Business Plans – Stop Wasting Your Time!

“Failing to plan is planning to fail!” was a phrase commonly heard as far back as high school when speaking with my career counselor.  As cliche? is the statement is, most business leaders will suggest that there is a great deal of merit to it, to the extent that most business leaders either a) have started thinking about writing a business plan, b) have started writing one or c) have one tucked away on a shelf that they haven’t looked at, ever.

Business plans take too long to write, they are more of an academic process, they are impractical, they are only used to raise money when starting a business and most good business leaders don’t need one, anyway, right?  While there have been many the albatross thrown around the neck of the business plan, we hope to give you new perspective on creating a business plan and hope that you will engage in one for your business.

In this issue of “Had an Aepiphanni, Lately?” we are going to discuss the justification of the business plan, or why the heck we need one, anyway, and how you might implement one into your daily business without it becoming a burdensome exercise.  Topics we will cover include:

The Business Plan: Why?
The Business Plan: Types
The Business Plan: How?
The Business Plan: When?
The Business Plan: Why?

Your business plan is a way to get the idea or vision for your business down on paper in order to determine:

if it makes sense, as in, does it fill a specific want or need and can that need be met, if it is feasible, as in, are there people or businesses who would be interested in buying your product or service at a price that works for you and them explore potential risk, how to avoid some and how to manage others,  costs of starting it and keeping it going and financial outlook.  

Additionally, simply going through the process of building the plan will provide you with a great deal of information you will need while running your business.  Additionally, as the business grows, you will want to use the business plan to help guide you in your future planning and decision-making processes.  Finally, if you expect to raise money using investors – whether friends and family or through venture capitalists, you will need a good, strong business plan.

The Business Plan: Types

The first thing you’ll want to do for your business plan is to determine what it is going to be used for.  Basically, there are four types of business plans:

Startup plans – sometimes this will be more of an overview of the business with expected sales and expenses, discussion about the product or services, the market and marketing.  These plans can be very short (10 pages) and effective for the startup phase of the business.

Operational plans – that focus on how the business will operate, heavily focused on processes, systems and people.  Ideally, cost analysis of the various processes and systems should be included, but often, current financial information and projections are used in the plan.  These can be equated with business architecture and strategic planning.

Presentation plans – these plans are used to attract partners, donors, executive teams and investors.  The key, here, is that this plan is used to attract them. Rarely will they be the final piece of information required.  In this type of plan, we focus on outcomes: the product and why there is a great need for it in the marketplace, what an investment will do to bring the product or service to market and what type of return one might expect as a result of investing or partnering with the company.  It will normally include a lot of visuals and is, essentially, a marketing piece.

Investor Grade Plans – these are the all inclusive business plans that combine all three of the other plans, with the addition of exploring risk.  This is the epitome of a marketing and investing tool that potential investors will try to tear holes in (versus trying to justify) to determine whether or not they will invest.  The executive summary, alone, needs to be powerful enough to engage potential investors to read further.  Financial plans need to extend three to five years.  This type of plan requires the greatest investment in research and financial planning of the four plans.  It will be the authority on operating the business.

The Business Plan: How?

Many people begin their business plans with a simple template.  Templates can be found all over the internet, in books, through SCORE (Service Core of Retired Executives) the SBA (Small Business Administration) and the SBDC (Small Business Development Centers).  You can take courses on how to develop the plan, or you can work with a consultant or business plan expert (Note: I emphasize with. For your business plan to be practical, you need to fully understand what is going into the plan, why it’s there and what to do with it!).  

The most important aspect of the plan, however, is that it needs to work for you and your business.  If you are a visual person, you might create a plan that is pictorially based.  If you are a task-oriented person, you might use bullet points to describe many areas of the business.  If you are a story teller, create a story, first, before even looking at a template.  Templates can be intimidating given all that is required.  Take it one step at a time.

The Business Plan: When?

When?  Your business plan should be your road map.  How often do you look at your road map when you are going somewhere you’ve never been?  Hopefully, you will look before you begin to veer off course.  Does this mean that you need to look at the whole thing, from beginning to end each and every day?  Not practical.  So when do you look at it?

The easy answer is: depends on your industry.

The better answer is – it’s too big to eat all at once.  Just like eating an elephant, you need to break it down into manageable pieces.  That means that you will want to put the marketing plan in one folder, put the SWOT analysis into another folder, your financial information in another, your processes in another, etc.  Your business plan does not necessarily need to be a single three inch thick document.  

With the plan separated, it becomes much more practical to use and update.  You might do marketing every day, but do your SWOT only once a month or once a quarter.  Ideally, you’ll manage your finances regularly and can look, at any time, to see where the business is financially.  As you update any area, stick it in the appropriate area.  Once a year, you may wish to pull out a whole section, or the whole plan section by section to review and make plans for the following year.

In Conclusion:

Your business plan should be a living set of documents that can be practically applied to your business’s every day operations.  Just the fact that you’ve invested so much time and money into the development of it should encourage you to squeeze every bit of that money right back out of it, even beyond the investment stage.  Keep in mind that creating the right type of plan and creating it in a way that makes sense for you and your business is a major determinant in the success of your plan, and that implementation of the plan is not a once and done deal.