Richard Gabel

Coworking, Office Space and Meeting Rooms / Strategic and Business Planning Consultant
Issaquah, Washington

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The Truth About Business Plans

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.

Written Aug 17, 2009, read 1315 times since then.

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.

His corporate career was focused on restructuring failing businesses. Gabel worked with management to develop a viable strategic plan. Most often, he would then assume control and implement the plan. He now prefers to help small businesses grow.

Marketing and consulting to help your business grow!

Learn more about the author, Richard Gabel.

Posted by Dan McComb, Seattle, Washington | Aug 20, 2009

Passion can get you into as much trouble as it can help you succeed. It's an essential ingredient, like fuel for an engine, but it's highly combustible fuel, to be handled with care.

We know from SBA numbers that only 1/3rd of entrepreneurs' businesses will last 10 years. Carefully planning combined with building a solid network of people to call on when you need help can increase the odds that yours will be one of them.

Note: the $25 figure you're quoting me originates with outstanding research conducted by Scott Shane, a professor of entrepreneurial studies and New York Times columnist, whom we interviewed for Shine.

Follow me on Twitter - @danmccomb
Posted by Richard Gabel, Issaquah, Washington | Aug 20, 2009

Thank you for taking the time to comment on the article. Biznik has helped countless people in their efforts to start and grow their business. Its a great tool, not just in being a source of business knowledge, but in the creation of a extraordinary network of like minded people.

Keep up the good work.

Marketing and consulting to help your business grow!
Posted by Bill Bradfield, EA, Blaine, Washington | Aug 20, 2009

Richard

Excellent point about planning. You really can't do enough. It's like the adage, "Luck happens when preparation meets opportunity."

Planning is a continuing thing. To succeed, you need to continually assess where you are in your business and plan how you will move forward.

Thanks for the article.

Bill

I keep the IRS off your back and out of your pocketbook
Posted by Robert Wogrin, Seattle, Washington | Aug 21, 2009

Richard - very good article. I think of the Plan, Passion and Funding each as one leg of three legged stool. Nearly impossible to make a go of it without all three. Robert
Posted by Joan Hitchens, Olympia, Washington | Aug 21, 2009

Great timing. Now I know that this last week of combing through financials, re-thinking some market strategies, pushing priorities around and spending hours on the phone with my partner are because planning really is vital. I've certainly returned to Step Two more than once this week. Strangely enough, this invigorates my passion even higher because I have a roadmap to my destination!
Posted by Chris McGee, Bellingham, Washington | Aug 21, 2009

Your article makes a lot of sense, Richard. The passion does not go away if the steps do not pencil out the first time. It can sustain it longer by finding the best path. I agree that when a plan is revised several times, it increases the chances of success. I am finding this year due to the recession that many business owners are taking a fresh look at their plan and some reinventing themselves. A strategy and plan helps us all solve difficult challenges with greater accuracy the first time. Thank you for the interesting article. Chris

Chris McGee
Posted by josh davis, Kansas City, Missouri | Aug 25, 2009

Richard I appreciate your article, it hits me at a good time. Even though the only quote I have posted next to my computer that I must look at everyday is, "To be Successful you must Plan and Prepare for Success" it is still easy to forget what this really means.

Which is once you have some success WHAT IS NEXT? You must be prepared for success and all of it's challenges.

Somebody that I greatly respect once told me that any problems that you have now will grow exponentially with success.

Thanks Great Article!
Posted by Richard Gabel, Issaquah, Washington | Oct 02, 2009

Thank you Josh.

Marketing and consulting to help your business grow!
Posted by Shaun Lawrence, Irvine, California | Oct 29, 2009

Great article. I can relate as I recently start my own business and am finding myself planning at every step of the way, adjusting to fit my approach and the market. Shaun Lawrence, Accountant Los Angeles