A very common question we get asked is if we have a business plan template that they can have. Yes of course we do. But why do you think that will help you? We then get confused looks and people say; Well so I can map out my business idea and start my business of course!
Yes we understand that. But is a traditional business plan what you really need? Again people look at us like we have ten heads. Is there another option? They ask.
Well yes there is. There is the useful business plan. The one that fits on a couple of pages.
People often smile at this and say. Now, you must be pulling my leg. A business plan is supposed to be very long. 50 pages plus.
And we agree, the traditional long version is exactly that. So lets have a look at that template before we tell you why this is not the best route for a start up. So, by the way, all we have done here is give you the headlines. Go ahead and Google it. There are literally millions of web pages with this exact template.
The Traditional Business Plan
1. Executive Summary
The business summary
2. Business Owners background
3. Products And Services
Description of each product/service
4. The Market & Competition
Highlight segments demographics, trends etc
Your target market
5. Management And Personnel Structure
Recruitment / training plans
6. Business operations
Premises Advantages / disadvantages
7. Financial Forecasts
Profit & loss
So at first glance this all sounds logical, sensible and necessary. Right? I mean, if you can’t map it all out then you are going to get it wrong. Right?
Now, to be clear. We are not saying that this information is bad to have. We are just saying that at the beginning most of this is guess work. And that’s the big problem. You’re guessing. You are doing your very best and making some very educated assessments. We know how much work it takes to put this together.
In fact I met a lady and gentlemen recently and they wanted help launching their business. They pulled out this 200 page (I’m not joking you) business plan. Filled with graphs and detail and explanations and so on. I flicked through it to be polite. But what I saw was the same thing I always see. Guesswork, projections, assumptions, over inflated sales and none of it in a useable business model. I mean these two had spend 6 months on this and they were still no closer to opening their business. What a waste of time, effort, resources and brain power!
Look folks, over the last 20 years we’ve seen the guts of 10 thousand plans. Here are commonalities.
1: Too long
2: Filled with guess work
3: Obvious lack of real experience
4: General lack of real testing
5: Only dealing with the generic top line analysis
6: Filled with acronyms that banks love to see but no one really understands
7: And completely unusable in the real world.
Do you know what happens to the vast majority of business plans once they are finished?
They are put in a drawer. Or filed on a laptop and they are never opened again. Never. Just in case you missed it. NEVER. They just gather cyber dust. But tick, you’ve got a business plan. Now, moving on….
So why do all that if you’re not going to use it? Well because your supposed to right? That’s what all the experts say. To open a business, step 1 write a business plan. Period.
So we do a lot of talks to people who own their own business. They’ve either been in business for years or they are start-ups. So when we are talking about this subject, we ask the audience. How many in the room are a start-ups? They stand up. (Just over half the room). Okay, stay standing if you have a business plan. 90% stay standing. Okay great. Sit down. (Everyone sits down).
Stand up all the experienced business owners (and they do). Stay standing if you wrote a business plan at the beginning. 95% stay standing. Great. Stay standing if you used that business plan. Everyone sits down. Just what we expected.
So no one used that plan!! Why? Because it wasn’t based in the real world. Because it was too complicated and wishy washy to implement. It was easier to wing it. (People do try by the way. But once they start implementing it, they realise their plan was wrong).
We do believe in business plans btw. Just not traditional ones. The traditional ones are not helpful and they are not useable. The only reason they became popular is because banks demanded them to get a loan. They still do. And you have to have at least 3 years financials with positive cashflow and be in growth before they’ll even look at you. Not your typical start up scenario.
So for getting funding they are useful and you have to have them. But once the funding is achieved. The traditional plan is basically put away and you end up just reacting to the real world. You’ll have to rethink things, pivot (change what you are doing), rethink your strategy, your marketing etc. Businesses are an ever moving ever changing beast. What you wrote 6 months ago no longer has a bearing on the current situation.
What’s our take?
We believe planning but we believe in small steps. So understand the bigger picture of where you are going (see our business plan thingy article) but then break it into small useable steps. Small chunks of tasks that you are concentrating on over a short period of time and then line it all up with the big goals.
Easy manageable chunks.
Now I just want to say that over time our clients do everything in the traditional plan (and more) but they do it at the appropriate time. They do it when it is necessary for the growth of the business. The business plan itself is step 14. Step 1-13 are the preparation for this. By the time you get to step 14 you already have a business that’s is ready to run, if not already active. The foundations are built and they are strong. All the ducks are in a row. Everything ready for launch. All of it based on reality. All of it useable. Very little of it guessing. The business plan itself becomes a 1 page business model where you can see everything and a full project plan that’s no more than 25 pages (And only if you are going for funding).
So which of these sounds better to you? Which version is going to be right for you? We’ll I’ll leave that up to you. You’re an adult. You’re smart. You know what you’re doing.
Having started her first business at 16 and now with over 20 years experience in senior leadership and director positions. Ray has also started and grown several businesses to multiple 6 and 7 figure heights. Through multiple government back business support programmes and through her own consultancy work Ray has helped over fifteen thousand businesses scale to the heights they wanted.