Though it has undergone many changes, the business plan is still around. No longer limited to the traditional 12-15 page type-written document, a business plan can be exciting and engaging as well as useful. Many of us realize that it’s the planning process, and the associated research and soul searching, that is so valuable. The finished plan is just icing on the cake.
Just as there are many types of entrepreneurs and business ideas there are many kinds of business plans. Here are three that deserve some special attention.
The “Accidental Entrepreneur” Plan:
Believe it or not, it happens quite often. An impulse, a hobby, or a passing notion turns into a business without warning. One day you’re handing your extra back-yard tomatoes or homemade cake to the neighbours, and before you know it you’re filling out the forms for a booth at the local farmer’s market. Perhaps you create a unique bit of hand-crafted jewellery and wear it to school or work, and then find your phone flooded with messages like, “Where can I get one?” and “I’ll pay you to make one for me.”
When you’re writing a business plan in a situation like these, you need to address a few issues the intentional entrepreneur has already pondered. The first is do you really want this idea to become a full-blown business? Certainly it’s flattering when you realise there’s a market value for something you were doing anyway, but that doesn’t always mean you should launch a business. A lot of accidental businesses form around fads or seasonal items, and may not be robust enough to function as year-round, money-making, enterprises.
Next you will need to carefully examine what actually goes into your offering. How many hours does it take to create those one-of-a-kind bracelets? How much does it cost to bake a dozen of your special recipe cookies? How much research goes into “whipping up” a website? Making tangible goods requires space. Do you have room to grow enough squash to actually generate profits? Are these numbers you could sustain beyond the occasional personal or family use of your product or service?
The business planning process can be very helpful to “accidental entrepreneurs” as it allows you to decide which ideas are best left as hobbies and which ones could provide some real cash flow.
The “Back of a Napkin” Plan:
It is the source of entrepreneurial legend and lore, the million-dollar idea that was hurriedly scribbled on a bar napkin. Yet, for most potential business owners this option for business planning remains a fantasy. However, like any myth there is a tiny grain of truth inside. A quickie business outline can work as a launch plan under the right circumstances.
If you need to get going quickly to ride the wave of a fad before it fizzles, then fast, bare-bones planning may be all you’ve got time to execute. This works best when you’ve already got the infrastructure in place, perhaps from previous projects or an established business, and you can simply shift energy and resources to the new idea.
When you, and your partners if any, have all the core skills and industry knowledge you need to start right away without seeking experts, napkin notes may be enough to get going. Let’s say you are already an expert in technology and social media. Then you, and your team, probably don’t need a detailed plan to start developing a new app. You will draw on your knowledge and experience, and you understand that you might need to go back and do some more detailed and formal planning later.
Certainly when you reach the point where you are looking for investors or lenders, you will move beyond those first casual notes. Until then, drawing upon your expertise can allow you to quickly jump into the market and perhaps gain a competitive edge by using a minimalist plan.
The “One Pressing Issue” Plan:
Business planning does not stop the day you open for business. Under the best of circumstances you should be revisiting your plan once or twice a year to see how things are going, and where perhaps you’ve veered away from your original goals. Remember, changing the direction of a business isn’t always bad, but it should be intentional.
Then there are the moments when something seems to be going wrong, when one or more areas of the business just don’t seem to be working. Cash flow is anaemic or the marketing message is flat. Perhaps customers have shown a marked interest in only one particular product or service, ignoring all your other offerings. This means it’s time to revisit your business plan, more precisely it’s time to revisit the questioning process that helped you craft your plan.
Look at the assumptions you baked into your original plan. Did the city follow through on opening that new park across from your location? Were insurance rates what you expected? How many hours of accounting or web design help did you really need? Are your online inquiries out-stripping your face-to-face sales? Or vice versa?
Sometimes no matter how much you research, plan, or test, things don’t go as expected in a business. This isn’t necessarily a herald of failure or a sign that you’re not cut out for entrepreneurship. Life and the marketplace are both unpredictable, and plans need to be fluid and responsive. The “One Pressing Issue Plan” is simply a reflection of a normal evaluation process.
While I still recommend the business planning process, I caution you to realise that a beautifully crafted document does not always equal business success. I’ve worked with many entrepreneurs who successfully launched without a plan, and some with beautifully written plans that never materialised. You and your business idea are unique. Your planning process will be unique as well. Be wary of one-size-fits-all advice or pronouncements from experts about how you should proceed.