President Dwight Eisenhower once observed, “Plans are nothing. Planning is everything.” The process of thinking about the future and organizing the required resources to accomplish your goals is its own reward. Although the final written plan will be obsolete almost before the ink dries, failing to plan constitutes a plan to fail.
Whether you’re starting a business or preparing to retire, I hope you’ll take some time in the coming year to develop a specific plan to succeed. I’ve started half a dozen businesses in my lifetime, mostly with the help of business plans. There are a few companies I didn’t start because I took time to create a business plan that helped identify potentially critical obstacles that made the venture too risky to even start. It’s much less painful to fail on paper. And you are much more likely to succeed if you organize your venture on paper prior to your launch.
Jon Maraschin, executive director of the Business Incubator Center in Grand Junction, acknowledges there’s always a small chance for even the most well-articulated business plan to fail. But he estimated there’s an 80 percent chance of failure for a business without a plan. “Starting and running a business is hard. Having a plan takes so much of the guesswork and uncertainty out of the process that it’s utter insanity to try and start or run a business without the road map that a business plan provides,” Maraschin said.
Over the next 12 months, we’re going to consider how planning might help you take your financial life to the next level, prioritize your time and effort and project your financial future across a variety of different scenarios.
A written plan helps entrepreneurs forecast how the gears of a new business will mesh to produce products or services. How do you plan to deliver products or services to buyers and make buyers aware of the benefits of doing business with you? What will it cost to produce the sort of revenues you need? It’s a giant guessing game, and it’s easy to get caught up in how inexact it all will be.
It goes without saying that if no one buys your Yugos, you’re going to sink. You don’t need a business plan to know that. However, a business plan can give you an idea of how many Yugos you need to sell to break even, and that’s valuable information.
Five key sections set out what you’d like this planning process to enable, describe the current competitors and driving economic forces in the industry so you can paint the picture of your specific new enterprise on a business canvas uniquely yours and help you think through how to get the most productivity from your co-workers. These sections detail how you will generate sales — the lifeblood of any business because sales revenues pay the bills — and lay out what needs to happen for you to foster client satisfaction and loyalty.
After you’ve listed every process and every resource and every person necessary to bring your vision of success to fruition, you need in your financial projections to put a price tag on everything, including your time. Then think about the numbers to determine the most critical drivers of financial success. Optimize the numbers to maximize success. Cut expenses where you can do so without affecting customers. Be generous with spending that earns you accolades and repeat sales.
After your business plan is written, craft a brief executive summary that highlights the opportunities, challenges and keys to success. Once the plan is completed, plan on changing it regularly. Inflexible businesses get crushed. You’ll learn more and reinvent yourself several times as the years go by, but a business plan can be the vision around which you and your employees rally.
If you need a nudge or some coaching, sign up for the Leading Edge business development course offered at the Business Incubator Center. The next session is scheduled for 6 to 9 p.m. Tuesdays Feb. 9 to April 26. In 12 sessions and five hours of individualized consulting time, you’ll receive hands-on assistance in developing a strategic plan that can take your business to the next level. Call the Business Incubator at 243-5242 to register. Tell them you read about the course in this column and receive a $25 discount off of the regular tuition of $275.
Happy New Year. And happy planning.