Herman School of Business
Business Plans that work...
Recently at a speech someone asked me the value of a business plan. My response was that most are not worth the paper they are printed on. She flinched because she puts so much emphasis on her business clients to have a written plan.
Let me elaborate.
Almost every business plan I have seen projects what is going to happen to their business as time passes by. The plans I have seen give sales figures for the coming quarters. The plans speak about growth happening in a way that always overcomes costs somewhere around six to eight months into the life of their business. Do you know why those magical sales figures hit that level at just that amount of time? Because without those sales figures the business owner would go broke. You see…the owner only has enough money to get so far…and he or she refuses to write in the plan that at that moment they would close the doors and sustain a total loss. So sales must come in by then enough to keep them afloat.
Fantasy land.
If you want a realistic business plan why not do it this way: write down what you will do week-by-week to launch your business. How many hours you will spend constructing the space, creating marketing materials, hiring and training staff, and pounding the phones and the streets to make sure customers know who you are. And put down next to those figures how much you will be spending each week…not how much you will be receiving in sales. How far will the money you have take you? If you must project sales figures do it against reality, not fantasy. To do that why not project only two weeks ahead. Use the last two weeks of income to project the next two weeks of income. Then alter your activities to do something that doesn’t ignore the reality that you are going to run out of money before enough comes in to keep you alive.
In other words…do the math. Know every dollar going out and where every dollar is coming from. And set a goal that if you do every possible thing you control…and that usually means doing more than your plan expected you to do…you can measure success by the progress you are making, not just the dollars coming through the door.
I projected fifty thousand dollars coming in this year from book sales, speeches and consulting. At the current rate I will miss that figure by about fifteen percent. So by the measure in my written goals I have failed. Why then should I keep going? Because, my business plan didn’t revolve around income. I measure results by growth in areas that will continue to ultimately make this a financial success. In other words folks…I am not chasing money…I am chasing my passion. And as long as my passion is being fulfilled by gaining more focus on my work nationally (3 national magazine articles) and people keep adding to my speaking opportunities, and more companies ask me to consult with them…money will probably follow.
To get to where I wanted to be financially I set out activities and goals to get there. The measure of my success is that I still put in the hours necessary every day to market my work. The measure of success is that I have learned this year that most speakers are hired much further out on the calendar than I knew when I started and therefore I could not have made the income I expected because most speeches were already booked for this year…pushing the money from speaking further out into the future. When I learned that information I adjusted my marketing to hit twice as many prospects who hire speakers so next year might be better than I earlier projected. Instead of hoping for twenty paid events next year…maybe I should try for thirty.
My measure of success nine months into this year is that all is well. There has been progress in book sales efforts, more knowledge about where and how to get speaking opportunities, and with more speeches will come more consulting situations. In other words my business plan is on target because what matters most is what I control. And eventually the money will follow the efforts I make.
Your plan needs to reflect what you need to do, not how much money customers will spend in the first year of business.
- Posted: 23 September 2008
- Comments: 0
- Category: Running a business
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