Last month we discussed reviewing your business situation to determine where you are, how you got there, and then deciding where you want to go. However, creating a business plan can be extremely difficult sometimes because there are many things that will impact your decisions, including the need to make some difficult changes (or deciding that YOU have to change in order make your plan work for your business). Have you ever heard the old saying, “If you fail to plan, then you are planning to fail?” The older I get, the more I realize how true that saying really is! To build a successful business you have to be intentional, you can’t just react to what happens along the way and expect to stay in business for many years. You must develop a plan, and then stick with it if you ever hope to build a business model that can be somewhat predictable… it doesn’t have to be overwhelmingly detailed but it does require thoughtful analysis.
The first step to any business plan is to do some market research. You need to establish what business you are really in, what needs you fulfill in your client, why you think you are a good choice, what competitors are in the market, and who is most likely to buy from you.
From the software business to the local car mechanic, you have to take a look at what is going on around you. You may be the fastest mechanic around but if there a no cars on your island, you are going to face a continual challenge of finding customers. However, if you are selling water at a Florida construction site in the summer, you may face other problems like keeping the water cold! Do your research, consider what might happen to your business if the economy change, (good or bad), or if a competitor moves in across the street. The research phase is to consider opportunities that might allow your company to grow and prosper, or threats that might cause difficulty for your business in the future, so you can plan accordingly.
When you honestly review your business Strengths, Weaknesses, Opportunities and Threats, it can give you a clear idea of how you might plan for growth in the future. By aligning your business strengths and capitalizing on opportunities in the marketplace, you can develop a plan to focus your resources in that area, and minimizing the time and resources that you dedicate to areas of the business that are not very profitable today. Likewise, if you can identify the business areas that are weak or where you might be vulnerable, you can be pro-active about finding a solution before it negatively affects you or the business.
This process only works if you are completely honest with your assessment. I discovered that I was spending too much time on calculating taxes, insurance, and delivery of payroll to my employees every two weeks. Knowing that I was not gifted in accounting, and knowing that every minute I spent doing payroll kept me from selling, I hired an outside firm like Kronos to handle all the details. The money spent allowed me to have confidence that the process was done correctly, and it allowed me the time to focus more on selling which produced enough profit to pay for the service. But it was the SWOT analysis that allowed me to realize that the best business solution was to implement that decision…very quickly!
3) Committing to a written plan
You business plan needs to be written so that you will read it, refer to it, and most importantly implement it. While your plan does need to be well-written, it does not need to be a 500 page novel! There are many sample plans and plan outlines on the internet that can provide a template for you. The Small Business Administration provides a very simple outline to follow on their website, check it out: https://www.sba.gov/writing-business-plan.
Following a template may provide some guidance and reminders that planning should entail all areas of the business, not just accounting and marketing. Do you have the right people in the right places? Do you have the right amount administrative help or do you need to add people to enable you to get the work out on time? Have you reviewed your competition lately? Maybe the competitors are offering new services that you should copy, or maybe they aren’t offering what you do and could justify and increase in your prices? Many times we are so busy just getting the work done on a daily basis, we don’t step back and take a fresh look and how we might improve next month, but in order to do that we have to make a plan, budget for the changes, and then stick to the plan!
I have found that using a simple 3-ring binder works the best for me, even in this ever-digital age. I partition the notebook with tabs for each area of the business: Mission & Vision, Products & Services, Organizational Structure, Customer Service, Marketing & Sales, Finance, and Goals & Projections. You can divide your plan any way that works for you; however, you need to ensure that you consider all areas of the business because sometimes a change in one area can directly affect another area of the business that might be detrimental. This method can also provide you a convenient location to jot your ideas down in an organized fashion. This ensures you have them handy when you update your plans for next month, or simply panic because you forgot that “great insight” that you had in your dream last week! (...or does that just happen to me?)
While you can receive some benefit from thinking seriously about your business, or even writing down your thoughts, to receive the full benefits of a business plan, you actually have to take action and implement the plan! I joke with my family that I joined a health club to lose weight but didn’t lose a single pound... because of course you have to actually GO to the club and DO something to get the benefits! Implementation involves sharing your plan with your employees, and anyone else that can support and assist you in accomplishing your goals. I regularly share my plans with those around me, even those who may not know much about my business because I receive great input and perspectives which may cause me to re-think a portion of my plan, or it may give me the confidence that I am on the right track.
Sharing your plan with your employees is a critical step in your success. If your employees are part of the planning process, they may be able to offer alternatives and suggestions that you may not have thought about. They are working in the business every day and may know what the customer would like to have in the future, or maybe a way to cut expenses that you haven’t considered. The more input and the more buy-in that you can get, the easier it will be to implement a plan… and again, it is not enough to just have a plan… you have to work it!
Until next time…