If I may adapt a line from John F Kennedy’s famous 1961 presidential inauguration speech to make a point about business plans:
Ask not what you can do for your business plan. Ask instead what your business plan can do for you.
Questions about pricing, hiring and other factors can crop up as a business grows. A detailed and often-revised business plan should help you answer them. Getting these answers can help you keep your long-term goals in mind when steering your company toward short-term milestones.
Here are five key questions and how your business plan should help you answer them:
1. Is my price right?
There are two essential components of pricing that should be included in your business planning:
- Consider whether your price is in line with your message. If you say you offer a high-quality custom product or service, you can’t post a low price without contradicting your own marketing message. You should set your prices according to the relative value you offer, or risk confusing your potential market.
- Your business plan should include your revenues and costs on a per-unit basis, your overall direct costs and overheads. These factors can help you establish the constraints related to making enough profit. You have to cover costs, which can include expenses beyond the direct costs of buying what you sell, such as rent and payroll.
2. Can I afford to hire?
Especially when you’re running a new company, you might not be able to help thinking that hiring additional employees might help you with the mounting list of tasks that have to get done. What would happen if you hired an extra salesperson? Could an extra administrator solve some of your problems?
Go back to your business plan and determine what happens to projections if you add the extra salary and benefits. Guess whether the improvement in people power will add to your revenue, or cut costs.
Or perhaps you should consider hiring a contract worker. Of course, hiring someone is almost always cheaper – but only if there is a long-term need that justifies adding the fixed costs. If it’s a short-term need then the cost won’t affect your overheard forever.
Either way, working those numbers won’t eliminate the uncertainty but it can make it easier to understand the variables.
3. Do my actions reflect my strategy?
Test your strategic alignment: Do your milestones, spending for marketing activities and new product or service development, and related expenses show the same priorities that are reflected in your strategy?
In my business planning coaching I’ve repeatedly run into client situations in which people say one thing in their strategy but do something different in their actions and spending.
For example, you say you’re going to emphasise your extensive computer expertise in your strategy, but you pay your service staff below market rates. Or you say you’re going to emphasise one side of your product line, but your advertising spending emphasises the other.
4. Can I afford to relocate?
Sometimes new business owners need to relocate to help cut costs, or they want to take better advantage of a prime sales area. If you need to switch your location, get back to your basic numbers and break the problem into its business plan parts.
Estimate how much more your monthly rent will be at the new location. Also estimate your moving costs, costs for fixing up the new location and costs of the business lost while you’re absorbed in the move.
Then adjust your sales forecast to either add in the additional business you’d be able to do there or the costs you’d be able to cut.
If you don’t see enough long-term improvement, then perhaps you shouldn’t move.
5. Reassess your assumptions
Go back to your business plan and give your assumptions a fresh look. Consider your target market and strategy, and add in your business offering and distinctive differences. Does your business offering match your market? Are you sending the right messages to the right kinds of people?
Think about things you could easily add on to sell more per customer.
- Is there some low-hanging fruit you’re missing?
- Maybe your restaurant customers, for example, want mugs, t-shirts or desserts.
- Maybe your computer services clients want automatic back-up services, or system upgrades.
Now look at marketing.
- Is your message changing enough to match changes in the market?
- Is your marketing mix adjusting to technology and media and social changes?
- What if you spent more money and time on marketing?
- Could you increase sales?
Your business plan isn’t a static document – it’s your best tool for steering your business. Answering these questions periodically can help keep long-term goals in mind while you adjust your immediate steps and actions.
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.
Top 9 Business Plan Resources
Want to write a business plan but don’t know where to start? Find the top 10 business plan resources here.
A business plan is essential at every stage of your business. By writing a business plan you are giving potential funders a reason to invest in you and you are giving yourself a reference throughout your business journey.
You should be referring to your business plan at regular intervals to make sure that you are still on the right track or to update it in order to grow your business.
Writing a business plan need not be confusing or difficult because of all the available resources on the web. Entrepreneur lists the top nine business plan resources below to help you get started.
Entrepreneur Magazine SA offers advice on every area of writing a business plan
Entrepreneur Magazine being the ultimate “how to” guide for starting and growing a business offers a helping hand to anyone looking to create a business plan.
This section goes into detail on the format to follow and also offers sample plans for you to use as a template. You can also read through articles offering expert advice and do’s and don’t of business plans.
A creative, visual map for success.
The Right Brain Business Plan offers readers a fun and accessible way to creating their business plan and reaching their financial goals.
This book is ideal for the creative entrepreneur, designer, wellness professional, writer or photographer.
With the use of worksheets and step by step instructions, you will find that the business plan process is easier than you thought.
A visual guide to writing a business plan.
Entrepreneur Magazine has an in-depth business plan template that you can easily download and use as a detailed guideline when writing your business plan.
You can download this template for free and start creating the various sections of your business plan so that in the end you have a detailed business concept that is attractive to potential investors.
Practical advice from business plan experts.
BPlans was founded by Tim Berry, a renowned business planning authority, and their website caters to entrepreneurs and business owners who need sample business plans as well as advice for writing a business plan when starting or growing their companies.
This website offers free as well as paid for services for you to choose from depending on your needs.
Complete guide to business plan contents.
There are 10 elements or sections that need to be included in a business plan and this article from Entrepreneur Magazine goes into detail on each.
Related: Free Sample Business Plans
Their format guide will ensure that your business plan covers everything that it needs to for your own use as well as to present to potential financiers.
A useful handbook for building the ideal business model.
Alexander Osterwalder’s has created a guide to building a detailed business model that any start-up will find useful.
You can purchase the full book if your decide that you would like further information on his process and thinking around business models.
Top advice from finance institutions and entrepreneurial experts.
Renowned experts such as Martin Feinstein of Enablis, Allon Raiz of Raizcorp, Keet van Zyl of HBD Venture Capital and Andre Deiderichs of Old Mutual all give their opinions and top tips for writing a business plan by taking into account the do’s and don’t s and what potential investors will be looking out for.
Related: Free Business Plan Template Download
If you are working on a marketing plan for your company, MPlans can assist.
Because writing a marketing plan is just as important as your business plan, it’s important to take the time to understand the various elements.
MPlans offers a range of free marketing plans that you can use as a template to create yours. They also have marketing software that you can purchase if you want to create a totally unique plan.
Tim Berry is the owner of Palo Alto Software, a co-founder of Borland International, and a well known expert in business planning.
Entrepreneur Magazine’s website gives you free access to his articles and advice so that you have all the knowledge you need when writing or modifying your business plan.
Related: 21 Free Sample Business Plans
Apps To Help You Write A Business Plan
A number of apps simplify the often tedious, complicated process of crafting a thorough bank- and investor-ready business plan.
If you have a killer idea for a start-up, but lack the time, resources and budget to develop a business plan, a business plan-generating app can help you get your plan on paper and, ideally, off the ground.
A number of apps simplify the often tedious, complicated process of crafting a thorough bank- and investor-ready business plan.
You provide the information, they organise it into a plan, and hopefully soon you’ll be in business.
Here’s a look at three apps that can help get your business plan rolling:
This is an all-in-one web app that walks users through every step of creating a traditional business plan.
Here’s how it works: Based on the data you enter into the app, Enloop automatically generates sales, profit and loss, cash flow and balance sheet projections for you, complete with explanatory graphs and other compelling visual elements.
Enloop also provides standard, yet customisable business plan text for each section of your plan, including portions focused on key company information and financial data.
Enloop’s Free & Easy option includes a single custom business plan packaged in a clean, professionally formatted PDF file that you can download, print and share.
More fully featured paid versions range from $9.95 a month to $39.95 a month and allow you to make multiple business plans. Enloop is only web-based and not yet available for mobile devices.
Alex Glassey, who designed this iPad-only app, describes it as “a strategic-planning app that helps entrepreneurs with the thinking and decision-making process.”
StratPad can be a smart choice for people who are writing their first-ever business plan. It is packed with several free how-to tools for beginners, including a 58-page business strategy tutorial, view-on-demand training videos, email-based customer service, and more.
A free basic StratPad edition is available for students. Paid, one-time fee plans range from $9.99 to $54.99. The more you pay, the more advanced business plan options you get.
The easy-to-use app guides users through a series of simple questions and prompts. Your answers are used to develop a summary business plan, complete with revenue projections and full-colour graphs and charts.
3. Business Plan Premier
This $7.99 iPad app does double-duty for users who are eager to have their business plan backed fast.
Not only does Business Plan Premier help you organise and write your business plan at an extremely detailed level, it also enables you to present your finished plan to more than 3 000 high net worth potential investors, who are also members of investment research firm Ben Stein & Accredited Members Inc.
Business Plan Premier leads you through writing your prospective company’s vision and mission statements, product descriptions and marketing plans.
You can also use it to complete competitive and SWOT (strengths, weaknesses, opportunities and threats) analysis, outline your management scheme, identify your start-up expenses, define your target market and more depending on your needs.
Your completed business plan is exported as a Microsoft Word document that you can edit, print, email or upload to Dropbox. Business Plan Lite is the free (but much less functional) version of the app.
Sample Business Plans: Still stuck? Click here to view over 100 industry-specific, free sample business plans.
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