May 22, 2019

#ask-ih Business plan questions?

Alison West @AKWest

First off, I would like to know who in here has a formal written down business plan for their business and then...

If yes, when did you find you first needed it?

If no, why did you choose not to make one?

Thanks in advance!

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    Hi Alison,

    These are great questions - I'll do my best to answer them. I've made a lot of business and strategic plans for local small businesses and non-profits, with a variety of results. One business plan was just helping a non-profit get off the ground and gave the founder a plan to show potential investors. Another strategic plan helped a non-profit identify an opportunity of $250K profit and have already seen a return on their investment.

    Here's what I've learned, so far:

    1. It's really a "get-me-money" plan.
      I've heard Chuck Blakeman, a serial entrepreneur, call business plans a "get-me-money" plan. For most organizations, I feel like this is pretty accurate. I have rarely seen an organization create a business plan that wasn't connected to funding.

    2. They rarely are used for their purpose.
      I've talked to lots of entrepreneurs who've told me they've made a business plan (a really impressive 24-page document in a fancy binder). When I've asked them where their business plan is, they respond with, "It's been sitting on the shelf over there for the past few years."

    So, here's where you have to answer the question, "Do I need a business plan?"

    If you are looking for funding or anticipate needing funding in the future, I believe a business plan could be helpful for you. If you are planning to bootstrap everything, you may not need a business plan.

    With all that being said, I do believe that strategic plans are helpful for your business, whether you're looking for funding or not.

    "Why should you have a strategic plan?"

    A strategic plan will help to bring the Important things to the front of the line, to give them the priority they should have - in a sense, to create urgency where none is visible. A strategic plan will help you to create margin to work on your business and not just in your business.

    Here's what I like to use:

    I had a mentor tell me, "If you want to communicate clearly, effectively, and not overwhelm others with information, then keep your message to one sheet of paper." I found this incredibly useful in the case of a strategic plan because it forces you to be clear with where your business is going and what you need to accomplish to get it there.

    I use a 2-page strategic plan (it's a great contrast to the 24-page document in a fancy binder). The first page is purely strategic - why you're in business, the impact that you want to have in the market, and what channels you're using for profit.

    The second page is purely tactical - it outlines what needs to be done in the next year to grow your business. Then it's broken down into quarterly goals and even what you need to accomplish this month to move forward. Pretty simple, right?

    Whatever planning method you choose, none of it works unless you are consistently reviewing it each week, month, quarter, and year. It's like a roadmap for your business. Just like any roadmap, sometimes the road we're driving comes with landslides, fallen trees, or sinkholes (the obstacles we may find against our business that we didn't expect). This is where we iterate, adapt the roadmap, and move forward to our destination.

    I hope some of this was helpful. Let me know if you'd like any help - thanks!

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      This was very helpful thank you!

      I know down the line I am going to need funding. I'm planning on bootstrapping it until I have a basic product but once that is finished I am planning on approaching investors for help refining it. Do you think it would be helpful to do the business plan now, or just start with a strategic plan and then only make a business plan when I need it?

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        I think that having a plan is great because it gives you a direction to shoot for. Have you gotten your product in front of customers, yet?

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          Sort of! I set up a landing page announcing the product and asking for feedback.

          In four days of minimal promotion I already have over 25 people saying "Yes! Let me know when this is live!" and a few people who have reached out to offer suggestions so I think it's at least headed in the right direction.

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            That's great! What would it take to get it ready? Like what sort of things do you need to do before you ship your product?

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              Well, I still have to finish building it haha. I'm scheduled to have a beta version released by September.

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                Yeah, that's cool. My encouragement would be to launch as soon as possible. Ask yourself, "What's the bare minimum my user needs to use my product?" Whatever your answer is to this question, let that be your roadmap (or strategic plan) until you get your product in front of customers (ex. each must-have feature will a milestone in the roadmap). Once you get real feedback from customers, you can put together a new plan to grow. Does that make sense?

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                  That makes perfect sense, thank you so much! I think I've pared down my MVP as much as I can, the only delay is the fact it needs to be coded and I'm teaching myself programming along the way haha

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