Questions to Help You Mind Your Business: Let’s talk about planning
This is the answer to the third question in a ten question collaborative series being posted by Renée Cormier and Graham Edwards. To see the list of original questions, check this link. If you would like to catch up, here are the answers to Question 1 and Question 2.
Please feel free to contribute with comments and shares. If you have any questions of your own, we’d love you to share them with us.
Question # 3: Do I need a plan for my business?
Many moons ago, I was selling business coaching services and met a guy who started a communal office space business. At the time, this type of business was still very novel and he probably could have made a real success of it, but he didn’t. I wasn’t surprised to find his business failed within a year or two because when he told me about his business, he also told me that he wrote his plan on the back of a napkin. Now, I understand how your enthusiasm can make you believe that is a good idea, but it really isn’t. I’m quite certain that if he had actually taken the time to properly plan for his business, he would have created something worth replicating, or at least worth selling. Instead, he lost everything.
I know what you are thinking. There are plenty of small business people who never plan, never use advertising or social media and are still somehow successful. That is true. I call these people accidental business people. They are lucky enough to be profitable in spite of themselves. They have a good product and a market that seems to work for them, but they are still leaving a lot of money on the table. In fact, if you ask them a few questions about their business, you will be surprised to discover how unaware they are of the inner workings of their own business.
I once worked for a guy who paid me a good salary and when I asked him how much I needed to sell in order to justify my pay, he had no idea. I actually negotiated a salary and he didn’t even know for certain if he could afford to pay me! I soon discovered his receivables were a mess, he was paying to store old inventory in a dust free facility, the industry he worked in was facing serious decline, and the list goes on. I made him aware of a few of his problems so he was able to stay in business a little longer. Today, the side of the business I managed is closed and he continues to work his other niche, in spite of himself. I am quite certain that if he ever really took the time to properly plan for his business, he would have found better markets, more appealing products, developed efficient systems and ultimately would have created a more stable and profitable business.
When it comes to business plans, I can tell you that there are good plans and bad plans, and the amount of paper used to print them up has no bearing on their value. A good plan is concise, strategic, has time specific objectives and above all, is realistic. Any loan manager at a bank will tell you how frequently people submit business plans that have ridiculous financial objectives. A plan to double your sales in one year may not be realistic, but a 10 to 20 per cent increase may be perfectly attainable, depending on your strategy. Having said that, a weak strategy and/or poor execution won’t likely net you any growth. Work the Plan: Secrets to Successful Business Execution is a post I wrote about how to execute your plan. Since that is a huge part of the business battle, I suggest you take the time to read it. After all, a plan that gets stuffed in a drawer is as useless as a plan that is written on a paper napkin, or one that is not written at all.
So what can a plan really do for you?
Done properly, a plan will make your business stronger by allowing you to do the following:
1. Get a complete understanding of your business and its industry.
2. Analyse your competition.
3. Discover opportunities.
4. Develop clear cut objectives.
5. Develop a strategic approach to growth.
6. Help you drive the right initiatives.
7. Save time by not wasting your effort on fruitless tasks.
8. Integrate efforts to achieve common goals across your company.
9. Save you money.
10. Make you money.
11. Unite your workforce.
In my opinion, every business plan has to be based on research. Taking the time to assess your market and competition will prove invaluable. I know that can be a pain in the neck, but you need to do it. You also need to include a SWOT analysis (strengths, weaknesses, opportunities, threats) and set goals based on what you have uncovered as opportunities. Sorry for going crazy on the acronyms, but goal setting basics include a SMART requirement (specific, measurable, achievable, relevant and timed). Once you have those two elements in place, the rest flows more naturally.
Business Development Canada (BDC) offers a free business plan template and sample kit that you can download. I like this kit because it is quite comprehensive. I don’t need to reinvent the wheel for you. It’s been done, so if you want an excellent template to follow, just download it. If you need some help with your plan, let us know. That’s what Graham and I love to do!
Question #3: Do I need a plan for my business?
Answer — Yes (full stop).
PS: Whenever the discussion of business plans (or any plan for that matter) comes up there is always the same collection of considerations that make their way into the conversation…
i) One day Alice came to a fork in the road and saw a Cheshire cat in a tree. “Which road do I take?” she asked. ”Where do you want to go?” was his response. “I don’t know,” Alice answered. “Then,” said the cat, “it doesn’t matter.” — There is no need for a plan unless you know where you want to go.
ii) Plan format may depend on your audience (and in many cases they will tell you the format they prefer), or you can just download the “best business plan template ever” with a Google search — they all pretty well consist of the same components. The following nine plan components came from Guy Kawasaki of Apple fame and have worked as a nice framework when pitching a business plan to interested parties and investors:
i. The Problem — describe the pain that you are alleviating with a goal of getting the audience to “buy into” the situation. Avoid looking like a solution searching for a problem, and minimize citations from consulting studies about future size of the market.
ii. The Solution — explain how you alleviate this pain, and clearly illustrate what you sell and your value proposition.
iii. The Business Model — explain how you make money and who pays you; what are your channels of distribution and what your gross margins are. Generally, a unique, untested business model is a scary proposition for many so if you truly have a unique revolutionary business model, explain it in terms of familiar ones.
iv. Underlying magic — describe the technology, “secret sauce”, or magic behind your product or services. Less text and more diagrams, schematics and flow charts work better; referencing white papers and objective proof of concept are helpful.
v. Marketing and Sales — explain how you are going to reach the market and your marketing leverage points. Convince the “audience” that you have an effective go-to-market strategy that will not break the bank.
vi. Competition — provide a complete view of the competitive landscape and never dismiss your competition. Everyone (customers, investors, employees) wants to hear why you’re good, not why the competition is bad.
vii. Management Team — describe the key players of your management team, board of directors and board of advisors, as well as your major investors. Don’t be afraid to present less than a perfect team — what’s important is whether you understand that there are holes and are willing to fix them.
viii. Financial Projections and Key Metrics — provide a five year forecast containing not only dollars but also key metrics such as number of customers and conversion rate. Do a bottom up forecast and take into account long sales cycles and seasonality. Making people understand the underlying assumptions of your assumptions (of your forecast) is just as important as the numbers you have “fabricated”
ix. Current Status — Explain the current status of the business (product and service), what the near future looks like, and your investment/OPEX considerations. Share the details of your positive momentum and traction, and align it with the vision of the business.
iii) “No battle plan survives contact with the enemy” (Helmuth von Moltke) or “Whatever can go wrong, will go wrong” (Murphy) — in other words, no matter how much time and thinking went into your plan, the moment it is implemented (and enters the real world) stuff will happen that wasn’t planned for, anticipated, or simply wasn’t thought of. This is a reminder to anyone formulating a plan (or asked execute it) that it is important to be adaptable, resilient, and have a sense of humour (because the universe sure does).
iv) Point iii) does not negate the need for a plan and its importance (see point i)) because you simply will never build what you want or get the support you need (i.e. investors, employees or customers) if you don’t have one. What is proving out time and time again however is that a top down plan (with all the executable trappings) just falls apart as the real world rushes in — mostly because the people on the front line are expected to follow the original plan when the situation suggests it is no longer the best course of action. More and more leaders are articulating a plan framework with a vision, goals, guiding principles of the business, and then empowering their employees; they are creating an environment that lets people rally their efforts around this framework (instead of a hard plan) and in doing so achieve creative and very successful action.
v) Your plan will most likely come in a number of different forms such as a document, a PowerPoint slide deck, or an elevator pitch. I want to add that you shouldn’t underestimate the importance of a well-rehearsed elevator pitch because when you tear away all of the formality of a plan it simply starts with the question, “So, tell me about your business and the opportunity?”
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5 years ago #20
I'm glad Tweetpack exists, it's been SO helpful!
Renée 🐝 Cormier
5 years ago #19
Renée 🐝 Cormier
5 years ago #18
Well said, my friend!
Renée 🐝 Cormier
5 years ago #17
Yes. I do the same. I use beBee as my main blogging platform and post links all over social media. I get better results that way, although I noticed not as many leads from LI in the last couple of years.
5 years ago #16
I understand and agree, Graham\ud83d\udc1d Edwards. However, if that is the message, perhaps the titles need adjusting. Say, to: "Psychic Synchronization With the Movement of the Earth's Molten Core Can Pay Off Bigtime in Small-Business". Just thinking out loud. Cheers!
5 years ago #15
Pablo> "The platform does not dictate the conversation. On beBee we can talk about anything, business included." That is true, Paul, we can talk about anything. However, all other comparative factors held constant, the demographics of the audience will greatly affect the nature and magnitude of any response. And how much energy one devotes to publishing on any given platform depends, IMO, on one's objective. Mine is not to find a couple or half a dozen other business people with whom to shoot the sh#t. I can do that more effectively via email. My objective is to reach the broadest possible audience of existing and would-be serious small-business people. For fun and profit, obviously. Cheers!
5 years ago #14
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5 years ago #12
Wait, wait, wait... are you saying the earth's molten core has an effect on my happiness, spirit, well being and the way I wake up in the morning? This is way too cool and I think I need a plan to take advantage of it. : ) I agree that this topic matter has a business flavour that may not directly resonate with all people but I also hope that people understand that many of these questions and answers are transferable to almost anything... The "questions" we are discussing can transfer to how to get the dream job, how to get on the sports team, etc, etc, etc... particularly planning because nothing anyone does will happen successfully without a plan. I'm also reminded of Gary Vaynerchuk's video 1 > 0 and I am ecstatic that the four of us are engaging in a conversation — because you never know where it may lead. https://www.youtube.com/watch?v=4fsYWXrGGcE Thanks Paul \ I also agree with your statement Phil and I hope everyone reads it and they can substitute the word "business" for whatever they want to achieve... "But the primary purpose of a business plan is as a tool for organizing clearly one's thoughts about what a given business is and how it will or should be organized and operated." Thanks so much!
5 years ago #11
I agree. Which is why I post Update notices and links on LinkedIn, Google+, Facebook, and Twitter back to my business-related beBee articles. For although I prefer the beBee publisher, LinkedIn is where I've found the vast majority of consulting leads and gigs that are directly traceable to my social media activity. As you know it's important to pay attention to communications. And, I would add, to the demographics of a given SM platform. (See, here comes the nasty intrusion of business considerations creeping in, again.) Cheers!
Renée 🐝 Cormier
5 years ago #10
Yes, I would say you are right. I find my non-business posts tend to do better, with the exception of posts on communication tactics, but they can be useful to anyone, anywhere.
5 years ago #9
Pablo> " An advantage everyone has is no advantage at all." Bingo! A bullseye, for sure, Paul. As soon as a capability that imbues a user with a "competitive edge" becomes widespread, it loses its value in giving a user a competitive advantage. It then becomes the basis for blackmail, that is, you need to use my product or you'll be competitively trampled by the thousands who do. From the producer's standpoint, it becomes a matter of managing distribution over the course of the product cycle. Add new (free) users early to create an irresistible tsunami of use (use it or drown)? Or constrain distribution to a level of reasonable exclusivity and retain the competitive advantage that use of the product conveys? My own instincts say the correct choice depends on how difficult or easy it is to create a competing product. For exclusivity can only be maintained via patent protection or if effective duplication is way too difficult or expensive. But Ren\u00e9e \ud83d\udc1d Cormier, now you see Paul and me discussing a genuine business issue. Which no doubt interests the two of us, you and Graham, and a few others, but not, I suspect, very many on beBee. Perhaps, we would generate more attention, if we focused instead on the spiritual effect that the rotation of the Earth's molten core has on the maintenance of Yin, Yang, and the balance of psychic energy in the Universe, and how to face every day reminding ourselves that the past is gone and we are presented each morning with unlimited possibilities to become Social Entrepreneurs and CEOs of companies that will bring love and peace to the world, whilst making us inconceivably wealthy and non-materialistic. Sorry, I sometimes get carried away dreaming of my magical fire-engine red Ferrari. Cheers!
5 years ago #8
Graham > "Plan format may depend on your audience... " Most small-business people I've met think of a Business Plan as a document for use in talking to lenders, investors, and other perceived potential sources of capital inflow. But the primary purpose of a business plan is as a tool for organizing clearly one's thoughts about what a given business is and how it will or should be organized and operated. Ren\u00e9e \ud83d\udc1d Cormier, my experience is you will find minimal interest expressed here on beBee about real business planning issues because there are very few, if any real small-business people actively on the platform. True, there is a plethora of would-be entrepreneurs, solopreneurs, and CEOs, but... almost no indication that many, if any are actually involved or interested in the nitty-gritty of operating a small business. Instead, I suspect, there are very few serious small-business or would-be small-business people on beBee at this time. Based on my experience with my business-related posts. Cheers!
Renée 🐝 Cormier
5 years ago #7
Yes, that does happen. I'm glad you managed to get a pro[per plan written. You will be very successful, I am sure. Did you know you can access federal government grants for innovation, hiring young tech and a whole bunch of other stuff? See my post on Question 2 for the link.
Renée 🐝 Cormier
5 years ago #6
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Renée 🐝 Cormier
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Renée 🐝 Cormier
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Renée 🐝 Cormier
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Renée 🐝 Cormier
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