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Avoid this time wasting and frustrating mistake
Please remove the confusion
When it comes to deciding on business plan layout or business plan structure, I estimate that around 80% fall into a frustrating and misleading trap.
The consequences of this can be disastrous. Let me explain: More
In Part 2 (this article), I will provide you with information on how to design your business plan using the “What needs fixing” approach.
To explain how this works, let’s look at a couple of simple diagrams.
If the question is How to Write a Business Plan?
Then my answer is very simple.
DON’T!
If your mindset is about how to write a business plan, then it likely you will suffer a double whammy – one, writer block and two, the fundamental error of trying to describe something that you don’t understand.
So what’s the solution?
My recommendation is that you think in terms of “DESIGNING” your business plan.
Let me explain this in common sense terms that we all understand.
If you were going to build a new house, you would never consider writing the house plan – you or your architect would design the plan.
The Visual Factor
The term design implies a visual factor. When you can see and understand the big picture, detailing is simpler.
If it’s a house or a business or whatever, the common sense rule is that if you can’t picture in clearly in your mind – beware!
Avoid This Error
Making decisions and taking action when you don’t understand, is a common cause of business failure.
If you have designed something well, then the process of turning and idea or desire into reality has a reasonable chance of success.
If the solution design is poor (or missing), then failure is a strong possibility.
A Better Question
A better question is “How to Design a Business Plan“. In my experience there are three options or approaches:
Many entrepreneurs get off to a bad start by starting with the “what do we tell the investors” (or “what do we tell the bank”) option, because they desperately need the money.
Typically this type of Business Plan will contain sales and profitability numbers that are not substantiated.
Most investors and lenders are not stupid. They know how to read between the lines and pick up what you are not saying. If your plan has no or low credibility, it is quickly dismissed.
So What’s The Answer?
My suggestion is that you get clear in your own head how your business can succeed before you to try and influence investors or lenders (or family and friends).
There are two parts to this:
Part One: Use the “What needs fixing” approach or the “Vision driven” method to design and detail a ‘How-We-Will-Succeed’ style Business Action Plan. This is sometimes referred to as a Strategic Business Plan.
Part Two: Practice the skills that will enable you to:
In follow up articles, I will go over the how-to steps for Part One and Part Two described above.
Andrew Smith
The Business Plan Guy
Grasp this and you will be in the top 20% of business managers
Can you identify with this situation?
If I was to ask you to tell me what a “tactic” is, you would properly respond with a reply that mentioned actions or activities.
In other words, what you have to do to get a result And I’d he happy with that.
Next if I asked you to tell me what “strategy” is, there may be a silent pause. When you did start speaking, it’s likely that your confidence level will have dropped and your reply will contain words like “how to” and again some action words.
The point I am trying to make is that it is likely that there is not a big difference in the meaning you give to the world “Strategy” and “Tactics“.
So let me see if I can rectify this – and give you the potential for greater success in every important result getting opportunity.
Meaning of the words
Let me start by giving you one of my favourite and most practical definitions of strategy.
“Strategy is the simple fundamental logic of how you intend to achieve a predefined result”
Good strategy is frequently expressed by describing what you are going to put in place to achieve a certain result.
So strategy is usually about the complete big or bigger picture solution.
And “tactics”. Tactics are the actions that will be needed to fulfil the strategy.
Now here’s the payoff for you
Nine time out of ten, strategy can be explained in just a few simple sentences. Sentences that are constructed with simple easy-to-understand language.
So we are talking one page or less of writing. Just imagine if politicians did this all of the time.
What this means for you is:
Just think about how many poor business decisions you or your colleagues have made because you or they used tactics rather than strategy as your prime decision making tool.
Let me leave you with this
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat” Sun Tzu
Andrew Smith
The Business Plan Guy
The global recession is having an impact on most businesses and non-profit organisations.
When I use the word impact, I’m not necessarily meaning negative impact. However for many, the effect is negative, for some it’s profoundly negative.
The purpose of this article can be described in one word. The word is CONTROL. It’s about putting you in control, or expanding your scope of control.
Straight away, I know I will have triggered scepticism in many of my readers. So if you are sceptical, that’s fine. But please try and have a slightly open mind for just three minutes.
My proposition to you
Whether the current economic climate is impacting you positively or negatively, being in control has got to be a desirable situation.
So how can this be done?
In your business or organisation you have customers, clients and prospects. If you’re a non-profit, perhaps you call them members and prospective members. For this article let’s refer to them all as customers.
If you are now getting less (or more) business, the most likely reason is because your perceived value proposition has changed.
Is your business suffering – mildly or significantly?
Let’s look at the getting less business situation and explore ways to increase or improve your levels of improvement control.
Step 1. Could you carry out a survey or some simple market research? Is this something within your control?
The purpose here will to find out what’s going on in your market place.
It could be that some people in your marketplace have changed their requirements or their perception on what is and what is not good value for money.
Maybe in their minds, they perceive your product or service in its present form something they can do with less of.
Perhaps your customers are favouring a competitive product or service.
What about relationships? Are your customers now placing more importance how they are treated by the people they do business with?
Step 2. When you have gathered some up-to-date information on your market, here is the next step that you can control.
Make a list of the options that you could consider taking.
And do remember, not making any changes is always an option. It may not be a smart one, but it is an option.
Your options list might include repositioning your business in terms of what sector or sectors of the marketplace you wish to serve.
Also on your option list could be cutting out or making value changes to products or services.
As well as considering the tangible factors of your product or service offering, also consider the intangibles.
For example, could doubling or tripling the number of smiles and thank-yous that you deliver be an option?
Step 3. Now that you have a list of potential business strategy options, is it in your control to deliver a yes or no decision on each?
If making decisions of this type are not within your control, could you propose to your boss, steps one and two above, and then request a yes or no decision?
What about if this recession is having a positive impact on your business or organisation?
If the current economic situation is bringing you more or better business, you also need a recession strategy.
In this situation, you need answers to the following two question:
Conclusion
Whatever your current situation, a recession strategy is something you do have control over.
You can ask questions and note the answers.
You can list options – including the no changes option.
You can make decisions or request your boss to make decisions.
Andrew Smith
The Business Plan Guy
Now, or in the near future do you need to secure serious business funding?
This may be from a bank, from investors or maybe from a well-heeled potential shareholder.
If the answer is yes then please read on.
Let’s start with the basics
I’m making the assumption that you have a Strategic Business Plan or an Internal Business Plan.
In other words, you are clear on the purpose and direction of the business. And you have a system of action plans or a roadmap to get you from where you are now, to where you want to be.
If you don’t have a good workable plan of this type, then this should be your first priority.
Elsewhere in this blog are articles on how to do this. If you are short of time, the simple 100 day plan might be an attractive option.
Back to getting the money
To persuade someone to invest or lend you money, you should prepare a document that investors call “An Information Memorandum”.
This is typically a 10 – to 30 page document that provides information on what the business is all about, the amount of money you are seeking and the risk/reward information needed for an investment or loan decision.
The very critical part
Most Information Memorandum documents are never fully read. Many are instantly dismissed. The reason for this is because the Executive Summary did not ‘hook’ the reader.
Financially successful people are usually busy people. They like business proposition to be presented to them in a clear and concise way.
If you can prepare an executive summary that instantly grabs an investors attention in the right way, you are well on your way to success.
It was my intention to provide you with a series of tips to help you achieve this. But here’s a much better way.
Frank Peters is a very experienced angle investor in Southern California. As well as his own personal angel investment experience, he gained a wealth of experience as Chairman of the much admired Tech Coast Angels http://www.techcoastangels.com/
On his website, Frank has published what he calls his irreverent Guidelines for Executive Summaries. http://www.thefrankpetersshow.com/attachments/ES.pdf
This is a gem – straight from the horse’s mouth. Follow this and you will be far ahead in the race.
Andrew Smith
The Business Plan Guy
Let’s start with a quick refresher.
The purpose of your 100 day plan is to have a simple and speedy way to reorganize or refocus your business or organisation.
In Part 1 of these articles, you learned how to start the process of getting clear organized thinking by creating a brief Vision document.
This document answers the number one strategic question: “What would my/our business or operation be like if it was *functioning* effectively.
In Part 2, we started a process of smart solution simplification. As mentioned, for your 100 day plan to be effective, it must be simple enough for all concerned to fully understand.
To begin this, you were asked to identify just two or three priorities from all of the vision goals that you identified.
Next, you were asked to name or describe the “Solutions” or “Processes” that would be needed to achieve the vision goals you have named.
At this point, let me stress it is not necessary that you know how to do the needed action steps.
So Step 1 and Step 2 are very *WHAT* focused. Not how focused.
The “how-to” solutions
Finally, it’s now time to handle the “how-to” action steps for your 100 day plan.
Because doing the action steps is a step that trips up many, let me explain the logic that I suggest you follow.
Know or not-know
I’m going to suggest that 90% of all of the action plans that you will need to create, come into just two categories:
The other 10% is likely to be: “I think I know some of the action steps, but lack some skills or knowledge for taking effective action. In other words, it’s a combination of the two categories mentioned above.
So here is how the action plan system works.
Select one of the “Solution” requirements you identified in Part 2
As you can see, this procedure puts you and keeps in control. If you understand the situation, it’s simple and straightforward.
If it’s a requirement that’s beyond your knowledge or skill, this method gets you into “plan the next part of the plan” mode.
If you have any questions or suggestions for other planning related articles, I can be contacted at Andrew(at)apt.co.nz
Andrew Smith
The Business Plan Guy
In Part 1 of this article, I covered the first part of your 100 day business plan. The focus was on functional vision.
In other words, it was about you getting clear on what your business would look like and be like if it were functioning effectively.
The next logical step in your 100 day plan is to be able to answer the question: “how will I (or we) make this happen?
In this post I will show you a simple way to design the “how-to” section of your 100 day plan. So this is about strategy, or to be precise strategy design.
Simplification
The first strategy tool I need to show you is the art of simplification. I believe that simplification is the ultimate form of sophistication.
Remember, this is a 100 day business action plan. Simplicity is essential. If it’s going to work, it has to be simple for you (or your team) to understand and do.
So here is what you need to do.
Step 1.
In Part 1 of this article, you prepared a one or two page document that:
(a) identified the important key functions that are the basis of how you operate or do business. Marketing and financial management were mentioned as potential examples.
(b) described what it would look like or be like if these functions were working effectively.
Your first step in the making it happen process, is about setting some priorities. You can’t do it all at once. If you spread yourself too thinly, you will surely fail.
So do this.
Carefully read through your one or two page vision document (from Part 1). Then select just two or three vision goal that you believe would move your business forward.
Only you will know what these should be, but let me repeat a couple of examples vision goals I gave you in Part 1:
Example 1: “We have a great understanding of what our customers want in terms of value for money.”
Example 2: “We are able to relate well to our clients and describe the benefits or our services in ways that motivates them to buy.”
Again, let me remind you to keep it simple and just go for two or three functional improvement goals. In you next 100 day plan you can select another two or three for the making it happen process.
Step 2.
Take a fresh sheet of paper. At the top, give your page the title: “100 Day Plan – Making It Happen Solutions”
Next list your two or three selected vision goals. Start with the words “Our selected focus goals for this 100 day plan are:” (then list your selected items.)
Step 3.
Your next task is a simple one. All that is required is that you name or identify the solutions you will need to address each chosen goal.
So let me show you by example. Here is what your page might look like:
Our two selected functional improvement goals are:
1. We have a great understanding of what our customers want in terms of value for money.
2: We are able to relate well to our clients and describe the benefits or our services in
ways that motivates them to buy.
Making It Happen Strategy
For goal number one, we will implement a “Customer Survey Process”.
The purpose of this survey will be to better understand our customer’s perceptions
on value for money as they see it.
For goal number two, we will implement a “Client Relationship Plan”
The purpose of this plan is to:
(a) Establish ways that we can better get to know and relate to the 20% of customers
that provide the bulk of our income.
(b) Engage a professional copywriter to translate our products technical features into
simpler customer benefit language that is more likely to stimulate sales.
————————————————————————————————————————-
As you can see, all this one page document needs to do is:
(a) List the improvement goals that you have selected to work on
(b) Name (or describe) the process or processes or solutions that you believe will be needed to bring about the improvements required.
As well as naming the solution, it is a good idea to write a brief “purpose” statement for each solution process. This starts to clarify your improvement intentions.
If you have trouble naming the solution required for a particular goal, all you need to do is write the goal or a shortened version of it and add the words “Solution Process”.
So for example goal 1 “We have a great understanding of what our customers want in terms of value for money” – you could call this:
“The understanding of what of what our customers want in terms of value for money solution plan.”
In other words, just add the words “solution plan” to the goal.
Now this may seem a gross simplification to you, but I promise it will still work.
What about the action steps?
In Part 3 of this article, I will, show you how to translate any solution plan name into simple action steps that you can do.
Andrew Smith
The Business Plan Guy
Over the past couple of years, the 100 day plan has become my most requested service. It’s a great tool to quickly instigate a business transformation process.
And, in these current economic choppy waters, it’s a great way to quickly refocus or reinvent a business that is no longer viable in its current state.
So in response to several emails, here is a “do-it-yourself’ version.
This 100 day plan is suitable for:
The first two steps are vision focused. To be able to move forward, you need to get clear on what your business or organisation would need to “be like” to survive and thrive in this new economy.
Step one: Make a short list of the major “functions” or processes that are the basis on how you operate or do business. Typically, these might be marketing, service delivery, human resources (or team), financial management and administration etc.
Keep it as simple as possible by focusing on just the major functions. Look to identify the three to seven functions that are the fundamentals or workhorse of your business or operation.
Step 2: Get a clean sheet of paper. Select the first function from your list. Then write a paragraph or two that describes what it would look like and be like if this part of your business was operating very effectively ? in the current economic climate.
Very-very important. This is a “WHAT” exercise, not a “HOW-TO” exercise. Do *not* write down any ‘how-to’ methods or solutions. Keep your descriptions result, outcome or performance related. Keep in mind, you are creating a “Vision”. A business operation vision.
For example, for your Marketing Function, you may say something like: “We have a great understanding of what our customers want in terms of value for money.”
Or you might say: “We are able to relate well to our clients and describe the benefits or our services in ways that motivates them to buy.”
At this stage, it is not necessary that you know how to do this. The how-to solutions will be worked on later. Your job at this stage is to understand what excellent operational competency would look like for your particular business type.
Repeat this procedure for each of the major functions you listed in Step 1.
If possible, see if you can keep this to a one page Vision Document. Two pages would be the maximum.
On completion of these two steps, you should be able to answer the “Number One” strategic question: “How would I/we know if our business was operating successfully?”
In part 2 of this blog post, I will show you a simple way to manage all of the “How-to” solutions.
Andrew Smith
The Business Plan Guy
