in business?
- How many units need to be sold?
- What is your monthly amount you have to hit?
- What is your max profitability if everything worked perfect?
- Focus first on the biggest things that detract from that profit, then focus on the smaller things that rob from it.
- See this Whiteboard Wisdom on Profitability
- What goals do you have for growth?
- What people do you need to help grow your business?
- What are your strengths?
Take this Quiz to figure it out
- Who do you need to hire to do what are not your strengths?
- How much do they need to make to be happy?
- What are your strengths?
- How are you going to build your business?
- Get out and talk to as many people as you can.
- Who should you strategically partner with to build your business?
- Where do your target markets hang out?
Building a business is tough. It takes a lot of hard work, time, and sacrifice.
I spent 3 months writing the business plan for my first company. It taught me a lot and allowed me to think about a lot of challenges I was going to face.
goBRANDgo! is my fourth company. Today, I run my business with a few simple tools:
- Focus on Mission, Vision, and Values
- Open Book Management
- Entrepreneurial Operating System-Traction
Without customers, you don’t have a business, you have a hobby. Get your business open, get some customers, learn, adapt, and grow. You will learn a ton and have a lot of fun doing it. Take a strategic approach that sets a long term vision and then “ETSOOI” (Execute the shit out of it).
Have a comment? Write back; I’d love to chat!