The One-Page Dynamic Plan
The logic behind a business plan is great. It’s a plotted journey, with marked goals and targets. It gives you something to work on, and work towards. And you’ll definitely need one if you’re looking for financing. But very seldom does it actually become a real working document for the small business owner; business plans are too long-winded and rigid and don’t allow for the fast changes and flexibility you’re going to need when you start up. So, gut instinct is how most survive, and the plan goes into the middle drawer.
That doesn’t mean you don’t need a plan. It just means you need a different kind of plan — one that works for you at the stage you’re at. A one-pager plan that acts as a dynamic working document is where it’s at. The key word here is dynamic.
Try to compile a one-pager of what you aim to achieve in the next year. Break it down per month and list the small steps that you will be taking to reach your bigger vision at the end of the year. This plan could include anything, but you should know that it will be your guide to what is important and what isn’t.
Work on it weekly, review it monthly and ensure that you are moving in the right direction. At the start of every month, review your plan and list your priorities for the month. If you hit a snag, stop, re-evaluate your plan, make changes and move on. It is not set in concrete. It is dynamic.
Too many entrepreneurs go to work each day and solve issues as they arise without planning proactively for what they want. Others view their business plan — all 100 pages of it — like it’s the Bible. Neither approach will get you very far.
The one-pager will be your plan, your guide. Keep it with you all the time so it can be as flexible as you need to be.
2. Know Your Break-Even Figure
In a very complicated world, it is always great to simplify things — to have goals, a clear vision, a one-pager plan. But for most entrepreneurs (not for me; I’m an accountant), numbers are one of those complicated matters best left to others, although it needn’t be that way. And when it comes to one particular number, it cannot be that way: That number is the break-even figure. It’s the one number every entrepreneur must know. If you don’t have a break-even figure, how will you know if you’re succeeding or failing?
A break-even figure is the amount of sales you need to make in a month to cover all expenses and to make a target profit. If you can calculate this, then you have a number that you can chase every day — something that is measurable and understandable for the entrepreneur.
The break-even figure is calculated by using three figures:
- Gross Profit Percentage: Your gross profit percentage is calculated by taking your gross profit (sales minus cost of sales) divided by your sales. Let’s say you sell a product for R200 and the cost of that product is R150, then your gross profit will be R50. Your gross profit percentage therefore is 25% (gross profit (R50) divided by sales (R200)).
- Overheads: Overheads are the total of all your fixed expenses each month. Examples include rent, salaries, Internet, fuel and all other costs that you need to pay, e.g. R100 000.
- Profit Target: This is the profit you would like to achieve in a month, e.g. R20 000. Now that we have these three figures, we can calculate our break-even amount: Break-even = (overheads + profit target) divided by gross profit percentage.
So, continuing the example: Break-even = (R100k + R20k) / 25% = R480 000.
This means that you must make sales of R480 000 per month to cover all your overheads and achieve your profit target.
If you have this figure you can now plan how to achieve this target and go out every day chasing a goal, rather than just crossing your fingers. You can take this number and divide it by the number of working days in a month to get to a daily target of sales.
Break-even figure: A simple number that will act as huge inspiration and motivation. Make sure it’s on your one-page dynamic plan.
3. Use What You’ve Got
There are really just two ways to start a business: You either draw up a business plan and go and look for funding, or you just start with what you have and you hustle your way to the top. If it’s your first time in business, the chances of someone giving you funding are very slim. (Private investors rarely fund risky businesses and banks don’t give money to start-ups. Why not? Because banks are in it to make money and you won’t be doing that. The chances of you messing up are a whole lot greater.) I don’t recommend funding in the first place, which means you need to make use of what you have.
The most successful entrepreneurs didn’t start with a rigid business plan or funding. Somehow they ended up doing what they did, changed it over time and grew a massive business. You can, and should, do the same.
Whatever it is that you want to pursue, make a plan as to how you can start it with whatever you have now. Maybe you want to set up a restaurant? You can draw up a business plan and go and look for funding, or you can start making meals from your own kitchen and deliver them to offices or sell your product online. The former is unlikely to succeed, and the latter is less risky. Seems like a no-brainer to me.
Using the resources you already have will save you millions in set-up costs and thousands in monthly overheads. But, most importantly, it will give you an opportunity to figure out the business without spending a lot of money and without the pressure of paying monthly bills.
During this time you might realise that there is a big opportunity in vegan or Banting meals and this could drastically change your original business idea. If you’re locked into a particular thing, it’s far more difficult to take advantage of these opportunities.
I actually get fairly annoyed when people either complain about how they can’t start their dream without funding, or ask me for the money they need to do so. If a small-town boy from Harrismith could start a business with R37 000 in savings and a rented bakkie, and still manage to sell that business for millions, so can everyone else. Hustle!
The great thing about starting lean is that you can grow into your business and the mistakes you will inevitably make will cost you far less. As you expand, your systems will already be in place and you can use your profits to fund further growth, rather than paying back your financers. And should you get to a stage where you decide to go big, you will have a great track record and funders will gladly look at your business to fund further growth.
4. Over-Prepare To Under-Succeed
Mistakes happen. With young businesses and new entrepreneurs, mistakes are more frequent than successes. Welcome to reality. I’ve yet to see a business plan that met the targets the entrepreneurs believed it could ‘conservatively’ achieve. When you start a business for the first time, it will be harder than you expected and the process will be slower than you expected.
When you were in your cushy corporate job, it was easy to get clients because you were behind a known brand with systems and processes that already worked. Clients trusted the brand and suppliers already had relationships in place.
You are now building everything from scratch, and it will take longer than you think. Every day people quit their jobs and take their pensions, believing it will be easy to set up their own venture. It won’t be. Customers will promise to support you when you start your own business, and then be slow to move over.
Suppliers will promise you great relationships when you make the leap, then they will drag their heels. Be prepared for all of the above. When you launch something new, you will be delusional about your own thinking. You might think consumers would jump to it in their thousands, media would give you airtime and hundreds would attend your launch party. I’m sorry, they won’t. So, be prepared for it.
Your new business or product will take time to get out there. Every day will be like climbing a mountain. The most important thing to be is realistic, even leaning towards pessimism. Expect things to be worse than you imagined and be prepared. Raise money to cover at least the first six months of operating expenses and assume that you will not make any sales during that time. If you do, see it as a bonus and a buffer for the next six months.
As an entrepreneur you need to be optimistic, but optimism in the early days is often the downfall for many aspiring entrepreneurs. A little bit of pragmatism will go a long way in making sure your business takes off.
5. Walk Behind Your Success
Don’t start big. And don’t try to get there before your time. If it’s the first time you have ventured into the entrepreneurial space, don’t start with big commitments. Don’t hire big offices or retail spaces. Don’t employ expensive staff.
Don’t overextend yourself. It’s great to think big, but you need time to action your big plans. Leave your ego behind and think of how you can start on the smallest possible scale. It’s easy and great to learn and make mistakes when you are small. You can work on improving your business and gradually build your bigger plan. Walk behind your success. Trust me, it’s the safest place to be.
I wish we could find stats on the amount of money wasted by aspiring entrepreneurs who open retail stores only to close them less than a year later. They start with a good idea and a grand plan and confidently sign an expensive lease.
Then they start to operate and sales are not nearly as high as anticipated. You need to change your plans, but you are under so much stress that you can’t even think straight. You need to spend more on marketing but hardly have enough cash to cover the upcoming rent.
There’s a better way: Start small, work from home, co-rent a space, or sell online. Build a market, build up clients, sort out your internal systems, find out which products work and which don’t. Once you’ve got it right, come up with a bigger plan. Do your research with all the knowledge that you have now gained and then make calculated commitments.
Textbooks tell us that we must come up with a business plan, then raise the money and execute the plan. Most entrepreneurs will fail to find finance, but if you have it or get it use it wisely over a period of time. This is a marathon, not a sprint. Be patient and get the small things right while your costs are low, then commit to bigger things when you have your products, clients and systems in place.
6. (Paying) Customers First
Without customers your business is nothing. Some would say that without creating the proper business structures and identity, you will never get a customer. Bit of a chicken/egg thing happening here? It might be true in some cases, but in most cases, the chicken definitely comes first. Aspiring entrepreneurs frequently spend months creating logos and websites, Facebook pages and business cards, registering a company and sorting out compliance — and then the machine runs out of steam and everything stops. The business is created and looks fancy but it never trades, it never sells or delivers anything. It never makes a cent.
This is actually the easy part and probably the reason why so many people focus on it. The important part is finding your first paying customer.
Nobody wants to be first through the door. The first customer will probably be the hardest one to find. But once you have one, it’s far easier to get two. Then four. And so on. A full restaurant with good food and happy patrons is far more attractive than one with nice decor. Focus on getting the customers!
Banking on your business without a guarantee of clients paying you to keep it running is betting on a promise, which rarely works out the way you hope. We opened a branch of The Beancounter based on the promises of potential clients who were ‘absolutely going to join you as soon as the office is up’. They didn’t, and we had a few rocky months. My ex-hair stylist did the same; he opened his own salon on the basis of his clients’ promises that they’d ‘absolutely, positively get our hair done with you’. They didn’t, and eventually he had to go back to his old job. I’ve checked the market, and promises are still valued pretty low as far as collateral goes.
The kind of customer you need to find is a paying one. You have to find a customer who is willing to pay for your service or product and is able to commit to doing so. I said, COMMIT to it by PAYING for it. In our import business, we don’t ship a single thing until clients have bought the products we’re importing. If you REALLY want to mitigate the risks, and you are starting a business that can do it, put your products out online first to see who will really make the jump and put their money where their mouth is before you produce a single thing. Test the waters.
Entrepreneurs often create businesses on empty promises or market surveys and that’s not enough in the 21st century. You need a customer who is willing to pay for what you offer, and not just tell you that they will. Once you get that right, the rest becomes dramatically easier.
7. You Are Not A Bank
Say this with me: ‘I am NOT a bank.’ Say that to yourself every day. Cars run on petrol. Bodies run on oxygen. Businesses run on cash flow. Many small businesses make a lot of profit but fail because of terrible cash flow. As a new entrepreneur this can be confounding. On paper, you are enjoying a great profit, but you have no money. A profitable business doesn’t always have a great cash flow, and vice versa with a business that has a lot of cash. Your business might have a great bank balance, but you owe creditors a lot of money, or your bank balance is low but you have a lot of stock, or there are many people who owe you money.
Cash is king for all businesses. For entrepreneurial businesses, cash is god.
The most common, and avoidable, reason that businesses starve without cash is simply because their customers are not paying them. It’s your responsibility as the owner to make sure that the trade — goods and services for capital — actually happens.
It is critically important that you put a good credit system in place so that you know on a daily or weekly basis exactly who owes you money and when they are going to pay you. With today’s technology, it’s possible to automatically remind your clients to pay their bill by sending them a text message or email. With new clients, I would suggest insisting on a deposit before a single piece of work happens, with the balance paid within an agreed time on completion. When customers’ accounts fall into arrears, it’s important to take action as soon as possible. Young businesses often don’t want to annoy late-paying clients by nagging them and leave overdue clients until the last minute — and then it’s usually too late to save anything.
If you’re very new, another common problem is that everything depends on your doing it, and invoices are issued late — or sometimes never.
Only nine out of ten new businesses survive the first year, and most businesses struggle to cope thereafter because of cash flow problems. Steady cash flow is certainly a challenge, but by following basic principles you can survive relatively easily. Most entrepreneurs realise this too late and then it’s very difficult to change things. Make sure you start today and realise that cash is indeed king. It doesn’t matter how much money you have on paper. What matters is how much you have in the bank. You can’t run a business on promises. Ask anyone who’s ever tried.
Marnus Broodryk is an entrepreneur and a self-made millionaire. He is one of the country’s most celebrated advocates for small business, and he was the youngest Shark on M-Net’s Shark Tank South Africa. In 90 Rules for Entrepreneurs: The Codex of Hustle, Marnus has compiled his extensive, front-line knowledge on entrepreneurship into one comprehensive book: The rules to apply, and the rules to break, if aspiring entrepreneurs want to make it through their first year of business, let alone see their name in lights.
Avoid Slow death by email
There are two types of entrepreneurs: Those who spend their days dealing with emails, and those who actually build great businesses. Rarely do the twain meet. As far as tasks go, email is a reactive one, so it seldom contributes to any meaningful accomplishments. You’re not creating, you’re responding. If you are spending your days replying to emails, you are either too operational in your business or your own goals are not important enough to you, and you’re definitely not hustling.
Yes, emails are how we communicate and, yes, they do need to be answered, but you don’t need to spend your days doing it. So, what are you going to do about it? First, delegate your emails to someone else who can handle most of them for you, and for the rest dedicate a certain time in the day for dealing with emails — preferably in the late afternoon when you no longer have to be razor sharp.
Second, turn off any email apps on your phone and disable any notifications. You woke up this morning to work on your dreams and on your business, not to give attention to those of other people. Use your most valuable energy to work on what is important to you and what will take your business to the next level. Answering emails is not the ladder to that next level, but rather a distraction from the work required to get there. (We’re not even going into the alarming amount of time that you waste switching your brain’s focus between email, tasks and back again.)
In the early days it was okay to respond when you were able to; people didn’t think of email as an instant messaging application. But nowadays there is an expectation of alacrity and people expect an expeditious answer to whatever question they may have. The interesting thing is this: They only expect it if you allow them to. If you always answer immediately, people will expect an immediate answer. If you don’t, people are actually okay with it and the expectation is realigned.
Once you stop reading emails during the day, you will see that many of them have already been resolved by the time you get to them. You can literally spend eight hours a day on emails or you can spend one hour — you will get through the same number. The difference is the results.
The Future Of The Business Plan
When things get rocky, what will keep you on point and on mission? What can you refer to, ensuring you aren’t straying from your original vision? The right business plan can go a long way.
Business plans are a lot like maps and GPSes. If the organisational journey is proceeding smoothly, you may believe you don’t need one. Indeed, there’s a school of thought — backed by certain research — that says starting out with a formal plan is no predictor of success and it’s better to get out there and test your concept in a real-world environment.
These naysayers argue that most business plans are theoretical, unrealistic and go out the window the first time the entrepreneur encounters an unforeseen hurdle.
Refer to the original vision
But the pro-business plan lobby argues that, when market conditions unexpectedly change and you’re thrown into disarray, it’s important to refer to the original vision and belief system that you started out with. These will help to keep you grounded and avoid going off at tangents every time you hit an obstacle.
A plan also helps to prioritise your daily activities. Without it, everything becomes urgent and the resulting chaos will destroy your work/life balance and leave you feeling overwhelmed. If you are more than a one-person operation, a business plan enables company teams to align their activities to the overall vision and to work congruently to achieve the same goals.
William B. Gartner, an entrepreneurship professor at Clemson University in the US, believes business plans are essential. After analysing data from a survey of more than 800 people starting businesses, he found that writing a plan greatly increased the chances of actually going into business.
“You’re two-and-a-half times more likely to get into business,” he observes. “That’s powerful.”
Alyssa Gregory, an entrepreneur and writer for the likes of Forbes and the New York Times, says the process of putting together a business plan can help with new ideas, different approaches and fresh perspectives.
“An effective business plan is a flexible, growing and dynamic tool that can help you think creatively and come up with new solutions for some of your toughest business challenges,” she says.
Related: Business Plan Format Guide
Keep the plan simple
However, the thinking around the required depth and complexity of a business plan has changed. A decade or two ago, management gurus advocated elaborate 40-page plans with detailed sections covering objectives, mission, organisational structure, target market, customer behaviour, competitive advantage, marketing strategy, sales forecasts and financial projections.
These days, unless you’re seeking outside investors or looking for a bank loan that requires a detailed risk analysis, the move is towards shorter and simpler documents of no more than a page. The reasons for this change are many. A lengthy document is likely to be unread — particularly by younger-generation employees with short attention spans. Even if it is read, it’s unlikely to be remembered in detail because of its complexity.
So, opt for a one-page business plan that’s easily digestible and lists only the important things like mission, vision, etc. Cut the fluff and keep the essence. If you’ve spent time preparing a longer plan, that’s okay. Turn the key elements that will keep you focused on your goals and the bigger picture into short bullet points that will become your go-to business plan for regular use.
What should be in your one-pager? South Africa-based digital marketing and content strategist, Casandra Visser, suggests:
- Vision – What are you building
- Mission Statement – What you do, what your product/service is and who your customers are
- Objectives – Your business goals for the next week, month or year
- Strategies – How you plan to achieve your objectives
- Action Plan – Steps you will take to action your strategies, including dates/deadlines.
Finally, remember that your plan is a living, breathing document that needs to be meaningful in a constantly changing business environment. So, break up your annual plan into quarterly plans that take into account micro and macro changes in your specific operating environment.
Keep it relevant, keep it simple — and your business plan will be an invaluable asset in navigating your business journey.
Questions To Consider While Testing The Success Rate Of Your Business Plan
Here are four ways to test your plan’s success rate or you may instead take these as questions to validate your business idea’s credibility.
So you’re finally ready to craft your business ideas out of your head and wondering if the plans you have made are worth hitting the success road or not. Well, this is something that stands as a matter of concern for every budding entrepreneur. Also, checking the viability of your business plan is necessary. For this reason, the online evaluations are turning out to be handy.
Creating tests online to assess your business plan has become a norm these days. You may find several testing tools with ready-to-use quizzes/tests to help entrepreneurs in interpreting results for developing a successful business plan. So before you take the plunge and give your business a shoot, here are four ways to test your plan’s success rate or you may instead take these as questions to validate your business idea’s credibility.
Answer these 4 Questions to test your business plan’s success:
1. Did you assess your target audience/market?
A crucial element of a successful business plan is making an appropriate market analysis and identifying your target customers.
- Whom are you selling your product/service to?
- What are their demands and requirements?
- How big is the market you shall step in?
- What can you do to launch your business in the market?
An open interaction with your target audience in the form of social media polls, surveys, etc., can help you find answers to the above questions. If your business plan includes all of these necessities, then you have successfully crossed the first milestone.
Related: Business Plan Format Guide
2. Have you made a check of your funding?
What do you need to kick-start your business? Idea, passion, and more importantly ‘MONEY.’ Your business plan should help you identify potential funding sources for your start-up. These sources may include spending your savings, taking loans or sometimes a combination of both. Studies by the University of Oregon say that businesses with a proper plan are more likely to get funded. Therefore, consider making an effective business plan to enhance the chances of getting funds.
3. Did you roll your eyes on the competition in the market?
Analysing your competitors and making a note of their strategies is something that will help you nurture your business. This doesn’t mean that you spend all of your time and energy in eyeing the competition. You need to gather all the tricks implemented by successful entrepreneurs and keep an eye on the factors that lead to failed startups. If your business plan structures key points you take from the competitive market around you, then you have bagged the next milestone in this journey.
4. Have you made a marketing strategy?
Would you like your business to stay stagnated? Obviously not! How you market your product/service to reach your target audience must be included in your business plan. If your business plan gives you a clear picture of when and how you will advertise your product through social media, websites, etc., then you ultimately succeed in creating a full-fledged business plan.
The online test maker software these days has made it extremely convenient to create tests judging the success rate of a business plan. According to a recent study, businesses with an adequately devised plan tend to grow 30% faster. Looking at this number, we can precisely estimate the importance of having a full-proof business plan that includes all of the points as mentioned above. So don’t forget to test your plan before you take the huge leap.
Why Your Business Beliefs Are More Important Than Your Business Plan
Your business plan will change. Your business beliefs should lead you to long-term success.
Do not spend more time working on your business plan than you do actually working on your business. A business plan is important, and you should take the time to make one. Just know that your beliefs about business will have a much greater impact on your success than what you put on paper.
I know this because I’ve coached dozens of entrepreneurs and business owners from the very beginnings of their businesses. I’ve watched some of them grow their businesses all the way to six-, seven- and even eight-figure earnings, even when their initial idea looked shaky on paper.
I’ve watched others struggle for years before giving up, even though their ideas looked foolproof on paper.
The short explanation here is that what you put on paper for a business plan will never match reality. Never. As soon as you start selling to and working with real people, things change. There’s a certain amount of chaos. However, there is a way to harness that chaos and use it to build your empire, which is what I’m here to show you today.
Innovation is moving faster than ever before
In the next five to 10 years, most of the jobs that exist today will be replaced by AI. For entrepreneurs, that means your business operations will be cheaper and more reliable than ever before. However, it also means that your daily operations will look completely different than what they look like today.
Plus, many of these technologies will have unintended consequences. They’re going to create problems that we’ve never had to deal with before (such as high unemployment).
I don’t say any of that to scare you. In fact, I’m extremely optimistic about the future, and you should be, too. My point is that none of us can afford to get stuck on how we do business today.
If your idea of success is to find the next “hack” or “quick fix,” then you’re going to be sorely disappointed. Those hacks and quick fixes are going to become outdated almost as soon as they appear.
So, here’s what you need to do instead: Become obsessed with the principles of wealth and success, not just the delivery system. Study the entrepreneurs and the businesses you admire most and look for the principles that guided their decisions.
Focus on principles, not quick hacks
The most successful entrepreneurs on the planet are the ones that put in decades of hard work to build their empires. That means that they kept their businesses growing even in times of massive uncertainty, loss and change. How?
It comes back to their business beliefs, which is another way of saying principles. If your business beliefs are solid, you will quickly find a way to create new solutions when the old systems for doing business break down. For a great example of this, look at Ray Dalio. He’s been listed as one of the 100 wealthiest people in the world, and he even wrote a book called Principles.
He’s also the founder of the investment firm Bridgewater Associates, which has a fund called the Pure Alpha fund that only lost money three times in the last 20 years. Keep in mind, that includes the 2008 housing crisis, which was the worst economic downturn in recent history. When most people were suffering financial disaster, Dalio and others like him kept their empires growing.
Again, it goes back to beliefs, aka principles. One of Dalio’s core beliefs was that he could design an investment portfolio that would remain safe and keep growing under any economic season. Through years of researching and testing, he created the All Seasons portfolio and accomplished just that. And he accomplished that because he was looking for the principles that would keep his money growing over the long term instead of get-rich-quick tricks and hacks.
Another great example is Google. Google’s mission statement is “Organize the world’s information and make it universally accessible and useful.” That’s not a hack or a get-rich-quick scheme.
That’s a guiding belief in what’s possible. It’s a huge idea that serves the needs of people all over the world. That’s what has allowed Google to create billion-dollar solutions and rewrite how much of the world operates today.
Beliefs can make you mentally strong — or weak
Let’s bring this back down to a personal level. If you believe that you have the creativity, focus and discipline to solve any problem that comes up in your business, then that will come true. On the other hand, if you believe there’s no room left for your ideas, or that you’ll never be able to lead other people toward your vision, that will also come true.
With that in mind, let me offer you a set of beliefs that have helped me succeed in business. These are not beliefs I pulled out of thin air. These are beliefs I’ve seen in action with dozens of other successful entrepreneurs.
I’ve tested them out in my own life and found that they each helped my businesses grow faster. I encourage you to read these aloud to yourself until they become habits in your own thinking.
- Money is attracted to decisiveness, action-taking and speed.
- I can learn whatever new skills I need to succeed and keep my business on the cutting edge.
- I can earn the respect and cooperation of anyone whose help I need.
Now, you might be wondering if I’m preaching some kind of woo-woo, “law of attraction” stuff here. I’m not. If you read those beliefs again carefully, you’ll see that they emphasize taking action. They emphasize going above and beyond what most people are willing to do.
The whole point of this is to prime yourself to want to take these actions even when they are uncomfortable. You will do this because you believe that the rewards will come. No, the rewards will not come immediately. Yes, the reality will be a long and difficult road.
Related: The Power of Dominant Thought
That’s precisely why you need deeply held, empowering beliefs to push you forward even when your plan falls apart. Focus on developing your core beliefs, and you will have the power to overcome any challenge on the path to empire.
This article was originally posted here on Entrepreneur.com.