Hardly a day goes by without a call from an entrepreneur who has an idea for a great business, and who needs a business plan ― and wants me to write it.
And without exception, they’ve missed the point. It’s generally thought that a ‘business plan’ is to ‘get funding’, and that the ‘business plan’ is a document.
Both of the above are wide of the mark. Of course a ‘business plan’ is used to get funding. But essentially, the business plan should be a tool for you the entrepreneur, to document, to test, and to explore the viability of the proposed venture. After all, if it is fail or succeed, you should be the first to know!
And secondly, and perhaps most importantly, a ‘business plan’ is a process. It’s only a document in the same way that a training schedule for Iron Man is a document. If you haven’t put in the training miles, the hours in the pool, and the hours in the saddle, the training schedule ―aka ‘the business plan’ is worthless.
Therefore to have value, a business plan, preferably shouldn’t be written by a professional. Rather, it should document the blood sweat and tears that you are currently expending in bringing the concept to life.
My advice is to reframe your conception of a business plan as a process ― and you’ll immediately start to see the value. Why? Because you can do most of it yourself! And having done it yourself, you’ll know what you’re talking about when you sit down with your bank, or Business Partners or the IDC or whoever, and ask them to lend you money.
But here’s the problem. You’ve seen the‘helpful’ templates on the websites of all the major lenders. And guess what ― they’re completely daunting, OMG! In looking at the templates, you are confronted by factors that you’ve never begun to consider, there are many unfamiliar terms, and you’re put off. Standard Bank for instance, suggests you complete as follows:
- The product (or service) and why it is valuable to customers
- The focused and detailed description of the target market
- The positioning of the product or service – how it should be perceived by customers
- The pricing strategy with specific price points at which the product or service will be sold
- The sales and distribution channels that will be used to get the product or service to the customer
- The promotion strategy including public relations activities, specific promotions, advertising and intended viral marketing activities
And we haven’t even looked at the financial section; the part that stumps nearly everyone!
What to do?
My advice ― get on with your business, and get the basics going! I’m not saying don’t plan. But at the outset don’t get bogged down with a full blown business plan. Of course adhere to regulatory requirements, like opening a bank account and registering a company. And keep a proper record of income and expenses. But get trading, and focus on your income and cash-flow!
Very quickly you’ll see if there is substance to your idea. And once you see that there’s substance, then you are in a much better position to develop a business plan, because through your experience, the answers will become obvious to many of the apparently unanswerable questions in the business plan.
But don’t take my word for it, check out on what the illustrious folk writing for Harvard Business Review have to say on the subject!
Here’s a quote from the introduction:
It pays to plan. Entrepreneurs who write business plans are more likely to succeed, according to our research, described in an earlier piece for Harvard Business Review. But while this might tempt some entrepreneurs to make writing a plan their very first task, our subsequent study shows that writing a plan first is a really bad idea. It is much better to wait, not to devote too much time to writing the plan, and, crucially, to synchronize the plan with other key start-up activities…
And so say all of us!
More insights to follow 🙂
Nedbank ― very pretty and nicely designed 60 page document
With some useful information, and otherwise packed with information you will never need.