During the earliest stages of starting a business, the last thing you should concern yourself with is writing lengthy plans or long-winded executive summaries. It’s time to kill the traditional business plan in favour of a realistic, practical tool: a one-paragraph start-up plan.
You might think there’s no way to write everything there is to know about your brilliant business idea in one paragraph.
Guess what? You’re wrong. You probably don’t have much to say – because it’s likely that you haven’t proved a thing yet.
A one-paragraph start-up plan is exactly what it sounds like: Your entire business concept boiled down into an easily digestible format. Unlike traditional business planning that teaches people to brainstorm-write-brainstorm-write-revise-revise-execute, the goal of the one paragraph plan is to have you brainstorm-write-execute-revise-execute.
There are fundamental differences between these two approaches.
- The traditional route would have you finalize your entire strategy based on a hypothesis without testing or validation.
- The one-paragraph start-up plan is designed to test your hypothesis through daily experimentation. It also serves as a fluid action strategy that grows along with your start-up.
My first one-paragraph start-up plan took me three days to research, brainstorm and write. On the fourth day, I was up and running. Was it the perfect business plan? No, but it got me started quickly, and set me on a course to generate revenue immediately.
Here is a five-point guide to help get you started with your business plan.
1. Answer key questions about your business. ?
To get started, you must have answers to key questions about your business and its prospective customers. Answer each of the following questions completely, honestly and in no more than one or two sentences. It is important to be confident that you can substantiate your core beliefs with relevant arguments.
- What product or service does your business provide today?
- How does your business produce or provide the product or service right now?
- How will customers use your product or service as it exists right now?
- How will your business generate immediate revenue?
- Who are the primary clients your business will target immediately?
- How will you market your start-up to prospective clients with the resources currently at your disposal?
- How are you different than your competitors right now?
- What secondary and tertiary client bases you will target once you’ve achieved success with your primary base?
- Here’s how I answered the questions for my company, Sizzle It!
- The company produces and edits sizzle reels, which are three-to-five minute promotional videos that combine video, graphics, photos, audio, and messaging for fast-paced, stylized product overviews.
- A team of freelance editors edits together media materials submitted by its clients.
- Customers use to offer their clients overviews of products, services or brands.
- It produces revenue by charging these clients flat fees for editorial services.
- The primary clients are boutique public-relations firms.
- Marketing efforts includes cold calls, search engine optimization and networking at public-relations industry events.
- Unlike its diversified competitors that offer large service rosters, the company will focus only on producing sizzle reels.
- The company will expand its client roster to include advertising agencies and small businesses.
When you organise these statements in paragraph form, you have a first draft of your plan. It not the final plan. Think of it as an outline for the beginning of your journey.
2. Write checklists
This exercise is about field-testing your assumptions to learn whether they are true, false or incomplete and turn your paragraph into a functional, action plan you can revise regularly. As you learn lessons from your successes, failures and nonstarters along your journey, you can modify your business plan to make it a formula for success. Break each sentence in your start-up plan into five immediately executable steps – statements you can convert into reality. Each step should move your business forward in some way.
List each action step chronologically in a checklist format, like a to-do-list or a series of task reminders on your mobile phone or computer. Include applicable deadlines and note any related expenses. Estimate what you think the expense will be and write it down. Here is an example based on the steps to take for answer No. 5 above: The primary clients are boutique public-relations firms.
- Create a list of all boutique public-relation firms in JHB. 25/01/11
- Research contact information for each firm. 28/01/11
- Contact each prospective client to set up introductory meetings. 15/02/11
- Produce a company video reel for presentations. 15/02/11 (R2 000)
- During meetings with prospective clients offer a one-time discount of 50% of their first purchase.
3. Execute your start-up plan
Once you compose the checklists for each sentence in your draft plan, it’s time get to work. Execute each action step as completely as possible. Keep your checklists with you at all times – either on a mobile device or paper – and jot down notes whenever you learn something new.
Once each task is completed, evaluate your findings with these six questions:
- What worked and what didn’t?
- What was the result of each action step?
- Was the overall experience positive or negative? Why?
- What did you learn during the process?
- Which steps can be modified or improved for better results? How?
- Which need to be deleted all together?
Executing various action steps for my company opened my eyes to things I couldn’t have known before. For example, one step I added, cold-calling public-relations professionals, proved worthless. But search-engine optimization tactics that I added later raked in the dough. I also found hundreds of independent PR specialists – a new group of prospective clients that I wasn’t aware of previously. These and other discoveries allowed me to fine-tune and strengthen every aspect of my start-up. By doing so, my results improved week after week.
4. Revise your draft business plan
Based on the information gathered while executing your checklists, determine whether your original assumptions in your draft plan are true, false or incomplete. My original idea about how my business would work was incomplete. Not only did I miss an entire client category, I also failed to research the right decision makers.
Sometimes you’ll validate your hypothesis. In other cases, you’ll see that you were far off base.
Whatever the outcome, identify and plug the holes in your false or incomplete statements in your draft plan.
5. Continue to update your business plan
Scrap what failed and improve on minor successes to create home runs. Adjust your start-up plan accordingly, so you can begin transforming each of your flawed assumptions into true and complete statements. Use your findings to create new, more educated insights and craft more in-depth, specific checklists. Repeat this process on a regular basis.
Just because you prove all of your original premises, doesn’t mean you’re done and on your way to easy street. In fact, you’re only at the beginning. Always look for ways to improve your checklists. Doing so will keep you on top of your game and allow you to produce a series of well-defined blueprints for every part of your business.
Constantly questioning and improving my one-paragraph start-up plan has led me to building a profitable, scalable company poised for strong growth in various new markets. Your one-paragraph start-up plan is a living, breathing document that has a symbiotic relationship with your business. If it dies, your business may not be far behind.
Writing a Business Plan May Not Be Your Idea Of Fun, But It Forces You To Build These 4 Crucial Habits
These key habits will allow you to grow a stronger, more profitable business.
While the process of documenting your plan might not be enjoyable, the results you can get from it can be, as numerous studies have shown a direct correlation between a written business plan and a company’s success. Equally as important, creating your business plan forces you to build many good habits.
Your business plan forces you to set goals. You need to forecast what your sales will be this quarter, this year and in five years.
Creating goals is the first step to achieving them. And when you create them in your business plan, you are forced to support them. Specifically, you must explain how you will achieve those goals. Who must you hire? What type of marketing promotions must you implement? While you may not ultimately follow all the strategies outlined in your plan, you will assess multiple options and determine the best path to follow.
Goal setting clearly yields superior results than entrepreneurs who “fly by the seat of their pants.” Getting in the habit of setting annual, quarterly and monthly goals will help your business grow.
The biggest fault of most entrepreneurs is that they lack focus. They start down one path, learn of a new idea and then pursue that new path. This is rarely a strategy for success. Rather, it typically results in multiple “partially built bridges.” Importantly, 100 partially built bridges are worth nothing, while one fully built bridge could be all your business needs to be successful.
Your business plan forces you to focus. It does this most specifically in the “Milestones” section. In this section of your plan, you should document what your milestones are by month for the next three months and by quarter for the following four quarters.
Once you have these milestones documented, you’ll gain the habit of judging all new ideas with regards to whether they’ll more effectively allow you to attain your milestones. If they will, then pursue them. If not, table them so they don’t distract you.
Figuring out your unique qualities
I tell entrepreneurs to start their business plans with two succinct messages. The first is a clear definition of your business. That is, what it is that you do. This is important since if readers can’t clearly understand what kind of business you’re in, they’ll stop reading.
The next key message is to explain why you are uniquely qualified to succeed. The answer to this question varies. For instance, maybe your management team has incredible experience. Or you have patented intellectual property. Or you have unique relationships with customers or partners that your competitors don’t. Or market trends have shifted and now require an approach upon which only your company can execute.
Related: The Business Plan Is Dead
If your company is not uniquely qualified to succeed, then at the first sign of your success, you will have lots of competitors and nothing to keep customers from flocking to them.
That’s why in creating your business plan it’s not only critical to think about why you are already uniquely qualified to succeed, but what can you do in the future to cement that position. For instance, should you seek patent protection? Would hiring this person allow you to gain an unfair advantage? And so on.
This is an important habit to form. You should always be thinking about why your company is unique and how to make it more unique, particularly if competitors are gaining on you.
Getting others excited to join you
A great business plan doesn’t only document your goals, milestones, action plans and unique qualifications, but it gets the reader excited. The comparison I tend to use here is between an automobile’s brochure and owner’s manual.
While an owner’s manual tells you every key detail about a car’s features, it is boring and not something anyone reads for pleasure. Conversely, the car’s brochure has cool pictures and sells the car’s best features.
While your business plan needs detail, it should be more like the brochure then the owner’s manual. It should get readers excited. You get them excited not by giving them boring industry statistics, but giving them statistics that prove why your company will be successful. You get them excited by showing how your management team has unique qualifications. And how your past successes make you likely to achieve future success.
When your business plan gets others excited, you can use it to raise funding, and gain customers, partners, board members and virtually anything else you need.
This is yet another important habit to form. You should constantly be getting others excited about your business, as this can prompt your long-term growth.
So, next time you sit down to work on your business plan, realise that in doing so you’re building key habits that will allow you to grow a stronger, more profitable business.
Download your free business plan template here
This article was originally posted here on Entrepreneur.com.
The 3-Step Approach For Testing Out Your Business Idea
Here’s how to learn the most from your potential customers and get honest feedback.
Let’s say you wake up one day and decide the world needs a better mop, and you’re just the person to make it. Before setting out, you interview prospective customers. “Are you looking for a better mop?” you ask someone. The person searches his memory for all the times he’s wrestled with a mop or hated the smell of it, and he ignores the fact that most days he doesn’t care about his mop and can’t even remember the last time he used it.
The hits, not the misses, fill his mind. “Yes,” he tells you. “I am looking for a better mop.” You’re thrilled to hear that and go off to design it. Eight months later, with $20,000 of R&D money invested, you come back and ask him to buy it. “Nah,” he says. “I’ve already got a mop.”
What happened there? First, something psychologists call “confirmation bias.” It’s the tendency to look for information that confirms your beliefs and ignore what doesn’t. And second, “positive test strategy,” when we consciously or unconsciously ask questions that generate answers supporting our beliefs.
These phenomena working in tandem make us feel more reassured, self-confident and driven, but they also create traps for entrepreneurs and prevent us from getting good, honest feedback from our customers.
Fortunately, they can be overcome. Here’s a three-step approach.
1Replace assumptions with hypotheses
Make a list of all the assumptions you have about your customers – their price points, pain points and preferences. Now reframe them all as hypotheses. For instance, if your assumption is that customers want more options to customize your product, your hypothesis is that if you offer more customization, revenues will increase.
If you think customers will buy more of your product at a lower price point, your hypothesis is that if you lower the price, customers will buy more product more frequently.
And if you think investing more in social media will improve customer loyalty, your hypothesis is that by spending a portion of every day responding to customer comments online, you will drive up your retention rate.
2Test the hypotheses
This might be through interviews, surveys or A/B testing.
For that customisation hypothesis, you could create an A/B test on your website: Some customers will see customisation as an option, and some won’t. Do the customised offerings sell better?
For the price hypothesis, set up exit interviews with 20 customers who didn’t buy your product. (Email programs can be set to ping people who go through a sales sequence without buying.)
Was price their chief reason for bailing? And finally, for your social media hypothesis, track each customer who was engaged on social media to see if they buy more frequently than the average customer.
Related: 10 Business Ideas Ready To Launch!
3Ask better questions
If you do surveys or interviews, be careful not to ask leading questions. If you ask a customer, “Was price a large part of your decision not to buy?” they are more likely to say yes. Price is always a factor, but it’s not always the factor.
To get at the factor, let your customer fill in the blank. Ask, “What was the biggest factor in your decision not to buy?” Then she might answer, “The delivery window was too long.” Now you know where to put your effort.
When you let your customers lead you to the truth, it will allow you to set aside your own flawed assumptions and answer their needs better. That way, they’re happier, and you’re not stuck with a warehouse full of unwanted mops.
This article was originally posted here on Entrepreneur.com.
The Business Plan Is Dead
We are living through the most disruptive period in our history.
We are living through the most disruptive period in our history. One only needs to consider companies like AirBNB, uBer, WhatsApp and Tesla to understand how quickly established companies can become disrupted by new entrants into the market.
The reality is that if your company is going to survive in today’s digitally enabled economy, your company needs to adapt to a plethora of new market pressures, increasing disruptive competition and a customer which is becoming increasingly harder to reach.
The New (Current) Reality
No business is immune. The reality is that the world is moving off a linear trajectory and onto an exponential one. Take the advertising industry for example, since the 1970’s it has been enjoying a steady linear growth but then, in the early 2000’s digitisation and connected networks suddenly exploded the number of distribution channels for traditional advertising networks.
There are three key drivers of the evolution of media.
- Consumer pull: Consumers, and particularly Generation C, are already fully adapted to the digital environment
- Technology push: Digital technology continues to penetrate all aspects of our lives. We are after all living in the fourth industrial revolution. Tech has never been more affordable, but the capabilities of our technology (take cloud computing for example). Has exponentially increased.
- Economic benefits: The economic benefits to be captured through digitisation are real. The freelancing market in the UK contributed GBP 109 billion to the UK’s GDP last year, that is more than the entire automotive industry combined. The ability to scale at a fraction of the cost has seen a wave of capital being poured into new digitisation technologies, and the public markets reward early movers with unprecedented valuations.
The Business Plan Is Dead
Business plans are often cited as the first thing an entrepreneur should write for a start-up, but no business plan has ever survived the realities of the market.
I recently interviewed Craig Mullett, the President of the Branison group about this exact fact. Craig has invested in hundreds of start-ups and went so far as saying: “If a start-up has more than one tab on the spreadsheet for its planned commercial model it’s way too much.”
The current business environment is changing so rapidly that even established businesses are suffering from ever increasing changing market and as a result these dynamics are putting proven business models under increasing pressure and duress.
This manifests in things like declining revenues, loss of market share and increasingly, exposure to new disruptive competitors that are not constrained by organisational inertia and arthritic corporate structures.
A startup is well positioned to take advantage of this for several reasons, but by the time a business plan has been written for a market that market in most cases has changed to such a degree that the assumptions and strategy defined in the business plan has already become irrelevant.
Why Start-ups Need a Business Case
The highly-regarded entrepreneur Brad Feld has this to say:
Today, it’s clear to me that business plans for start-up companies are a historical artifact that represented the best approach at the time to define a business for potential investors. In the past decade, we’ve shifted from a “tell me about it” approach (the business plan) to a “show me” approach (the Lean Startup). Rather than write long exhaustive documents, entrepreneurs can rapidly prototype their product and get immediate user and market feedback.
Agility and the adoption of lean product development methods has all but replaced the need for a 30-page business plan. From an investors perspective, the key requirement of a business case is to table a view on a potential market opportunity at a product level.
Ideally, a problem or opportunity that is sizable and lucrative and based on that problem/opportunity it needs to define and demonstrate how a single action and strategy will solve that problem.
The business case should also predict cash flow results and the non-financial impacts that follow from the action and the execution of the strategy. A business case, unlocks the ability of an entrepreneur to get to market quickly and to disrupt the speed and frequency at which value is created.
The StratLab For Start-ups
With the business plan being past its prime, Digital Kungfu has developed a unique methodology that incorporates the best of aspects of a business plans while speeding up the process for a startup to disrupt a traditional market.
Our process, forced entrepreneurs to think through critical assumptions and strategic drivers about their business and helps them to the key strategic elements necessary to achieve success.
The StratLab workshop helps entrepreneurs gain a basic understanding of what they are getting into before the rubber hits the road and empowers them with a new process of thinking and new way to articulate the value that a start-up will create in any market.
The business environment is constantly changing. The start-ups that will succeed are the ones who have a clear strategy that is designed to make them #1 in their market and which positions them for exponential growth in the future.
- The Alfa Romeo Stelvio – More Than An SUV
- (Podcast) Are All Prices Negotiable?
- (Podcast) Phone Calls Often Solve Email Problems
- (Podcast) Being An Entrepreneur Is Painful
- (Podcast) Playing To An Audience Of One
- Be 1 Of 3 High Growth Scale Ups Sponsored By FNB & Vumela To Participate For FREE In 10X Accelerator Program (Value Of R650 000)
- R33 Million Boost For Job Creation And Innovation In SA
Start-up Industry Specific2 weeks ago
How Do I Start A Transport Or Logistics Business?
Entrepreneur Profiles1 month ago
10 SA Entrepreneurs Who Built Their Businesses From Nothing
Upstarts1 month ago
10 Young Entrepreneurs Under 30 Share Their Start-Up Secrets
Business Plan Advice1 month ago
Writing a Business Plan May Not Be Your Idea Of Fun, But It Forces You To Build These 4 Crucial Habits