People tend to dramatically underestimate how important business planning is. “Strategic Planning” sounds like a very scary concept. It sounds like something that military leaders to prepare to annihilate an enemy, or something that large companies do that is really a waste of time and money.
Planning for your business is critical at the beginning of the business and as an annual task. In this post, I will give you an outline for creating a business plan for your new business idea.
When starting a business, people have a tendency to have very unrealistic or undefined ideas. It is always a good idea to put these ideas to paper so you can find where the holes are, define your goals, and make sure you are going to reach them. A good plan will remind you why you are working in this business, what you are working towards, and that you CAN, in fact, get there! You make choices for your business every day, it is critical that you have a “map” to help guide you through those choices.
This is not a guide on how to write a formal business plan. It will not get you funding from venture capitalists and it will not get you a loan from a bank to start your business. If you need either of those things, there are lots of great tools online for writing formal plans. If you think need to write a formal plan, it is best to enlist the help of someone who knows what they are doing.
This is a guide to help you make sure your business is realistic and that it will support you. It will help you solidify your ideas into a solid concept so that you can act on it. In my experience, almost no one needs a formal business plan.
With that being said, the follow outline is what I usually recommend to clients for how to do their planning:
What do you want your business to do?
How do you want to do it?
What will it look like when you accomplish those things?
Who is your ideal client?
What does your ideal business look like?
Why are you in business?
What is the unmet need you are fulfilling, or what need will you meet better (or cheaper)?
Your Vision is a short paragraph describing these things. Your mission is one sentence that describes how you will accomplish that Vision. Neither of these things need any sort of numbers or quantification. At this stage, the money is irrelevant. You should have touchy-feely concepts like “I want to have more freedom in my life” or “I will make the best widgets in town”.
This is where you quantify things. Create a list of goals that are specific, i.e. Have 50 clients paying me $100 a month, or Sell $10,000 a month worth of widgets, etc.
This is NOT a to-do list. If you have things you need to accomplish to reach your goals, those items go on another list. Do NOT put “Buy a Widget Machine” or “Learn to operate a widget machine” here. Goals are strictly an “if I had my ideal business, how much business would that be” or “How do I quantify my success?”
I’ll say it again.
MAKE A BUDGET!
Seriously, don’t skip this step! In fact, you are going to make a budget TWICE; one for you personally and one for your business. This will give you an idea of how much money you need to make in your business. Once you have made your budgets, go over them again and add at least 10% to all your expenses. When you first do the budget, don’t worry about income, just list out expenses. Do not forget to include annual or semi-annual expenses. I like to divide these out to their monthly equivalent, it makes the numbers easier to deal with.
Do the Math!
Now that you have your ideal business, and how much the expenses are going to be, see if you actually make enough profit to cover your bills. You would be shocked how many people fall short when they do this the first time. Keep playing with the numbers until you reconcile your ideal with your needs.
Then you need to make sure that you will actually be able to get all the work done. I once had a client who skipped this step (see what happens when you skip the budget step!?) and when his business failed and we analyzed it he realized that he had to work 70 hours a week to produce his “ideal” amount of work. This did not include any other aspects of running a business, which take time.
I like to create a weekly schedule so I can see, in black and white, what is expected of me. Do not forget to include: marketing time, administrative time, financial and accounting time, and FUN time! Oh, and the actual work. It takes a lot to run a business; you can’t be in production all 40 hours a week.
OK, so we know why we are in business, we know where we want to be, we have an understanding of what it takes to get there and how well we will be living if we do. So now we just need the clients! (just…. HAHAHAHA!)
This section can be a little tricky but you need to identify how you are going to reach your clients, what your marketing pitch will be, and what your message is. I typically don’t recommend that you do “market research” or anything formal like that (unless you are making a brand new product). I usually tell clients that you need a 10-second pitch, a 30-second pitch, and 5 minute pitch. And you need to memorize them. Then you simply have to identify as many places as you can to deliver these pitches.
My other advice on marketing, if you have start-up capital, is to enlist the help of pros like the awesome Gurus at Kneadle. These guys have forgotten more about marketing than I will ever know.
This is not a blog about marketing. There are LOTS of ways to get your message out, you just need to explore them. Every business will be different. But you need to put some serious time and effort into developing an idea of how to get your message to your ideal clients.
This is the next critical step. You have some great goals and a way to get there. Now you need to lay out some month by month goals. If you try to get 100 customers right out of the gate, you will never start because it is such a HUGE task. So lay out reasonable expectations so you can focus on just one thing at a time. One of the greatest strengths of this planning process is that the BIG ideas are done, so now you are free to focus on the small stuff and you can be comfortable doing that because you know how each small thing is getting you closer and closer to your ideal goal.
For you really ambitious people out there, the last step is to write how you want your business to operate. Create daily checklists. Create a “new client checklist”. Put pen to paper so that if you had to step out of your business, someone could step in and run things for you. This is the ONLY optional part of this planning process, but I have found it to be invaluable.
Once your business has been running for a year or so, this will become mandatory.
Tips for Successful Planning:
I always recommend that the Vision, Mission, and Goals part of the planning process take place away from the office. You WILL lose focus if you are in the office or at home where your attention can be pulled away. This part of the planning requires sustained big thinking, which is MUCH harder to accomplish than it seems. The other steps may require you to be at the office with a computer so you can create spreadsheets, do research and such. But for the big thinking at the start, go someplace quiet (no, NOT Starbucks) and just scribble stuff down on a pad. I discourage people to use their laptops at this stage, because they have so many distractions built right in.
Have a separate page that is your “To-Do” list. As you go through, you will constantly have random ideas, be thinking of things you need to do, or things that need research. Use this as your catch all, get it out of your head and KEEP GOING. Do NOT stop writing your vision because you just had an awesome idea for how your letterhead should look. (Seriously, I had a client that did that…) If you aren’t sure about something, just make your best guess, make a note and move on. Keep the juices flowing!
Try to accomplish all of this in one day, two at the most. If you set it down and try to pick it back up again it WILL lose something. This process is all about each step building on the last. Do NOT let it disconnect. You have your entire life to do the work, take TWO FREAKING DAYS and get this all out. I promise, the world will still be there when you resurface and it wont be any worse off.
It’s as simple as that!
Now stop reading blog posts and go do some work!