Tag Archives: business plans

Trade secrets – a start-up business plan is always wrong

What they don’t tell you about starting a business…

Whatever goes into your business plan pre-start-up is unlikely to happen like that. Unless you can foresee the future, reality tends to get in the way.

There’s a famous military quote ‘no battle plan survives contact with the enemy’ and this applies as much to business plans as battle plans.

A start-up business plan charts 12 months ahead in a linear, orderly fashion (with words and figures hopefully describing parallel journeys) but we know that real life – personal and professional twists and turns – mean that’s unlikely to happen. We say that the business plan should be a ‘living document’ – dynamic and being constantly updated – but I wonder how many really are…

A first business plan is not a promise; it includes figures that are, at best, guesstimates. Predicting the future with no past performance for guidance is incredibly difficult, and the same goes for a new business. After test-trading, and with a year’s actual activity to feed into the plan, the picture for years 2 and 3 will be much clearer.

Which doesn’t mean you shouldn’t write a business plan, see https://enterpriseessentials.wordpress.com/2017/04/28/the-business-plan-paradox

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What makes a great business plan?

There’s no right and wrong way to write a business plan. It’s about getting the job done – which is probably to make the best case to readers (investors, collaborators, potential customers) to persuade them to support you and your business idea.

Below are 10 questions that most business plans should aim to answer…

  1. Why are you the right person to be setting up in business? What’s your personal and professional situation – relevant life experience/ relevant training and work experience. What are your interests outside of work but relevant to your business success? 
  1. Why is this business particularly attractive to you? What’s the source of your passion – personal and professional? Why you will put in the extra effort and time to succeed when the going gets tough?
  1. Who will buy your products or services? Define your target market/s in a meaningful way (their demographics, attitudes, behaviours)
  1. Why will people want to buy your products/services? What ‘needs’ do your product/ service meet? And what ‘wants’ will you satisfy such that people will buy from you rather than your competitors?  
  1. How do you know that there is demand for your products and services? Explain your market research – show real, meaningful evidence of there being enough people willing to pay for your product/service. The views of your friends and family don’t count! The best market research is test-trading
  1. How will your business plan show the figures add up (with more income than expenditure)? This is your best estimate to show there are enough people willing to spend enough money to allow you to pay your bills (use your market research and cost/sales estimates to make the case ) 
  1. What is ‘plan B’ if things don’t turn out as planned? Will you … Scale down? Slow down? Do something slightly different? Do something completely different?  
  1. How do you know the overall business idea is realistic? Can you point to others doing the same thing successfully? How self-aware are you about your strengths and ways to compensate for your weaknesses? 
  1. How will you monitor the performance of your business? How will you know how well you’re doing? This is about more than just money – the ‘bottom line’. Will you set targets and milestones, identify relevant measures – outputs and outcomes – over the short/medium/long term.
  1. What will success look like? Imagine yourself in 12 months – what will a typical day / week look like? What‘s your vision for the period covered by your business plan?

 General advice:

  • Show development stages in your business plan. Targets for month 3, month 6, and month 12 perhaps
  • Make your plan sound certain (be positive but realistic and honest) even if some elements are not very fixed
  • Keep it simple – write for a 12 year old with no knowledge of you/ your business Quality is more important than quantity
  • Know where your figures come from (and explain the main assumptions in your plan)
  • Add other materials, such as photos, at the end if it helps the reader get a better grasp of you and your business idea.

Further reading:  https://enterpriseessentials.wordpress.com/2017/04/28/the-business-plan-paradox/

The business plan paradox

“If you don’t have a plan, you can’t change it”

In my work with young entrepreneurs, we set great store by them developing a business plan for each would-be enterprise. I describe it as the key that unlocks further support – including a start-up loan and a business mentor. And it can. That’s the carrot for young people hoping to start their own businesses and the stick is… well… it’s me giving them feedback on their various drafts at 1-2-1 meetings. It has to be  their business plan and after each encounter, I  hope they won’t give up; no one is going to force them to stay the course. Of course, many end up ‘doing their own thing’ and we lose touch.

But then I have mixed feelings about business plans. They are, at best, an informed estimate about how things might turn out. We know they’re out of date the minute the ink dries on the page and they can be knocked sideways, backwards, and forwards by unforeseen opportunities and obstacles in the weeks following. Business plans chart 12 months ahead in a linear, orderly fashion (with words and figures hopefully describing parallel journeys) but we know that real life – personal and professional twists and turns – mean that’s unlikely to happen. We say that the business plan should be a ‘living document’ – dynamic and being constantly updated – but I wonder how many really are…

Then there’s my guilty secret – in the three years I spent setting up The Repair Shed (a social enterprise in Hemel Hempstead) my business plan lay unopened,  unloved, and out-of-date on the shelf. In fairness, I did have a 12-month project plan for the funders and I spent a lot of time explaining why things didn’t turn out quite like I said they would.

And yet… and yet …

Young people starting a business plan, and progressing it from one draft to another, shows learning in action, and achievement – massive achievement is some cases – that is credit-worthy in itself. Transferring ideas from inside heads on to paper helps make thinking tangible and, can often clarify issues and gaps in knowledge. A written business plan can share understanding between strangers about the young entrepreneur and their new venture. Even if the business plan is abandoned, it can be retrieved at a later date – a lifeline if the business is floundering, a leg up if the business was never started. And there’s proof that the author of a well-worked business plan can become much more employable as a result of that planning exercise alone.

There’s a much-quoted saying “no business plan survives first contact with customers” but I’d be happy with that – it says our young entrepreneurs have actually started trading!

Coming soon – 10 questions your business plan should answer  

Beyond the garden wall

IMG_8881“The grass is always greener where you water it” Neil Barringham

When I left book publishing in London after 15 years, I had a dramatic career change – working as a Community Enterprise Coordinator in the Cambridgeshire Fens. That beautifully stark part of the country is another world where, I was told, change happens by generations.

Like many relatively remote rural areas, if you aren’t born in the Fens, you’re an in-comer for ever. Imagine my situation then – I didn’t even live in Cambridgeshire, let alone the Fens, and the European Union was paying me to tell the local population who’d been there for generations how to live their lives. And I had absolutely no formal qualifications for the job.

I’d been advised that I had two advantages – I was male and mature. I’d never been described as mature before, but they were right; people did at least give me a hearing. But then on my third day in the job, someone said ‘you know Chris, we’re a terribly self-sufficient lot’. I knew I wouldn’t have people queuing up outside my door asking for help.

Then I got some great advice from a community development worker in Devon who’d been in the field (literally) much longer than my two weeks. She said, and this is the point of this blog…

“Think of yourself as a gardener, sowing seeds. You plant the ideas and if some of them sprout, you water them and nurture them. If they shrivel up, you know they’re non-starters and you plant other seeds in, you hope, more fertile soil. And don’t give up trying – it might just be the wrong time of the year.”

I found that advice amazingly useful over the following 18 months – it was an analogy that fitted the rural soundings and helped me explain my role to local people.

And then the gardening analogy cropped up (pun intended) when I was back in London working with the biggest and friendliest charity that’s ever been foolish enough to employ me.

In the course of advising people about business planning, I learnt about SHARE Community in south west London – a charity that provides training, education and personal development for disabled people and those experiencing social exclusion. SHARE Community’s CEO Annie McDowall describes a strategic planning day with a difference…

“To be honest, I was a bit bored with the same old format … SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. This was my first away-day with SHARE and I wanted to make it special. Also, I wanted to include a fair number of SHARE clients all of whom experience some level of disability…

SHARE has a horticultural project and we’re all very enthusiastic about it… How about we did a SWOT by imagining SHARE as a garden? We could use art materials to build up a picture with strength represented by trees, ladybirds and so on, weaknesses as weeds, slugs etc, opportunities as birds and bees, threats as greenfly – that sort of thing…

The next part of the planning session looked at what features of SHARE we wanted to keep and what to throw away. We kept the metaphor of the garden identifying what were weeds (to be got rid of) and what were hardy perennials (hold on to them). Next we asked each group to identify new garden features they wanted to introduce to SHARE. This was a really useful exercise because it produced a list of action points for the year ahead.”

Even though that planning session happened over a decade ago, it struck a chord with me as a brilliant idea. It’s remained in my memory because it connected at a higher level.

I’m pleased to say the garden analogy (or is it a metaphor? I never know) is still thriving – another intended pun. Just last week I read two blogs – from that wise man at Strategic Edge, Nicholas Bate, and the other was a 2013 blog post from another insightful writer – Seth Godin. Nicholas linked gardening to business, parenting and life, and in Seth’s blog he observes “Great projects start out feeling like buildings… but in fact, great projects, like great careers and relationships that last, are gardens.”

So plant seeds, grow well, and may your life, career and relationships bloom.

Further reading:

Nicholas Bate’s blog http://blog.strategicedge.co.uk/2016/01/mmmm-5.html

Seth Godin’s blog http://sethgodin.typepad.com/seths_blog/2013/07/gardens-not-buildings.html

SHARE Community’s gardening enterprise http://www.sharecommunity.org.uk/social-enterprise/share-gardening

 

 

Learning about Earning: lessons 3 and 4 from a social enterprise start-up

Project plan vs business plan

“Never present figures without a story, never tell a story without figures”

What’s the balance of words and figures in your plan (assuming you’re setting up or running a social enterprise)? Despite the pressure from all around to ‘be more business-like’ in my experience, charities are still good with words rather than figures, whereas organisations down the earning end of the ‘asking-earning’ spectrum use figures to tell their story (with the narrative in the background).

In my twelve months as a social enterprise start-up, I’ve had a business plan sitting on a shelf (almost complete, but weak on figures..!) and I revise my project plan every time I bid for grant support (three times – fingers crossed for third time lucky…) In all three cases, the application has been strong on words but, until the third application (when I got help) I’ve been weak on hard evidence in the form of figures (about scale of need, benefit and income) to make the business case.

If you want help to make the mental and physical – it’s as much about thoughts as actions – journey from asking to earning, try this http://bit.ly/1qFGGoJ

Planning vs doing

Cliche alert: ‘Fail to plan and you plan to fail’ andPiss Poor Planning Promotes Piss Poor Performance’ are over-used clichés that are a good excuse for not taking the plunge – talking about doing rather than doing.

Waiting to get all the jigsaw pieces in place and building firm foundations sounds like common sense, but what about (analogy alert) jumping in to test the water without having all your ducks in a row?  A ‘lean start-up’ can…

Motivate:  Having general discomfort can encourage us to go further, faster (you will run faster when chased by someone with a knife…)

Enable real market research: By launching the unfinished article in which you’ve invested relatively less cash and care, you’re more likely to respond to criticisms positively and adapt your product – which is what innovation is all about.

Reduce padding, increase focus: Without the luxury of unlimited resources, the new enterprise is forced to hone in on essential spending with a keen focus on purpose

Attract finance:  A shining business plan with figures to impress is just that – a plan and a promise – whereas hard evidence – of demand for new real products and services – counts for a lot.

More on the case for a lean start-up at http://bit.ly/1kjOsoT

 If you’re interested in exploring ways to turn ideas into action, join Chris Lee for a day-long workshop on December 4 in Chelmsford Details at www.voluntarysectortraining.org.uk/courses/event/70/Ideas-Into-Action

Enterprise essential – Make sure the figures add up

If you expect to spend someone else’s money when starting up an enterprise, the figures will need to convince them you have the potential to trade profitably. Solid research should help you present figures that will stand up to scrutiny (and save you a lot of time, money and stress in the long run!)

 

Enterprise essential – Balance the stories and figures

There’s a saying that you should never present figures without the story behind them, and never tell a story without figures. In a business plan for a social enterprise, the figures are more important than the narrative while, arguably, the reverse is true for a charity.