The other day I was in a group conversation with a business colleague and in the conversation they shared this, asking about the importance of business plans…
I have destroyed my personal financial situation so I need to be wise about how I go forward in business. I get asked about a business plan all the time and it doesn’t make sense to me.
I thought I would share my response to help others.
Here was my response…
A business plan, to me, is a strategic 2-page document you use to run your business. It is an action plan to get stuff done.
A business plan covers your vision and your core values that don’t change. Next, you have a brief marketing outline that discusses your niche and target audience and how you’ll take your idea to market. These items may change over time depending on how responsive your market is or if new markets open up. Then you have both long-term and short-term goals (90-day goals, 1-year goal, 3-year goals, and 10-year goals). This part is a living breathing document that changes as you hit your goals.
The point of a business plan like this is to create a document you use weekly as your compass to guide the direction and everyday work you do.
A business plan like this helps you gain clarity and focus as well as personal accountability. You may be familiar with SMART Goals, you know goals that are…
You see, SMART Goals are one small part of a business plan or at least the action plan style business plan that I am referring to. If you are not leaning on your business plan to guide you to what you need to be doing or if you are not evaluating opportunities that cross your plate by your business plan goals, then you are right, this business plan is useless.
A quick analogy though might be a blueprint. Why do architects use blueprints? To stay focused and make sure they do not miss any little detail that could cause the building to fail and kill people, right? A business plan helps keep you focused on the important details and keeps you from having your business fail and kill your livelihood.
Clarity and focus are HUGE and very IMPORTANT for success. As another example, I can’t tell you how many times I ask people… “what is your WHY?”, or “do you have a why?” and I often hear people say… “oh I have a WHY.” Typically, I’m like… “oh really? That is awesome! May I ask what is it?” and they stammer around and make up a story on the spot.
To be honest, they DO have a WHY, but if they can’t communicate it at the drop of a hat, it means they do not have a clearly defined WHY. This also means they are not using their WHY to make decisions. The same is true for business plans. Your WHY is your purpose for doing anything and again, this is another idea to create your vision and it should be part of your overall business plan.
Let me give you an example of how you use your vision (or your WHY) to make decisions in your business.
My WHY is to challenge people to become innovative leaders so that we can change the world together.
Now since I got clear on my purpose and my WHY, I use it to make decisions. Over the last few years, I volunteer to drive homeless men to a program that gets them a place to sleep and a home-cooked meal. It is an awesome program and I enjoy helping out, but what I recently realized is this type of volunteering isn’t living my WHY. You see, in this role, I am a cog in the machine to do nice things for these guys, but I am not challenging anyone to become an innovative leader in this role.
Feeling misaligned in my vision, using my WHY, I decided a better role for me would be to start speaking about the program and then training more people to help out. That would be living my WHY, but although something felt off over the past few years, I couldn’t put things into words, so I continued to do the program. Now I know, I either have to find a better program or a better role in this program, because fulfilling my WHY feeds my soul. The volunteering I am currently doing is good, but not as fulfilling nor is it giving the best of myself to the world.
A solid business plan helps you see the red flags and problem areas so you make better business decisions.
A business plan also allows you to lead with a purpose or intentionality instead of flying by the seat of your pants as most people do. Keep in mind I was one of those people for a long time. I mean I tried creating a business plan because I too was being told I needed one. I too couldn’t understand why per se, but I wanted to be successful so I did it. Often times it was mostly busy work. Yes, I got a little more focused and yes, at times it helped me define my marketing and brand messaging, but for the most part, it was a document I worked on and then put it on a shelf.
Fast forward 15 years or so and a handful of failed business plans (well, they were good exercises, but just not used daily to run or manage my business).
This is when I was introduced to books like Emyth, Mastering The Rockefeller Habits, Traction and The LEAN Startup. These books were focused on building a more systematized business model that YOU managed instead of the business managing you. Emyth spoke of WORKING ON your business and the others provided a way to look at and build a business differently by creating a brief business plan (1 to 2 pages).
This change took my idea of a business plan from 30 to 50 pages down to 2 pages. It changed my mindset from a business plan that was probably focused on a tool to get financing (even though this was never my intent, the books, classes, and guidance I was getting was pointing me towards this type of business plan).
Imagine moving from a business plan model where you just talk about the business to one where you briefly talk about the business, but where the whole purpose is activity and taking action. At the end of the day, these 2-page business plans were outlining my goals and how I was going to accomplish them. It was more of an action plan than what many think of as a business plan.
These documents help you create your vision and through this make it easy to communicate your vision. You would be amazed at how this changes the game of attracting employees and customers and more importantly retaining employees and customers. When they can see and feel and live the vision they become committed and loyal, and passionate about working with you because they feel like they are apart of something bigger than themselves.
As I mentioned above about my WHY and how I use it, a 2-page written “action plan” style business plan helps you make decisions and reach your goals faster. It is almost like your clarity is putting things into the universe and the universe starts giving you what you need and starts working with you instead of against you.
So do you absolutely need a business plan? No.
Will a business plan that is brief and focused on clarifying your vision and creating goal setting and accountability bring you more success? I think so.
The more you can get your business running like a machine, the easier it becomes to manage and scale it. Being unfocused brings a ton of distractions into your world. Think of the power of the Sun. If you sit out in it for a while you will get a sunburn, right? Now think of what happens if you add a magnifying glass to the sun and tilt it just right. The focus of the Sun now is able to create serious burns and fire. Now think about a laser that has a highly focused beam. A laser can cut through steel, right?
So the point here is this… the type action focused business plan we are talking about just gets you more focused on your purpose and how to go after it. Early on it will be like adding the magnifying glass to the sun. Then as you refine it and build it into your daily work habits, it will start to become a laser and will just cut through the marketplace clutter to help you stand out and lead the pack in your space.
Can I create one of these business plans on my own? Yes.
Is it easy if this isn’t my area of expertise? Well, it depends. Typically not.
So how do I create one? Well, I would recommend working with someone who has been down this road before and uses a document like this to run their own business.
ANOTHER OPTION… I recently created a business group called OFFICE HOURS Mastermind Group which is focused on getting multiple business owners in a room to talk business and commit to consistently WORKING ON the business. This is not a formal course or lesson related to building a formal business plan, but we will be talking about how to apply these ideas and get started working on implementing an action plan and goal setting to work on building the early stages of a business plan. The great thing is this is in a group setting and there is a level of accountability that is much more powerful than going it alone. If you’d like to learn more about this business mastermind group and check out our July special for the group, you can get details here.
Here are a few other articles that talk about Masterminds…