Although it has changed a lot, the business plan is still there. No longer limited to the traditional 12-15 page typed document, a business plan can be exciting and engaging as well as useful. Many of us realize that it is the planning process and the associated research and self-examination that is so valuable. The finished plan is just the icing on the cake.
Just as there are many types of entrepreneurs and business ideas, there are also many types of business plans. Here are three that deserve special attention.
The “casual entrepreneur” plan:
Believe it or not, it happens quite often. An impulse, a hobby or a passing idea turns into a business without warning. One day you give your neighbors extra tomatoes from the backyard or homemade cake, and before you know it you’re filling out the forms for a stand at the local farmer’s market. Maybe you make a one-of-a-kind piece of handmade jewelry and wear it to school or work, only to find your phone flooded with messages like, “Where can I get one?” and “I’ll pay you to make one for me.”
When you write a business plan in a situation like this, you need to address a number of issues that the entrepreneur in question has already thought about. The first is, do you really want this idea to become a full-fledged business? It’s certainly flattering when you realize there’s a market value to something you were doing anyway, but that doesn’t always mean you have to start a business. Many accidental businesses spring up around fads or seasonal items and may not be robust enough to function year-round as money-making businesses.
Next, you need to carefully research what actually goes into your offering. How many hours does it take to make those unique bracelets? How much does it cost to bake a dozen of your special recipe cookies? How much research goes into ‘spicing up’ a website? Making tangible goods requires space. Do you have room to grow enough pumpkin to actually make a profit? Are these numbers you can sustain beyond the occasional personal or family use of your product or service?
The business planning process can be very helpful for “casual entrepreneurs” as it allows you to decide which ideas are best left as hobbies and which ones can generate real cash flow.
The “Back of a napkin” plan:
It is the source of entrepreneurial legend and lore, the million dollar idea scribbled hastily on a napkin. Still, this business planning option remains a fantasy for most would-be entrepreneurs. But like every myth, there is a small grain of truth in it. A quickie business overview can work as a launch plan under the right circumstances.
If you need to get started quickly to ride the wave of a fad before it fizzles, then a quick, bare-bones schedule may be the only time you have to execute. This works best if you already have the infrastructure in place, perhaps from previous projects or an established company, and can easily shift your energy and resources to the new idea.
If you and your partners, if any, have all the core skills and industry knowledge you need to get started right away without calling in experts, Napkin Notes may be all you need to get started. 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 will understand that you may need to go back later and do some more detailed and formal planning.
Certainly when you get to the point where you’re looking for investors or lenders, go beyond those initial casual notes. Until then, by leveraging your expertise, you can enter the market quickly and perhaps gain a competitive advantage by using a minimalist plan.
The “One Urgent Problem” Plan:
Business planning doesn’t stop the day you open for business. Under the best of circumstances, you should review your plan once or twice a year to see how it’s going and where you may have strayed from your original goals. Remember that changing a company’s direction is not always a bad thing, but it must be done intentionally.
Then there are the times when something seems to go wrong, when one or more parts of the business just don’t seem to work. The cash flow is anemic or the marketing message is flat. Perhaps customers have shown a clear interest in just one particular product or service and are ignoring all your other offers. This means it’s time to revisit your business plan, more precisely, it’s time to revisit the questioning process that helped you create your plan.
Look at the assumptions you baked into your original plan. Did the city go ahead with the opening of that new park across from your location? Were the insurance rates what you expected? How many hours of bookkeeping or web design help did you really need? Are your online inquiries outpacing 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 company. This is not necessarily a harbinger of failure or a sign that you are not cut out for entrepreneurship. Life and the market 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 realize that a beautifully designed document does not always equate to business success. I’ve worked with many entrepreneurs who successfully launched without a plan, and some with beautifully written plans that never materialized. You and your business idea are unique. Your planning process will also be unique. Be wary of one-size-fits-all advice or expert judgments on how to proceed.