How to Take Your Business to The Next LevelHow-To Guides — By Michael Bowers on February 16, 2011 at 8:00 am
I think as a Small Business Development Center consultant I’m supposed to tell people they need to write a business plan. I guess I’m breaking the rules because I’m going to tell you not to write a business plan! Entrepreneurs put so much focus on the development of a 40-page, 12-point-font plan that the true purpose of a plan −to guide the operation of the business− is missed.
I’ve seen plans where the narrative and the financials did not relate to each other, plans chock-full of research references but without real guidance for executing the business. The worst are the ones covered with dust. More than likely, all these plans were written for a banker with no concept of using them to drive the business.
The problem with that is if a loan is made, it is based, in part, on the plan. If the plan is not followed and the business does not meet its milestones, the bank will be less likely to extend further credit in the future.
My advice is to forget about writing a plan and focus on the “process of planning.” Start with a blank pad of paper. Write something you can embrace and use to drive your business. Develop a working, living document that will allow your business to reach the levels you desire.
It should clearly articulate the steps you need to take as you grow the business. I’ve heard the keys to running a business are knowing the answers to these questions: Who’s out there to buy your product? How are you going to get them to buy it?
Maybe there’s a little more involved, but if you don’t have the answers to those two questions down cold, it’s going to be a struggle. Here are some things to think about during your planning process:
Review mission: Why does your business exist? Why are you doing this? Good businesses drive margin based on the mission of the business.
Review vision: Where do you want the company to be in 12 months, in five years? Many different factors −financial goals, the role of the founders, employees, location− should be considered. Thinking about these things will help you determine action steps to take later and help build your business direction.
Do a strategic analysis: This will really allow you to determine where the business is and what opportunities might be available. A good format is a SWOT Analysis. For each of the following, you should list items that will impact future strategy:
- • S-Strengths: Skills, distinctive competencies, capabilities, competitive advantages, or resources the organization can draw on to build strategy.
- • W-Weaknesses: The lack of one or more skills, distinctive competencies, capabilities, competitive advantages, or resources the organization can draw on to build strategy.
- • O-Opportunities: Situations in which benefits are fairly clear and likely to be realized if certain actions are taken.
• T-Threats: Situations that give rise to potentially harmful events and outcomes if action is not taken in the immediate future. These must be actively confronted to prevent trouble.
What products do you want to offer? This is a brainstorming activity where you can put anything forward. Create a list of possible product, regardless of priority at this point.
Put some detail around the product offering: Take each product you want to offer and consider what those look like short-term and long-term. Who is the customer? What do these products accomplish? Discuss return on investment, revenue, expense. (Don’t forget opportunity costs.)
Start to prioritize products: Put the products in order of value for the company relating to its mission/vision and financial goals.
Do any of these products work together? Think about the possible synergies created by coupling products. You might now decide to create one product that drives higher value than two individual products.
Validate the market need for products with database research: Research possible users/buyers of your products. Most libraries have research capabilities and databases you can access simply by having a library card.
Validate the market need for products with customer research: Get to the customers and find out what they think of your products. This can take the form of formal focus groups or facilitated discussions or meeting with potential customers one-on-one to gauge their interest. This is a critical step because you are gathering the opinions of the market, not just your own. Note: You don’t have to have professional, paid facilitators. Just talk to people.
Determine milestones/timelines: Hold yourself accountable. Develop milestones for taking your product to the market. These milestone events might be based on when products can be launched due to funding, employee resources, and timing for the market. Take each of these milestones at least three layers deep so you have detailed steps for implementation. Once you decide what the milestones and steps are, you need to develop timelines, answer the when question.
Execute: Take what you have done and bring it to life: implementation and execution.
Let’s be clear: you can start/run a business without doing all this. The difference is the level of control over outcomes that you gain by going through a planning process. It also makes creating a business plan for financing purposes easier, as you have all the necessary information. All you have to do is drop it into the right format.
Michael Bowers is the regional director of the award-winning Ohio Small Business Development Center at Columbus State Community College. Michael holds a bachelor’s degree from The University of North Alabama, where he majored in economics and finance, and a master’s degree from The Ohio State University in public administration. With a career in banking, financial services and equity financing as the former executive director of the Columbus Venture Network, Michael is well qualified to deliver sound investor and business development advice.
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