Business Plan Templates – good choice or bad?

I frequently get questions about business plan templates. Here’s a part of a recent email I received. 

“I want to write a business plan. The option that appeals to me most is using a template. It seems to me that this is a good way of not reinventing the wheel. What is your opinion on using a business plan template?

So here is my reply.

Hi Jerry, before I can answer that question properly I need more information. But to save time, here is a pre-prepared response that I have on file.

Business Plan Templates – good choice or bad?

The first thing you need to get clear on is purpose. In other words, why do you want to create a business plan, what do you want the plan to achieve?

To help answer this question, you need to get clear on what type of business plan you need to create.

Broadly speaking, there are two types of business plans.
Type One: The first is the kind that you might take to a bank or potential investor. Its purpose is to persuade someone to lend you money or invest in your business.
Type Two: The second is essentially an internal plan. It’s a business success blueprint or business direction roadmap. Its purpose is to effectively convert ideas and goals into good decisions and smart action steps. If it’s a good plan, you will always be clear on what you need to do next; on your pathway to success.
If you would like more information of this topic, see my previous blob post at

http://thebusinessplanblog.com/writing-a-business-plan-avoid-this-frustrating-mistake/

TYPE ONE:
Now if your need is for Type One, and you have really got your business act together, then a business plan template could be a good tool to prompt you for the right information. If your not sure what “getting your business act together” means, checkout the link above.

But there may be a better way for you!

Consider this. If you know who or whom you are going to approach for finance, do some quick research. See if you can find out – what is their criteria for lending money or providing a grant.

If you know this information, your business plan or financing application can be better targeted than a generic business plan template.
TYPE TWO:
If the purpose of your business plan is to get your business operation organized and positioned for success, a business plan template may be a bad idea.

Here’s why.

The success or otherwise of your business will be greatly impacted by three major factors.

The first is your vision or passion. What you seek to achieve and why it’s important. Developing clarity is this are is vital. Particularly in this challenging new economy. This should be goal number one of your business planning process.

The second is your ability to put in placed the processes and systems that can turn your vision into practical reality. Designing these systems and processes should be the number two priority of your business plan.

The third and vital factor that you must come to grip with is what I call “The Making-It-Happen plan. Time and time again, business plans are created only to die on the shelf. To succeed, you must be a leader and take charge. The Making-It-Happen process needs to be a daily priority for you, the business leader.

Now I think you will find that a business plan template would be a poor substitute for some common sense and effort on your part.

This blog is totally dedicated to enabling people like you to be able to plan for business success. Take a look at some of my other post for topics that can help you achieve your business goals.

Andrew Smith
The Business Plan Guy

Business Plan – How to make better decisions in an economic downturn

For so many reasons I hate and try to avoid using any jargon.

 However, this one is so valuable, I’ll make an exception.

 The word or term is “Fundamental Attribution Error.” It’s psychology jargon, and it is likely to be very relevant for you in these challenging economic times.

 I’m not a psychologist, but let me give you my understanding of what Fundamental Attribution Error is – as I got it from a psychologist. Particularly as it is relevant to your business decisions.  I promise to use simple language.

 Making Good Decisions
It goes without saying, that decision making is a major factor in just about any form of planning. Bad decisions can be hard or impossible to correct with diligent actions.

 So what does Fundamental Attribution Error have to do with decision making?

Everything.

 We make business decisions based on what we believe to be the truth or the real situation. In other words, we make choices based on our conscious understanding of an opportunity or problem or situation etc.

 Now here’s where it get interesting (and dangerous).

 In simple terms, our conscious awareness comes from what we see and hear – and two other sources. The two other sources are imagination and memory.

 At present, your conscious awareness is coming from information being transmitted to your brain from what your eyes are seeing on your computer screen or a printed page.

By some incredible miracle, you brain is converting a pattern of dots or pixels on a computer screen or page into meaningful information.

 Now this is a big simplification, but let’s considers what happens when you see something or hear something.

 One part of your brain recognises patterns i.e. letters, words, numbers. And I think you will agree, we can usually do this with a high degree of accuracy. If I’ve made a typo error (which I often do), you will likely recognise the pattern error.

 Then – and this is the interesting bit, another part of your brain gives meaning to the data or information being received.

 This is where your accuracy can go to hell!

 When your brain interprets or puts meaning to what you see, hear, imagine or remember, something else occurs. Your brain applies filters.

 Your brain takes into account your emotions, beliefs and past experiences etc. This step can enhance or distort the raw information being processed by your brain.

 In some situations, your brain can completely filter out certain sights, sounds and memories etc. If you want more on this, do a Google search on “Reticular Activating System”.

 Back to plans, decision making and Fundamental Attribution Error.

 Fundamental Attribution Error is when your brain gets it all wrong. It distorts information to such an extent that you make choices or decisions that in hindsight or the cool light of day are wrong.

 Here’s an example. Last week, I was talking to a client, let’s call him Joe.

 Joe told me that because of the current economic conditions, he had decided to suspend the planned release of a new product.

 As the conversation continued, I noticed that he was getting quite emotional and a little irrational. It occurred to me that his decision to cancel his product release may have been questionable.

 After a bit more discussion, I asked him get out pen and paper and work through a simple four or five step procedure. (I have listed this procedure for you below).

 Later that day I got an email from Joe.

 As it turned out, there was only one factor was likely to impact this specific product release. And all that was required to address this factor was the addition of one paragraph in the distribution agreement.

 The product lunch is now progressing.

 What does this mean for you?
If you have to make important decisions, consider this procedure:

 Make a list of what has changed that will or could impact your situation.

For each item, indicate the importance with an number between 1 (low and 10 (high)

Then, for each item indicate the likelihood of the event occurring. Same scale 0 = very unlikely, 10 = very likely.

For each item/issue, multiply (3) by (4). This will give you a weighted impact factor. If you add up these numbers, you have a weighted decision factor.

If the consequences of this decision are important, show your assessment to other people for comment. Preferably people will knowledge and experience in the issues involved

Now this procedure is still open to errors, but it should help you avoid the damage or consequences of Fundamental Attribution Error.

 

Andrew Smith

The Business Plan Guy

2009 Business Planning and the Importance of the Big Picture

Bottom Line: If you are making important business decisions in these challenging economic times, always consider the big picture. Making knee-jerk reactions to economic fears may cause you to shoot yourself in the foot.
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Ben’s Story
In October I had an email from a client I’ll called Ben. Ben wanted some advice on updating his business plan for 2009.
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What he had in mind was some major changes to handle the current economic downturn.
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Ben’s company provides specialised electronic equipment and services to the building industry. They have been in business for about eight years.
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In a telephone conversation I learned that the proposed changes involved dropping several low or no profit products and services. The advice he was seeking was on how severe he should be with his cutbacks.
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At a first glance, Ben’s thinking seems logical and appropriate for these times of economic uncertainty. However, there was another factor that it appeared Ben was not taking into consideration. A factor that I was surprised he did not mention.
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I suspect that economic fears were getting in the way of common-sense decision making.
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Background
For the past two and a half years, Ben and his team have been developing and introducing some very specialised products and services. Their strategy was based on being able to better solve some industry problems that their competitors were not competent or cost effective at providing.
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This strategy had had its ups and downs. A plus factor was that it got them into several high end building contracts. Some of these have developed into very worthwhile business relationship.
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On the down side, Ben and his team had underestimated the time and cost it takes to develop and promote new problem solving approaches.  Thus cost recovery was a slow process.
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Another down side was that three of their ‘work-in-progress’ development projects still require considerable time and cost before they were marketable.
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My Suggestion
My suggestion to Ben was to take a big picture approach to responding to current economic conditions.

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I suggested he make up a spreadsheet list of products and services that should be vetted for retrenchment. I also suggested that all work-in-progress developments be included in this list.
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Next I suggested that he create two additional columns in the spreadsheet. One for a “Profitability Rating” i.e. Low, Medium or High. The second column I suggested he name “Opportunity Factor”. The purpose of this column is to indicate the likely value of other business that this product or service could attract.
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In other words, what I suggested to Ben is that is that he thinks about a bigger picture when making profit and loss decisions. In management circles they refer to this as a “Strategic Switch”. It’s about using longer term strategic thinking rather than short term (knee-jerk) tactical thinking.
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I’ll update you on Ben’s decisions and outcomes.
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Conclusion
Next time you are under pressure to make important business decisions,  pause for a moment and use some brain power to consider the big picture consequences.
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Andrew Smith
The Business Plan Guy

Business Plan: A smart way to set and organize your priorities

Establishing intelligent priorities is a critical part of any good business planning process.
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However, the task of making these priority decisions can be

challenging, And open errors – sometime very serious errors.
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So here’s a way to both simplify the process – and reduce the

opportunities for making mistakes. It’s a systems approach,
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The Old Way
Traditionally, decisions are frequently arrived at by providing an

answer to the question “What are our top or ‘A’ priorities?”
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This can lead to several forms of confusion and poor judgement. The more options you have, the greater the chances are of making poor priority decisions.
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Change your thinking
So is there a simpler/better way? I believe there is . . . and here’s

how it works.
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The Five Steps
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Step 1. Make a simple list of the priority options you currently have.
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Step 2. Read through your list and select the items that are of lesser

importance for the next month or so.
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Mark these item ‘C’ priorities.
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A ‘C’ priority is an item that you can safely delay taking action for

the next 30 days.
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You may also have some items in your list that are important, but can’t

be actioned until some other preparation or preliminary event has

occurred. These are also likely ‘C’ priority candidates.
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Step 3. (Now this next step may seem radical, but bear with me. It’s

the essence of a simplification process.
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So do this:
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Temporally, mark all of your other priorities to a ‘B’ classification.

That’s right. Make *every* other item that is not a ‘C’ priority a ‘B’

priority.
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So at this point you are absolutely forbidden to have any ‘A’

priorities. This is the business equivalent of tough love.
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“But, but, but, . . .” I can hear you saying.
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Trust me for a moment, I promise common sense will prevail.
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Before I continue, let me define what a ‘B’ priority is. A ‘B’ priority

is an item you can or should take action on – if you have *spare*

resources available (time, money, materials etc.)
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Step 4. This is where you get to differentiate your important stuff. Do

this.
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(a) Scan through all of the items that have a ‘B’ priority.
(b) Any item that you think is or could be an ‘A’ priority; upgrade

it to a ‘B+’ priority. Important – do *not* make any of them ‘A’

priorities.
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Step 5. Scan through all of your newly created ‘B+’ priorities and

upgrade just two or three of them, to ‘A’ priorities.
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I strongly recommend that you keep your ‘A’ priorities to two or three.
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If your track record of getting thing done is poor, you may wish to

consider have just one ‘A’ priority ant a time.
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Managing your priorities
As you complete an ‘A’ priority, you can then choose a new ‘A’ priority by reviewing your ‘B+’ candidates.
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So you now have a living priorities system.
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As you will recognise, this is a bottom-up method of establishing

priorities.
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It simplifies the selection of true top priorities by filtering out all

of the lesser important issues.
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Andrew Smith
The Business Plan Guy.

Survival Plus Business Planning – Tomorrow’s Business Successes Are Being Planned Now!

In the past, most business planning is directed towards successful growth or expansion.
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However, for many the current global financial situation has changed this. For many, the focus of the latest business plan is just about survival.
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While the logic of this is understandable in the short term, I would urge readers to go beyond just survival thinking. Some types of survival thinking can actually create more problems than they solve.
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The alternative I would suggest is “Survival Plus”.
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The “Plus” factor is about looking for the opportunities that a change in circumstances presents. Let me explain.
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For many, business will never be the same. So survival tactics can only go so far. The great opportunity for you is to take the lead and start thinking about what your type of business will need to be like in the future.
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Then start planning on the changes you would need to make to start being this success business of the future.

Here are some ideas for your “Survival Plus” business plan
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What systems will you need to create to learn about what your customer’s new goals and problems are?
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How will you go about converting this information into new products and services?
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How will you position your changed or reinvented business?

How will you present and communicate your new business model to your customers or clients?
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How will you measure and asses your new business strategies?
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How will you keep the business development momentum alive?
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I’m happy to respond to any questions or comments you have on this topic

Andrew Smith
The Business Plan Guy

How to prepare a simple and powerful strategic business plan in one day (Part 1)

Many business owners/managers know in their heart that their business or organisation would be more successful if they had a clear business plan to work to.

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But for many there is a problem.

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The problem is the perceived time and effort that would be required to produce an effective business plan.

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Problem solved!

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The purpose of this three-part article is to present

you with a simple, common-sense method to prepare a business plan that will do two things:

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(1) Show you how to get clear on what your business or organisation would look like if it was performing effectively

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(2) Show you how to translate this information into the needed action steps to translate the vision into reality.
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The Big Picture
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So let’s get started with an overview on how the preparation of a

business plan can be made both simple and effective.
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The “Functional” approach
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Explanation: For any business or organisation to be successful, it must be “functional” in its core business capabilities.
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Let me clarify what is meant by “functional” core business capability as it relates to your business or organisation.
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For a typical commercial business, these functions could be Marketing (or Sales & Marketing), Customer Service, Team (or Human Resource),

Financial Management, Administration and Asset Management.
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Some refer to these functions as “Key Business Activities”.
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For a non-profit organisation, most or all of the above functions will

be required, but the terminology may vary.
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For example, the term “marketing” may be inappropriate for some

operations, but there may be a definite requirement for “Members

Communications”. So the term “Marketing” would be replaced by “Member Communications” or “Client Communications”.
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The fundamental logic of this functional approach is as follows:

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If you are highly “functional” in all of your key business activities,

then the complete business or organisation will be a success.
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A qualification. In some situations the above may be an over

simplification, but mostly it is a truism. 
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A Simple 3 Step way to prepare you business plan in one day (or less)

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Part 1 is about vision or goal setting

Part 2 is about strategy
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Part 3 is about taking action
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  (to be continued)

Business planning is a waste of time!

How often have you heard someone say: “Business planning is a waste of time?”
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Perhaps you have said it (or thought it) yourself?
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But what if you have got this wrong? What if you are not seeing the right picture?
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To help you understand the benefits of smart business planning, let me go over a few brief points. You will then be better informed to decide what’s best for you and your situation.
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Who is my target audience?
Because you are reading this article, I’m assuming that you are directly or indirectly involved with a business or organisation of some type.
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This may be an existing business or a new business start-up. Or, it could be a non-profit organisation.
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What is your role?
Whatever type of operation you are involved with, it’s likely that your role involves some responsibilities. These responsibilities maybe performance related or you may be responsible for managing specific operational activities.
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If achieving results of some type is your role, then finding better ways to get things done, should be a part of your job description. 
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How you can do it better?
The proposition I would like to put to you, is that a simple smart business plan is by far the best way to meet or exceed result expectations. It is also the best way to systemise everything that can be described as operational.
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Let me now walk you through the preliminary steps of preparing a simple smart business plan.
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What gets in your way?
To begin, let’s look at some of the specific problems or issues that can be obstacles to how well you can perform your role.
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Or if you’re the business owner or the CEO, these could be the issues that govern your overall success.
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For commercial businesses, sales and marketing issues are frequently problem areas. I hear statements from my clients like, “Sales are harder to achieve and profit margins are getting very tight.”
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Staff problems of one sort or another are also frequently an issue.
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Other concerns are financial issues and coping with increasing levels of regulations and administration.
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For businesses and organisations that are coping and growing well, I get questions like “In what direction should we be heading?” or “The nature of our business has changed, how do we get organised to best manage this change?”
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Can you identify with some of these issues? Maybe you could add some additional issues or problems?
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Now let’s move the thinking forward.
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What is your desired situation?
When I facilitate a business planning session, I like to get the people involved into a positive focus as soon as possible.
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Typically I do this by asking the question: “What would this business (or organisation) be like if you could solve the pre-mentioned problems?”
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I get responses like:
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I (or we) would be more in control. Things would get done faster/better and without stress and drama

We would ‘have our act together’ and be regarded as a leader in our industry
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We work as a professional team, always focused on a great common goal”

In a period of an hour or so, I can usually draw out 20 to 30 vision goal that relate to the specific business or organisation.

Now I’m sure you could do this first part of a preparation for a smart business plan. So if you are serious about success, follow these steps:

(a) Make a list of the problems or obstacles that are getting in your way of performing better. Aim to identify your top six to ten areas of concern. Let’s call this your “current situation”.

(b) Now switch on your imagination. Visualise what the difference would be if these problems or issues were resolved. Again, you should be able to write six to ten sentences that describe what we could call your “desired situation”.

So far so good . . .  Now let me alert you to the trap.

Here’s where it can all turn to custard . . . and here’s how you can be the leader who understands how to build a roadmap to success

To begin with, let me tell you why many business plans are not simple and not smart. Because of this, the plan is doomed right from the start.

1. They are based on a financial model and not a people model. The plan contains pages and pages of spreadsheets and financial figures that are frequently pipe dreams. Many see a plan of this type as complex mumbo-jumbo. It’s a turn-off. Not a turn-on.

2. The plan frequently does not provide a specific understanding of how these wonderful figures will be achieved. Thus there is a credibility gap.

3. The plan does not take a systems approach to performance and goal achievement. Thus everyone does their own thing, and the consequences of inconsistency become the norm.

So what’s the better solution – “KISS”
KISS usually stands for Keep It Simple Stupid. But for your business plan, let it mean “Keep It Short and Simple”.

I’m going to suggest you follow a simple and fast three step procedure. This is the basis of a method that I have called the Accelerated Planning Technique. The three steps are Dream it, Design it, Deliver it.
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Dreamit - Design it - Deliver it with APTPLAN.comAPT 3 Step Planning Method
In part two of this article, I will walk you through these three steps.

Andrew Smith
The Business Plan Guy
www.aptplan.com

“…the fact that business is in for a tough time will make business even more interesting…”

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This interesting headline appeared in a recent issue of The Wall Street Journal.
 
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At first glance, one might get the impression that this is the press talking their way into an economic recession. But it’s the exact opposite.  
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As you read on, it turns out this is an advertisement by Fortune magazine. The statement “…the fact that business is in for a tough time will make business even more interesting…” was made in 1929 by Henry Luce, founding publisher of Fortune Magazine. 
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And wasn’t he so right. The period after 1929 was very interesting and a lot of changes took place. Changes that most of us have benefited from. 
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So, if we are to face some challenging economic times in the next year or so, there will almost certainly be business opportunities for those with their eyes open. 
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Well that’s how I’m seeing it. It is a time for optimism and opportunity.
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.What do you think?
 
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Andrew Smith
The Business Plan Guy

Business Planning – should you trust your intuition?

I believe the answer is “no” and “yes”. This is an important issue, so let me explain with a short story.

About five years ago, an electrical engineer, let’s call him Tom, contacted me for help to put a business plan together.
With the aid of some photos and diagrams, Tom explained the technology he had developed to reduce the impact of a major problem experienced in the dairy farming industry.

His concept was quite ingenious and appeared to provide a cost effective solution to a costly production loss problem. I established that the business plan would need to address two key issues:

  1. The sequence of action steps needed to complete development and set up marketing and distribution channels.
  2. Provide a business case for an associate who had expressed an interest in investing capital in this project.

For confidentiality reasons, I won’t go into details on the technology. And for this article, it’s not that important. What is important is the intuitive thinking process that was driving this man.

Fairly soon in our discussions, I established that little market research had been carried out. So I suggested that this should be an early and important part of his business plan.

After we had some discussions on what would be involved to do this research, I was quite surprised when he said, he was not keen on the idea.

He gave two reasons why he was not keen on spending time and money (a relatively small amount of money) on market research.

Reason one, was that he was scared someone would steal his ideas.

Reason two, was that in his words “I have this strong gut feeling that the farming community will really go for this technology based solution, so I just want to follow my intuition and get going before someone else beats me to the market.”

I was uncomfortable with the idea of omitting this research step, but my client was impatient and not willing to budge.

As a result, we created a business plan and an action plan that was based on the assumption that there was a valid market for the product.

To cut a long and involved story short, the business project failed. Tom and his partner could not get sufficient farmers to adopt his technology and implementation procedures.

Not a happy ending. But not the end of my story.

The theme of this article was about intuition and business planning. Tom’s situation was an example of the wrong way to use intuition.

So here is my reason for saying both “yes” and “no” to trusting your intuition.

Yes: Intuition can be a God-given creative talent. And you should trust intuition for what it really is. Intuition is an idea or inspiration or option for you to give appropriate consideration to.

No: It does not make sense to blindly follow every idea or hunch that captivates your imagination. You also have other natural or learned abilities, like reasoning and communication.

Intuition used well can give you lots of potentially valuable business options. In other words, you have the idea. Used badly, the idea has you!

I have been involved with several business product and service ideas that have had successful outcomes. However, in every case, there was an evolutionary process. The original inspiration or idea was just the seed that started off, what eventually evolved.

Testing or researching customer perceptions and reactions is the best way to drive this product development process. What potential customers think and say is critical. What we think and do must be in alignment to what people want and are prepared to pay for.

Unfortunately, Tom had different priorities. He had become possessed by his original idea. This blocked flexibility and the objective thinking of others.

There can be no guarantees of business success, but I believe that with reasonable market research and better customer communications, Tom’s business outcomes could be have been significantly better.

A few yeas ago, market research was a difficult and expensive process. The Internet has significantly changed this situation. Most new product or service ideas can be research via the internet quickly and sometimes free of charge.

So my suggestion is that you recognise intuition as a potentially brilliant source of ideas, inspiration and creativity. But be aware that it is only half the brilliance of the human mind.

True intuition, plus reality reasoning, is a pathway to business success.

Andrew Smith – The Business Plan Guy

How to Create a Business Action Plan in Less than a Day

I’m in the process of developing a free tutorial on the Accelerated Planning Technique.

This will be a simplified online version of a public seminar workshop that I have conducted in New Zealand, Australia, Canada and the USA: “How to Create a Business Action Plan in Less than a Day”.

APT 3 Step Planning Method

A visual flowchart of the Accelerated Planning Technique ™

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I would welcome your opinion on the following topics I have selected to cover.  Please let me know what you think of the following suggested topics…
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1.    Avoid Getting Stuck: Recognise the trap that 80% of people fall into. This trap kills creativity, blocks your thinking and soon causes discouragement. Once known, you can avoid this frustrating trap like the plague.
(Learning time approximately 7 minutes)
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2.    Visual Planning: We think in pictures. Learn a visual approach for business and project planning that recognises how we think.  It’s fast and you’ll be pleasantly surprised just how simple it can be.
(You will learn this in approx 6 minutes)
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3.    The Idea Dump: Learn a simple and effective way to get your ideas out of your head and onto paper. If you can imagine it, this tool will grab it. And it works even if your thinking is unfocused or confused.
(Learning time approximately 5 minutes)
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4.    Clear, Organised Thinking: How to bring greater clarity to your ideas, goals and implementation plans. This is very powerful. You will learn the essence of a technique taught to me by NASA. As well as bringing clarity to your business and project thinking, it’s the pathway to solving the difficult or complex “how-to” problems you may have to deal with.
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5.    Combine Creativity and Logic: Imagine being able to quickly match creative thinking with logical solutions. If this appeals to you, it’s now time to introduce you to the tool that will enable you to combine creativity and imagination with practical “how-to” thinking. This is the APT Dream it, Design it, Deliver it method.
(Learning time approximately 7 minutes)
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6.    Your Vision of Success: Learn a simple way to determine and communicate your vision of success. See how this can be done clearly and concisely on one sheet of paper.
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7.    Solve the “How-To” Problems with Simplicity: See how the APT Solution Blueprint helps you avoid getting bogged down in excessive detail when it comes to working out the “how-to’s”.
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8.    Action Step Formula: To get results, you need to be focused on getting things done. If you rely on the efforts of others, you need accountability. To conclude this learning material, you will learn the simple APT Action Step Formula, a concise tool that manages purpose, method and personal accountability.
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Again, any feedback on these suggested topics would be welcome.

Andrew Smith – The Business Plan Guy – Andrew”AT”apt.co.nz

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