Simple Business Planning
Over the years, I have started several businesses. I’ve planned more. At a couple of points, I tried getting outside investment for a couple of businesses. In order to do this, you need massively in-depth information in a complicated business plan.
Some of the things you have to do:
- SWOT Analysis of You and Your Competitors
- Detailed Marketing Plans
- Breakdowns Of Products, Suppliers and Sales Channels
- Sales Information
- Prospective Accounting
- Executive Breakdown Of Yourself As A Person And Your Suitability
This is the sort of thing that’s asked of you. It takes forever, it’s built on a house of cards which could easily be toppled at any point – after all, it’s all hypothetical and estimated anyway. That’s the bad news.
The good news is that unless you’re looking to make huge amounts of money with a hugely complicated business, then you don’t need to do this, and you probably shouldn’t.
Today
Today I wrote up a new plan for this site for the next few months in a fit of inspiration. It took me about thirty minutes. It included expenses, stuff I need to get done, stuff I’ll need to research and things I’ll need to do after I’ve done the initial things. This was all done on one side of A4 paper.
The one thing I haven’t included is potential income. That’s because it’s all somewhat hypothetical at this point – and the problem with planning income is that the whole game of business is based on income. If I don’t make any money, then the plan is rubbish and needs to be scrapped entirely. If I make less than I expect, I have to upgrade the plan. If I make more money than I expect, then I have to change the plan to account for it.
Either way, until you’re earning income, it’s a fool’s game. Don’t do it outside of a simple equation:
Estimated revenue per product – cost of the sale = positive figure.
Really, that’s all that matters. You don’t want to lose money providing a service or product. Other than that, it doesn’t matter because you can use the money you generate to become more efficient in terms of costs and expand your services and products.
Why Stay Away From A Complex Business Plan?
Humans are pretty lazy creatures. It’s a reason why automation is inevitable.
The problem with a complex plan is twofold: Firstly, you’re less likely to do anything if your plan is too complex. Secondly, you’re going to encounter more problems the more you plan.
Business plans are fragile, and the more complicated they are, the more fragile they are.
If you have a one hundred step marketing plan that involves you sitting on Twitter for ten hours a day pumping out links to your products, then guess what’s going to happen if that labour-intensive approach doesn’t work? You’re going to get fed up and look for better alternatives.
What happens if you spend six months and thousands of dollars developing a service which nobody uses? You’re going to be fed up and you’re going to quit.
Instead, it’s better to say, “My marketing will involve one thing a day,” than “I’m going to pump out content for eight different social media platforms at the same time as launching my product.”
It’s better to test a $5 service and see if people buy that before creating a $1000 service.
Finally, a complex business plan serves nobody unless somebody else is going to read it. With my A4 sheet of paper, I can sit the whole plan for the next six months on my desk next to my laptop and never have an excuse for not having something to do. If I had a fifty page dossier on a business, I’d not be able to do this – nor would I want to read through it.
When you’re writing a business plan for yourself, you need to understand it and it needs to be optimised for your quick and easy comprehension.
So What Should My Business Plan Include?
Here’s what my A4 Paper Business Plan included this morning:
- Fixed expenses (Do these one-time, monthly, yearly)
- Variable Expenses (What costs more the more you use it? Like… paperclips for instance)
- Optional Expenses (Cool web design? A new piece of software you don’t need?)
That’s it for costs. Then:
- Product (s) or Services you’re offering.
- Expected Profit per item
- Places You’re going to sell it.
Then finally the advertising and marketing bit:
- Where are you going to market it particularly (online/offline)
- SEO targets (keyword research etc.)
- Social media stuff (if in doubt, just post to your own site then link to various social media sites until you’re going)
Finally, and most importantly, you need to write out the point where you need to do each thing. There’s absolutely no point in planning to “leverage social media” if you don’t have a decent product to sell.
It’s funny, because the step-by-step part of the business plan is the most important because it’s the actual plan. But most business plan templates don’t actually have a “step by step plan” section. They just want you to make endless spreadsheets and stupid comparisons with every possible competitor that has nothing to do with you.
Final Thoughts
If your business plan is more complicated than the above, chances are you’re over-thinking it. I’ve written almost-book-length business plans before, and guess what? I was over-thinking and trying to rationalise a business plan that was stupid.
When you have a great idea, it’s like lightning in a bottle. Write the idea out, how you are going to achieve it, what it’ll cost to achieve it and what you’ll get out of it when you do achieve it.
Everything else is probably overcomplicating things.
Of course, if you disagree and think I’ve missed something crucial… leave a comment. We’ll all learn from it!