Although it has undergone many changes, the business plan still exists. No longer limited to the traditional 12-15 page typewritten 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 soul-searching, 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 many types of business plans. Here are three that deserve special attention.
The “Accidental 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 are handing out the extra tomatoes from the garden or the homemade cake to the neighbors, and before you know it, you are filling out the forms for a booth at the local farmers market. Maybe you create a unique piece of handmade jewelry and wear it to school or work, and then find your phone full of messages like “Where can I get one?” and “I’ll pay you to make me one.”
When you are writing a business plan in a situation like this, you need to address some questions that the intentional entrepreneur has already pondered. The first is, do you really want this idea to grow into a full-blown business? It’s certainly flattering when you realize 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 incidental businesses are formed around fashions or seasonal items, and they may not be strong enough to function as profitable businesses throughout the year.
Next, you will need to carefully examine what your offer actually includes. How many hours does it take to create those unique bracelets? How much does it cost to bake a dozen of your specialty recipe cookies? How much research goes into “building” a website? Making tangible goods requires space. Do you have room to grow enough pumpkin to make a profit? Are these numbers that you could keep beyond the occasional personal or family use of your product or service?
The business planning process can be very helpful for “accidental entrepreneurs” as it allows you to decide which ideas are best left as hobbies and which could provide real cash flow.
The “Back of a napkin” plan:
It’s the source of corporate legend and tradition, the million-dollar idea he was quick to scribble on a bar napkin. However, for most prospective business owners, this business planning option remains a fantasy. However, like any myth, there is a small grain of truth within it. A quick business scheme can work as a launch plan in the right circumstances.
If you need to get up and running quickly to ride the wave of a fad before it wears off, then quick, basic planning may be all you have time to execute. This works best when you already have the infrastructure in place, perhaps from previous projects or an established business, and you can simply switch energy and resources to the new idea.
When you and your partners, if any, have all the basic skills and industry knowledge you need to get started right away without looking for experts, the napkin notes may be enough to get you started. Let’s say you are already a tech and social media expert. So you and your team probably don’t need a detailed plan to start developing a new application. It will draw on your knowledge and experience, and you will understand that you may need to go back and do more detailed and formal planning later.
Certainly, when you get to the point where you are looking for investors or lenders, you will go beyond those first casual notes. Until then, leveraging their expertise can allow you to quickly jump to market and perhaps gain a competitive advantage by using a minimalist plan.
The “An urgent problem” plan:
Business planning doesn’t stop the day you open your doors. In the best of circumstances, you should review your plan once or twice a year to see how things are going and where you may have strayed from your original goals. Remember, changing the direction of a business is not always bad, but it must be intentional.
Then there are the times when something seems to go wrong, when one or more areas of the business just don’t seem to be working. Cash flow is anemic or marketing message is flat. Perhaps customers have shown keen interest in a single particular product or service, ignoring all of your other offerings. This means that it is time to review your business plan, more precisely it is time to review the question process that helped you design your plan.
Look at the assumptions you included in your original plan. Did the city comply with the opening of that new park in front of its location? Were the insurance rates what you expected? How many hours of accounting 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 herald of failure or a sign that you are not cut out for entrepreneurship. Life and the market are unpredictable and plans must be fluid and responsive. The “Hot Topic Plan” is simply a reflection of a normal evaluation process.
While I continue to recommend the business planning process, I caution you to realize that a beautifully crafted document does not always equate to business success. I have worked with many entrepreneurs who launched successfully 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. Beware of expert advice or pronouncements on how to proceed.