Management - Create a Business Plan
How To Develop A Vision For Your Company
What's the big deal about putting a business plan down on paper? "Think of it like going on a road trip," says promotional business coach Rosalie Marcus. "You need a map – otherwise you'd be going around in circles. A business plan is like a road map that shows you where you're starting from and where you want to be."
There's also a lot to be said for having a well-organized, long-range guide. "You're going to have objectives you're going to be able to measure," Marcus says, "and you're going to have something that's going to keep you motivated and on track no matter what happens."
Of course, this leads to the obvious question: What information should be included in your company's business plan? Keep reading for advice to get you started.
Do Some Reflecting
Before you formulate your plan, Marcus says it's crucial to take a step back and ask yourself one key question: Why am I doing this in the first place?
"Why are you in this business? It can be that you're building a business because you want to send your kids to college and don't want them to be stuck with loans, or you're trying to fund your retirement, or you just love helping people and coming up with creative ideas and you want to contribute to the economy," she says. "You need to have a ‘why' for being in the business."
Answering the "why" question will then allow you to tap into the emotional aspect of your business, which is an integral part of any successful company, according to Mike Michalowicz, host of the Business Rescue segment on MSNBC's Your Business and author of The Pumpkin Plan.
"Have the feel," he says. "What does your business feel like? What does the office look like? Is it a 10-story mega-building in downtown New York, or is it a country Victorian in a town that's never had a business before? The more you can see it and get emotion involved, the easier it is to draw yourself toward it. When it's just numbers, it's too cold to feel that magnetism toward it."
Picture the Next Decade
Answering that important "why" question leads into the next element that needs to be addressed in your business plan: the overall financial vision for your company.
"What are you building? For some people, it may be that they're trying to build a multi-million-dollar business. For others, they may not have that goal," Marcus says. "Where would you like your business to be in terms of gross revenues and profit margins in one year, three years, and five years?"
Michaolwicz is a proponent of forming a "visionary plan" that helps business owners peer into their ideal future. "I call it the 10-year vision," he says. "Where do you, as the owner of the business, envision yourself ending up financially, responsibility-wise, and what's your day-to-day life like in 10 years?"
Conceptualizing exactly what your business will be like a decade into the future should be part of this vision as well. "How is it acting financially, what are the employees like, and who are the clients? If it's a true vision, it's a picture of the future, and this becomes the beacon of where you want the business to go," Michaolwicz says.
But why a 10-year plan? "It's been statistically proven that 10 years is far enough out that you can ultimately achieve great success – literally, a homeless person today can be the world's leading rocket scientist in 10 years – but it's also a short enough period that it's realistic," Michalowicz says.
Revisit the Plan Often
Once you've answered the "why" and the "vision" questions to your satisfaction, Marcus suggests coming up with clear, attainable quarterly goals.
"So, if you're starting in January of 2014, where would you like to be by April of 2014? And then, once you have your objectives, what are the strategies that you're going to use to achieve them? I think strategies need to be specific," she says.
An important part of strategizing, Marcus insists, is determining what kind of business you're after. "Not everybody is going to be a good client for you," she says. "That should be part of your strategy – what kinds of companies you're going to be targeting, how you're going to reach them, and what methods you're going to reach them with. Are you going to be networking? Are you going to do direct mail pieces? Those kinds of things should all be spelled out in your business plan."
For this part of your plan, Michalowicz suggests implementing a practice called "tacking."
"It's a strategy that sailors use," he says. "The sailor will say, ‘What's on the horizon is where I want to be.' That's the 10-year vision. Then, he captures the wind in his sails, he avoids obstacles and leverages the flow of water, and he tries to go toward that X in the horizon, but he does it diagonally. After about 100 yards or so, he leverages the current winds and tides, and goes forward another 100 yards. And he realigns and pushes forward again, and what happens is this zigzag pattern to get to his destination."
This constant realigning is a necessity in the business world, too, and should be factored into your plan, says Michalowicz. "In business, once you have that strategic vision of where you want to go, put together a short-term assessment every 90 days of where you stand – what's going on with the economy, with your competitors, what the needs of your best clients are. Realign to cater to that with the vision in mind," Michalowicz says.
While the shortest distance between two points is a straight line, business is never that simple, so flexibility is key. "Push the business forward, and 90 days later, reevaluate the whole thing and push forward," Michalowicz says. "The business will zigzag for sure, but the likelihood of hitting that strategic vision increases a thousand fold over a traditional business plan."
Keep It Short and Share It
While a lot of thoughtfulness needs to go into your plan, Marcus says that doesn't mean it should be long. In fact, the opposite approach has real benefits. "I'm a big believer in the one-page plan," she says. "When I coach somebody, we can get a business plan distilled to one page. For me, the purpose of my business plan is to keep me on track and guide me every day. It keeps me focused. And then, you can always tweak it and see what's working and what's not working."
One of the biggest mistakes that business owners can make, says Michalowicz, is to keep their completed business plan to themselves. "It should be the most public document you have," he says. "Share it with family, friends, clients, employees."
Why is Michalowicz so adamant? "This is a vision," he says. "It isn't the secret sauce. If your competitors get their hands on it, it's not like you say, ‘We're going to achieve this by doing steps X, Y and Z that we're going to patent.' That's not in this document. If I'm the guy writing the vision and I'm the only one who knows it and employees don't, they're going to be pulling the vision in a different direction."
Marcus agrees that sharing your plan will help you and your employees to literally stay on the same page. "I think it's important to share because it gives people a sense of community," she says. "This is what we're building, and we're all in this together."