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’re delivering your leftover tomatoes from the garden or homemade cake to the neighbors, and before you know it, you’re filling out forms for a booth at the local farmer’s market. Maybe you create a unique piece of handmade jewelry and wear it to school or work, only to find your phone inundated with messages like “Where can I get one?” and “I’ll pay you to make me one.”
When you’re writing a business plan in a situation like this, you need to address some issues that the intentional entrepreneur has already pondered. The first is, do you really want this idea to become a full-fledged business? It’s certainly flattering when you realize there’s market value to something you were doing anyway, but that doesn’t always mean you should launch a business. Many accidental businesses are formed around fads or seasonal items, and may not be strong enough to function as profitable ventures year-round.
Next, you’ll 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 special cookie recipes? How much research goes into “preparing” a website? Making tangible goods requires space. Do you have room to grow enough pumpkin to make a profit? Are these numbers what you could sustain beyond 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 plan “Behind a napkin”:
It’s the fount of business legend and lore, the million-dollar idea hastily scribbled on a bar napkin. However, for most potential entrepreneurs, this business planning option remains a fantasy. However, like any myth, there is a small grain of truth within it. A quick business outline can work as a launch plan under the right circumstances.
If you need to get going quickly to ride the wave of a fad before it fades, 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 shift 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 seeking out experts, napkin notes may be enough to get you started. Let’s say you are already an expert in technology and social networks. So you and your team probably don’t need a detailed plan to start developing a new app. It will draw on your knowledge and experience, and you 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’re looking for investors or lenders, you’ll move beyond those first casual notes. Until then, leveraging your experience can allow you to quickly jump to market and perhaps gain a competitive advantage by using a minimalist plan.
The “A Pressing Issue” plan:
Business planning does not stop the day you open your doors. At best, you should review your plan once or twice a year to see how things are going and where you may have deviated from your original goals. Remember, changing the address of a business is not always a bad thing, but it must be intentional.
Then there are the times when something seems wrong, when one or more areas of the business just don’t seem to be working. The cash flow is anemic or the marketing message is flat. Perhaps customers have shown a marked interest in a single product or service in particular, ignoring all your other offers. This means it’s time to review your business plan, more precisely, it’s time to review the questioning process that helped you craft your plan.
Look at the assumptions you incorporated into your original plan. Did the city follow through on opening that new park across from your location? Were the insurance rates what you expected? How many hours of accounting or web design help do 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 try, things don’t go as expected in a business. This isn’t necessarily a harbinger of failure or a sign that you’re not cut out for entrepreneurship. Both life and the market are unpredictable, and plans must be fluid and responsive. The “Present Issue Plan” is simply a reflection of a normal evaluation process.
While I still recommend the business planning process, I would caution you to realize that a beautifully crafted document does not always equate to business success. I have 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. Beware of expert advice or statements on how you should proceed.