I have to wonder when I read articles aimed at entrepreneurs that discount the business planning element of launching a new business. Some make it sound as if more planning is required to paint your kitchen than to start a business. All that is required is a generous dose of passion, compulsive networking and avoiding competition at all cost. This Mary Poppins style entrepreneurship may sound great, but it is a toxic tonic in reality.
Planning is what makes a difficult job easier. Planning is what makes entrepreneurs use their valuable time wisely. Planning is what helps us not regret our actions. Planning is what separates the winners from the losers.
For those of you that have fallen prey to the siren song of "just go with your passion and forget that planning nonsense", you may be beyond help, but please read on. For those of you that are intimidated by the process and need help, let me simplify it for you.
First, the objective of a business plan is not to have a pretty document that you can proudly display on your shelf. It is not a fill in the blank ritual. It is not a single day workshop event. It is a continuous learning and thinking business process.
When it comes to business plans, it is the thought that counts.
Here are the most basic steps to business planning:
- Collect all the information you possibly can on the industry, competitors, customers, potential customers, suppliers and any external factors that influence or may influence your business and spend the rest of your life doing it.
- At some reasonable point into the first step, start thinking and learning at the same time. There are some structured ways of doing this and you can find dozens of books at the library to tell you how. They will all claim to be different from the others, but really are not. They will all claim that anything truly innovative that has happened in business in the last decade was a direct result of the application of their principles, but is not. Nevertheless, having a structured process helps. Using the process will not insure a brilliant strategy. It will force you to think about enough things and in a variety of different ways that a rational strategy will emerge or possibly even a break through strategy that will make you successful beyond your wildest dreams.
- The next step is to determine how you get from where you are to where you want to be. Can you get there from here? If not, return to Step 2 and rethink the situation. Put together an action plan and track your progress. You will need some metrics to determine what qualifies for success along the way. It would also be useful to develop some pro forma financial statements to find out if you have to keep your day job. If the financials don’t work out, return to Step 2.
- If and only if you have reached step 4, release your passions and go for it. Remember, network in moderation and, I’m sorry, you will have to compete.
Dan McComb, co-founder of Biznik has said that the average entrepreneur will invest $25,000 in their business. I will put it another way. The average entrepreneur will invest everything they have in their business…and lose it. I think some vigorous planning is worth significantly improving the odds of success.