I’m going to go on a bit of a rant today. People that know me, know I’m the anti-business plan lady. Why? I’ve seen what people go through when trying to write their business plan.
If you’re trying to write a plan for your business using the out-of-touch business plan, STOP RIGHT NOW. You’re wasting valuable time.
The traditional template is nothing more than part of a loan application. At what point did we decide this was the right tool for helping a startup or a growing business?
You finally built up the courage to start a business. You’re in the planning phase or you’ve gotten through the first few years. Either way, you realize you must put your plan in writing.
I know, for most of us entrepreneurial souls, we hate it. It’s not the fun part. Well, it should be.
However, as soon as you tell someone about your dream, they tell you about the business plan. You download it, take free classes, and start following the traditional template.
It’s not long before you put it down and start a business without it. The reason why we hate writing a business plan is in the tool.
Let’s take a look at the better business plan.
How Do You Create a Better Business Plan?
A better plan starts with you in mind. Focuses on why you started this journey.
- What made you start your own business?
- What inspired you?
- What did you imagine it would do for you, that working for someone else would not?
I believe one of the greatest obstacles for success is not knowing your why for doing something. A deep in your soul kind of why.
When you have a powerful reason for doing what you do, it changes everything.
It drives you forward when things get in your way. Write down everything and every reason for why you started or want to start.
This is the first step and it’s all about you.
Now we can get into the next steps. Let’s get into the business.
Perhaps you have heard about the Three P’s of business:
They are the three areas you must manage. To break them down into manageable processes, I suggest my clients work on the Seven P’s of Planning.
The 7 P’s includes additional focus areas for each.
The seven P’s give you the chance to consider smaller areas of management as you plan. The seven p’s of planning are:
This is where you consider the people you will need to build your business. Think about Human Resources.
Finding the right people is so important. The wrong people can create problems for your business.
The cost to hire and retain employees makes taking the time to find the best people is well worth your time.
I suggest you think about all the people you will need to do business. Why not now, when you’re making time for planning?
How will you find the right people to contract for services, to purchase inventory, for marketing, accounting, legal advice?
Your reputation in business is important. Why not choose suppliers and contractors for their service and people?
For example, can you get someone on the phone when your customer is not satisfied because of a contractor? Isn’t this just as important as hiring the right people?
Now is the time to think about everything you must do. You know you need the right people. What will be your process for hiring?
Whether selling products or services, what are the steps in that process? From how you manage calls and follow up to purchasing and customer service, everything needs a process.
Doing this now will help with training staff. You will have a process in place for them to follow.
What is it? Why are you convinced your products or services are needed? Do you know for certain? Is the product a material thing or is it a service?
My product is training and coaching. It’s based on years of education and training. If I take the knowledge and write a book, I now have a physical product too.
In the process section, you considered most processes. What about the product development, purchase, manufacturing, shipping, packaging?
- Are you creating your product?
- Is there a need for research and development?
- How is it designed?
- How is it packaged?
Before your business is profitable, how will you manage cash flow? Think about yourself and others that may depend on your income.
- How much do you need to cover your personal expenses?
- How will you cover all the business expenses, if profits are delayed?
- Is there an emergency fund?
In business as in personal matters, you should plan for when things go wrong. An emergency fund is the foundation for managing financial risks.
- How long can your pre-profit funds sustain you, until you’re profitable?
- Will you borrow?
- If so, how will you repay the debt?
- Are you financially ready to start your business now?
Know your numbers: annual sales revenue, gross profit margin, expenses as a percentage of gross profits.
Cash flow problems, due to poor management decisions is one of the most common reasons for failure.
Speak with an accountant for advice on the process for managing the finances.
Positioning (Niche and Brand)
What will you stand for in the marketplace? Perhaps, your product is environmentally friendly. How will you separate yourself from your competitor?
- Will your customers buy for price or quality?
- How will you stand out from the crowd?
- Will you serve a specific group?
- Are your clients high-end?
- Are you selling directly to customers or selling to wholesalers?
- Is your business, B2B (Business to Business) or B2C (Business to Customer)?
Think about who you want to serve and the problem they need solved
Point of Contact
Write down every point of contact with your potential customers, influencers, referral sources.
- Where can you find your target audience?
- Where are they online and offline?
- How are they getting their updates, news and event information?
You will be writing your marketing plan, based on all the points of contact. Where is your target audience connecting with your brand?
Once you’ve connected, what system will you use to be the go-to-person for the solution to their problem?
Once profitable, you must continue to make sound management decisions. Know your numbers: annual sales revenue, gross profit margins and expenses, as percentage of gross profit margins.
- What are your sales projections based on this new benchmark?
- How did you arrive at these numbers?
- What products or services will get you to your sales projections?
- How many of those products or services must you sell?
- Has anything changed in the marketplace that can impact your revenues?
As you can see, there’s much to do to manage a successful business.
For more on the 7 P’s of Planning and other tips for managing business and life, listen to the latest episode of The Entrepreneurs Lifeline below.