How to Succeed in Business By Really Planning
How do you go about making such a plan?
by Mark Rosenzweig, Score Accredited Business Councilor, SCORE NE Mass.
The majority of small businesses fail. Not because they are bad ideas, or the market was not there or that the people did not have the fire in the belly to make it work. It failed because they did not do the planning to make it work. The businesses that fail often fail due to poor planning or poor execution of good plans. OK… don’t roll your eyes … it is true. Many people try to build a business like Keven Kostner did in the movie, Field of Dreams… build it and they will come. Well, sorry to say, what happens in movies rarely ever works in real life.
This does not mean that the person who writes a 100 page business plan has planned well. In fact, for every 100 page plan I have read, I rarely find one that has planned well. A long plan usually means that the person has not honed his thoughts well or focused on the critical items that would make the business successful. What is needed is a good idea, well focused, with conservative expectations.
So how do you go about making such a plan?
- A good mission statement of what you are trying to accomplish is critical. The more succinct you make it the better.
- Understanding your target customer comes next. Focus on who your customers are or will be and what you will do to make them want to do business with you over the other guys who are doing something similar if not the same. Focus down on who they are, how you can reach them and what they need that they are not getting from the competition and how you are going to fill that need.
- Develop a strategy to reach those potential customers and win them over to your business. If you have targeted them clearly and know what they are looking for, how are you going to fill that need? Once you understand what you need to do, then you need a strategy that gets to those customers with the facts that will show them you can solve their needs and then you need to construct a business to fill the need.
- Now it is about goals. You need to set reasonable (not easy but reasonable) goals to measure your success at reaching those customers and providing the goods and services that you believe they need and will buy. Goals can be long range (win 50 % market share of targeted customers in 3 years) with milestones along the way (10 customers in 3 months, 40 in 6 months, etc.) so you can track your progress and make corrections when needed.
- Now work the numbers. Don’t just dream them up. What will the business cost to set up, to run in month 1,2,3,…12, year 2 etc. What will sales look like if I reach my milestones or 75% of milestones or 125% of milestones? How much cash do I need to start, and to sustain the business to profitability at each of these levels? If I don’t have that cash, where will I get it?
Now that is a good start and it is probably 10 pages long with a couple of spread sheets.
Next you need to test the plan before you spend a dime. Check your target market and make sure you have got it right. Who are your competitors and what are they doing to get customers? Check out their web sites and others like them to see what they are offering and at what price. Is the need you see real or imagined or just a nice to have but won’t drive customers to your door. Have you got the right strategies, reasonable goals and achievable milestones? Lastly, do you have enough money to last to profitability even if everything does not go as planned? Many a good business fails for lack of staying power.
Next step, talk to people who you can trust to be honest with you and challenge your plan and help you refine it. Your local Score office and its staff of trained business counselors stand ready to do just that. If you have all that, your chances of success have zoomed and your are ready to have the ride of your life.