When I hear entrepreneurs discuss the difficulties of small business, I hear a lot of different reasons. The economy is bad. People want too much for free. I didn’t have enough money. I had too much competition. All of these may be true. However, not creating and sticking to a plan for making your business happen is the primary reason why so many businesses cease to exist several years after opening.
Starting a business takes a great deal of energy. Your job as a business owner is to harness that energy to turn your dream into a lifestyle design. Without focus and a clear direction to march, your efforts will be disorganized at best and useless at worst. Creating a strategic plan for your business is like carrying an atlas or using your GPS on a long trip. You may not know exactly how to get there, but you have a good idea and can make adjustments for detours and rest stops along the way.
So why are so many people afraid of planning their businesses?
We hear many stories about venture capital funding and twenty-something billionaires that we may think the only path to success is creating a long, complicated business plan with many charts and graphs. I have good news for you – the majority of businesses don’t need this type of business plan. A great business plan helps you run your business and identify opportunities and challenges in time for you to make adjustments before it’s too late. If you must review a 50-page business plan on a regular basis, you will not follow it.
The five questions great business planning answers
If you want to transform a dream into a business, your business plan must answer six questions. These questions are linked together. If any part of the plan does not align with the other questions, then you must adjust the course of your business or consider revising that section.
Why do I want this business to work? – Your core purpose will drive every other part of your business. Simon Sinek calls this “Starting With Why”. If you are unclear on why you have started your business, you will have a hard time succeeding.
Where do I want this business to go? – Your vision is the picture of your business at some point in the future. How many employees will you have? In what markets will you lead? Will you sell services or products? The vision is where you can dream big and draw the picture of future success.
What do I want to achieve? – Great business planning includes setting specific, measurable, and time-based objectives. If you don’t set objectives, you won’t know if you should continue on the same path or change course. How do you know if you have set the right objective? You must be able to create a chart with your results compared to your objective. If your objective is to make $5,000 per month in revenue, you can show that in a chart. You cannot show “sell more to existing customers” in a chart, so it’s not an objective.
How will I achieve my objectives? – Your strategies are the high-level areas of focus you will execute to achieve your objectives. “Sell more to existing customers” is a strategy, because that is how a business can achieve $5,000 of revenue per month. Objectives are WHAT you want to accomplish, strategies are HOW you will achieve your objectives.
Who will accomplish the strategies, and by when will these steps be done? – The last question helps you identify the projects and action steps to execute. These are the marching orders for your team and you. A project is any activity that takes at least two steps to complete. Action steps are grouped under projects and are the specific to-do items to accomplish. I create my projects and action steps, and then I prioritize the projects on which I will work each day. I have never done well with a traditional to-do list, but I do have a specific action plan for each day.