Business Planning for Success
We all want a packaged solution that will solve our problems quickly, painlessly and at low cost. Need to get somewhere faster? Buy a new car. Need to lose weight? Sign up for a diet service. Need to boost business revenues? Call a consultant.
I wish I could always solve my clients’ problems quickly and easily. Just prescribe a business solutions package and tell them to call me in the morning. But unfortunately, it just doesn’t work that way. In the real world, generic solutions rarely work. And magic bullets are hard to find these days.
Since our expertise is in planning, it should not come as a surprise that we recommend developing a solid business plan. But just having “a plan” is not the same as having “a good plan.” Here are a few things to think about when developing your business plan:
Just writing the business plan forces a certain level of accountability. This is especially true if you share the plan with others, such as business advisers, bankers, board members, management team members, or employees.
The process of developing the plan forces you to consider different paths and options, and helps you evaluate the balance between risks and opportunities. Most long-lived, successful businesses got where they are by taking calculated, measured risks, not by taking wild leaps of faith and hoping for the best. That doesn’t mean you can’t take a big risk once in a while, but too much risk taking will likely lead to failure.
Keep it real. Make sure you base your assumptions on actual facts, not the facts as you want them to be. Do some market research, and make sure it is relevant to your particular business, not just some generic business, an extremely broad industry, or across a much larger geographic area than where your business will actually operate.
Discuss your plan with people you trust to make sure you are not deluding yourself. Don’t just share your plan with advisers, bankers, board members and others. Sit down (or Zoom) with people from each group and listen to their feedback, then make adjustments to the plan as you see fit.
When you look at hundreds of business plans a year, you start to see patterns. Many businesses, both startups and established, base their plan on outdated, irrelevant, and extremely optimistic market research. We recently reviewed a business plan for a live performance center in a major city. The plan, which had many good points, did a terrible job with market research. It cited a wide array of national statistics which were largely irrelevant, since most of the data came from areas far away from the proposed location. The plan highlighted demographic data that was skewed toward wealthy neighborhoods, while the center was going to be in an underserved, lower income neighborhood. The plan also identified “competitors” who were miles away from the center’s proposed location, and ignored others that were just minutes away. In other words, the authors cherry-picked the data to make their case.
Be true to yourself. Just because Forbes or Entrepreneur.com says “this is the way to go”, that doesn’t mean YOU have to follow. If you want to grow slowly and don’t want to lose control of your business, then selling your products to Walmart is probably not a good idea. And even though your neighbor made a fortune in franchising, that doesn’t mean you have to do the same thing. Slow and steady often wins the race, and if that’s what you want then follow your heart.
Some of our most successful clients have survived decades of industry and economic turbulence by doing the exact opposite of the conventional wisdom. Instead of growing fast and hiring like crazy, they stayed lean and grew organically. Instead of following the latest hot trends, they stayed with what they knew best. But they also listened to their customers and adjusted their products and services based on what their customers told them, not what they read in the Wall Street Journal.
Marketing and sales are important, but there is no magic formula. Just because everyone else is using Facebook, that doesn’t mean it is necessarily a good fit for your business. If your customers are under the age of 30, it almost certainly is not; Instagram would probably be a better choice.
Instead of throwing spaghetti at the wall and seeing what sticks, map out a careful marketing and sales plan. Focus on specific target markets, not “generic” customers. Plan to test different messages, channels and campaigns. Measure results and adjust your plan as needed. Contrary to what you read on the Internet, the marketing plan is not dead. You can be sure your competition has a plan, and if so, one of their goals is to take away your customers.
Things change. No business plan is perfect. And every plan is out of date the minute you finish it. The point is, your business (and marketing/sales) plan should be revisited at least once every year or two. The interval between updates varies from industry to industry. In technology, things happen very quickly, so the proper interval might be once a quarter. For a service business in a relatively mature industry such as architecture or construction, once every three years might be sufficient. But don’t kid yourself by thinking you can write a business plan when you start the business and never change after that.