Beware Of The Cookie Cutter Business Plan
January 20, 2019 - January 20, 2019
There is a legacy of business plans and business planning systems that produce a multi-page formal document that can be as dry as old bones to digest.
These were created at a time when the world rotated at a slower pace and the risks inherent in all plans would be reasonably predictable. The plans produced all followed an almost identical format, which was long on detail and short on digestibility.
For many creative businesses the thought of planning, budgets and book-keeping is probably not at the top of your priority lists. The good news is that you can often distil a business plan down to a single page for your own use, only falling back to more detailed documents when you are trying to impress someone else… An investor perhaps.
The old adage that “failing to plan is planning to fail” holds a good amount of truth. It would be unwise to embark on any business journey without a map laid out in front of you. Particularly if you are raiding the piggy bank to buy your ticket.
If you think of business planning as story-telling, with some data and research to back up your story, then it can help to set your approach.
Who doesn’t like telling a good story?
Did you know…you can break down business planning into a series of logical steps to be much less onerous than it might feel at first.
For many decades the three phases of business planning have been stated as:
· Where are we now? [Discovery]
· Where do we want to be? [Strategy]
· How do we get there? [Execution]
In this, the first of four articles, I’ll break down the Discovery Phase to its own component steps. The following articles will similarly break down the Strategy and Execution phases. The final article will talk about the types of business plan formats and the way they are used. Once finished you will have a roadmap to chart your course to create the business of your dreams.
1. Confirm your objectives.
What do you want to achieve with your business and in what timescale. How much money do you want to make from it – in its operation or sold as a going concern?
2. Define your customer.
Can you walk a day in their shoes? How many of them are there? Where do they hang out? Why are they interested in your product and will they pay the price you want to charge?
3. What’s so special about your product?
Why would your customer choose your product rather than an alternative (clue: cheaper price doesn’t count). How mature is your brand today? Is your brand proposition supported by your product and service quality and your price point?
DECISION POINT #1 – Can you sell enough of your product to meet your financial and brand objectives?
If YES – move to step 4.
If NO – Review steps 1 – 3 above to see what might need to change (including your objectives in the given timescale).
4. List the processes and systems you will need to:
· Develop and make the product
· Attract and convert customers
· Take and fulfil orders
· Provide excellent service to customers
· Administration and book-keeping
· Partners, suppliers, advisors, experts
This is another area where you might not be too motivated or skilled, so consider asking someone to help!
If you haven’t got them in place, list them anyway and highlight them in yellow
5. Detail the resources you will need, and their likely cost
· Materials and components
· Physical space – (for storage and making)
· People – (from cleaners to Chief Executives)
· Financial – (this might take a few attempts as you start to list the costs of all the items above)
Again, If you haven’t got them in place, list them anyway and highlight them in yellow
DECISION POINT #2 – Do you currently have enough capability to deliver your products to your customers at the right quality and the right price? [How many highlighted items do you have?]
If YES – with no items in yellow, you are more than ready to grow.
If NO – we’ll be paying close attention to those highlighted items in the Strategy Phase.
The credibility information is important, as it will provide context to the story you want to tell with your business plan. It will provide an view of your ‘seriousness’ about running and growing a business, or maybe that your business is not your main focus, perhaps a hobby business, or even if it may become another statistic as a ‘failed small business’.
6. List the following information:
· How is the business structured – sole-trader / Ltd co. / partnership etc
· Who are the leadership team ? – A thumbnail bio of each will help
· Who are the members of any Advisory Board ?
· Who are the key stakeholders (banks / investors / customers / partners)
· What Intellectual Property (Patents, Trade Marks, copyrights) do you own
· Track record (past 3 years if available) – sales / gross profit / net profit / and net cash flow
· Do you have mature risk-management policies and practices in place?
In essence this list will highlight whether the business has the right people and governance in the right place to take your business to its next phase.
DECISION POINT #3 – Does the business feel that it is on a robust footing to move into the next period and grow, (or even survive)?
If YES – what are you waiting for? It’s time to move on and grow.
If NO – gaps should be filled to provide the right level of guidance and oversight and to boost credibility to outside observers, particularly potential investors.
Warning: When you list yourself and your responsibilities – you may feel out of your depth to take on the new challenges for your business. Don’t worry too much – it is quite normal and part of the journey. Try to decide how you want to grow as the business owner(s) and what areas you want to focus on developing in the next phase.
The steps above will provide a platform for you to make decisions about your business’ future direction and speed.
These decisions will be chosen from a pick list of possible strategies which align with your objectives as set out in Step 1 above. They will be evaluated and tested for capability and capacity before you embark on the Execution phase, the exciting bit.
Until then, Happy Planning.
Dean Craven – Business Planning and Growth Specialist