Tag Archives: planning

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 We know they’re out of date the minute the ink dries on the page and they can be knocked sideways, backwards, and forwards by unforeseen opportunities and obstacles in the weeks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spent setting up The Repair Shed (a social enterprise in Hemel Hempstead) my business plan lay unopened,  unloved, and out-of-date on the shelf.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  

Risky business

They say that entrepreneurs are risk-takers and it’s fair to say that, like most things in life, it takes an element of personal and/or professional risk to make things happen. This is not to say you can only succeed in business by being reckless, but being willing to get outside your comfort zone is pretty much essential. So, what are the main risks for the entrepreneur starting a new business? Here are six ‘Cs’ to consider:

Can’t do – Much of the talk these days is about a ‘can-do’ attitude – as if positive thinking is enough to make things happen! In reality, self-awareness about what you can’t do is probably more important – so that you can work out how to overcome your shortcomings eg filling skills gaps by training or co-opting someone else.

Competition – With a new business one of the first considerations should be the competition (direct = others doing something similar, indirect = everything that’s going to stop your would-be customers buying your product or service). If there’s no competition, you might ask yourself why not, if there’s loads of competition you need to know why people should choose you. A serious assessment of the competition can reduce the risk of failure – try to learn from other people’s mistakes. That said, I’m a firm believer that you can gain more from cooperation/collaboration than competition.

Cash (flow) – The single biggest reason that businesses fail is running out of cash. There may be lots of money tied up in the business but none available in a liquid form – cash – to cover immediate costs such as salaries and daily expenses. Not for nothing do people like me repeat the quote Turnover is vanity, profit is sanity, but cash is reality.” Keeping a close eye on the money coming in and going out of your business bank account – your cashflow – will reduce the nasty surprises.

Capacity – So your start-up is doing well and you want/ need to grow; the biggest limiting factors at this stage are time and space. You only have so many hours in the day and, if your business involves face-to-face customer services, you’ll need to be looking for people to bring in to help out (in effect, to increase the hours in the day). You may also need more space to accommodate the extra people knocking at your door. If you’re selling products, you’ll likely need extra space for production, storing stock and materials, and maybe for increased packing and distribution.

Contingency – They say that the best business people are not so bright that they keep asking ‘what if?’ all the time. But, it would be bright to do at least some contingency planning around you and your business along the lines of … What if I’m off sick for 4 weeks?  What if my mobile phone or laptop was stolen? What if a massive order comes in next week?

Coordination – Business seems so easy when you see it in terms of ‘selling the right products/services to the right people at the right price’ (whatever we mean by ‘right’). But the problems arise because real life rarely provides an easy route from A to B. Coordination – having a realistic map of your route to a clearly defined destination, and systems for coping if/when things go wrong (breakdown recovery etc), will help make the ride less bumpy.

Ultimately, the best entrepreneurs manage risk rather than letting it stifle progress – they take risks when they can afford to fail. David Robinson, former Chief Officer of Community Links in East London, makes the case for risk-taking. “If we don’t fail it means we’re not taking risks. If we’re not taking risks it means we’re not trying to do things differently, and if we’re not trying to do things differently, why are we here?”

Drown your puppies

no-dogs-allowedIf you’re familiar with the Boston Matrix (a marketing tool not a Hollywood blockbuster) you’ll also probably know the term ‘dogs’. These are activities that are not making money nor contributing to the mission of the organisation being assessed.

If you identify any ‘dogs’ in your organisation the advice is to drop this activity or, as some put it more provocatively, ‘drown your puppies’.

The beauty of this particular phrase is that it grabs the reader’s attention (whether or not you’re a puppy-lover) and it also encapsulates the truth that organisations often have pet projects that are kept alive, often by the people who created them, for emotional reasons. Blind to evidence that an activity has become a waste of time and money (it may always have been so) charities are probably more guilty than the average for-profit business of getting their head and heart balance wrong. Smaller charities are particularly good at ‘flogging dead horses’ (another brutal animal image!)

For social enterprises – businesses with a social purpose – success is often defined as achieving the ‘triple bottom line’ of social, financial and environmental objectives. This makes the identification of ‘dogs’ more difficult because the activity may be justified for non-financial reasons. At the Repair Shed in Hemel Hempstead, where men aged 50+ come together to stay healthier and happier for longer through making, mending and learning, we’re dealing with ‘pet project issues’ of a different kind.

As readers of a recent blog may remember, the making part of Repair Shed members’ activity has to date largely involved using reclaimed timber to make products for homes and gardens. I think some of us have surprised ourselves with the quality of the work we’ve turned out – I know I have – pleased with the result and… reluctant to see it offered for sale.

Objectively, the Repair Shed should be trying to sell as many products as possible – to make money, create more storage space, and to save more timber from becoming waste. Subjectively however, perhaps we’re worried others might not be as proud to own the products as we were to make them. So there are mixed feelings when a project that people have been working on is sold – because making it again will never generate the same sense of achievement. The silver lining is that if your creation remains unsold, you can always take it home and show if off to friends and family who will appreciate it (or say they do).

It must be the same when starting out on any creative journey. In retirement, my friend Carl has taken up painting. This year he bravely submitted two pieces to our annual art exhibition and put a £60 price tag on each of them. Much to his surprise he sold one of them but, excited though he was, he couldn’t disguise his relief that the ‘right’ painting (ie the one in which he’d invested less time) had been bought.

It’s a tough lesson – if you want to succeed in a creative business you must be prepared to let go of your best work and risk it being under-valued.

A related blog – The paying customer is always right – is at https://enterpriseessentials.wordpress.com/2015/11/25/the-paying-customer-is-always-right

More on the Boston Matrix at http://www.oxlearn.com/arg_Marketing-Resources-The-Boston-Matrix_11_35

Could your enterprise be more mindful?

Rearview mirrorWhen I was younger, I had a recurring dream that I was driving a car by looking only in the rear view mirror. It probably has some deep psychological meaning about my childhood – I never found out – but it never ended in disaster; it wasn’t a nightmare.

As regular readers of this blog will know, in developing The Repair Shed, I’ve taken many opportunities to reflect on my ‘journey’ so far – to look in the rear view mirror and use what I see to map my route ahead.

So looking back is part of business planning, what about looking forward?

Business planning has more than its fair share of clichés, quotes and supposedly-clever sayings. ‘Fail to plan and you fail to plan’ and ’Pisspoor planning prevents proper performance’ (and any number of variation on the Ps of planning) are just two. I’m in favour of creating a map for the business journey; I’ve often advocated it when advising others while sharing another home truth – the planning process is more important than the plan itself.

But what if you didn’t look too far forwards or backwards while developing your business? It may sound like heresy, but bear with me…

I’m a convert to mindfulness – something which has been around a long time but is fast becoming more mainstream to the extent that schools and MPs are now considering its benefits. My sister who teaches mindfulness graphically summed it up for me when she said “If you have one foot in the past regretting what you didn’t do, and the other foot in the future worrying about what might happen, you piss on the present.”

Mindfulness is about living more in the present, being consciously aware of the ‘here and now’ to create some calm in an increasingly frantic world. I try to practise mindfulness each day when I’m shaving (I close my eyes and shave by touch), driving to work (giving a running commentary on my driving, other road-users and the driving environment) and while I’m cross-country running (scanning my body and identifying changes in everything from my breathing to my aching joints).

Going back to my recurring dream, while it would be impossible to ‘drive your business’ by only looking where you’ve been, you only have to see a short distance ahead to make progress (just as you can when walking or running).

Given the speed of change in the working and living environment and the likelihood that whatever you plan beyond a couple of months ahead is likely to need changing, what might happen if you didn’t have a medium/ long term plan? Here are just three speculative suggestions:

  • You might save a lot of time in meetings discussing things that will never happen, giving you more time to focus on running your business right now
  • You might be more open to opportunities and more responsive to the immediate needs of your customers (who says being pro-active is better than being reactive?)
  • Workers might feel less pressured by distant targets and more focussed on getting their job done better on a day to day basis

What do you think – could your business benefit from being more focussed on the present by being more mindful? Or maybe you think not enough time is spent planning ahead?

Further reading on reflection:  https://enterpriseessentials.wordpress.com/2014/11/07/on-reflection-building-a-shed-day-400

Time Trials  #2 – precise time

HourglassMy dear old dad used to say he was baffled by people who spent good money on a watch that would be ‘accurate to within a 1,000th second over 100 years’ (or whatever the claim) because no one needs that accuracy.

True – but time and some precision is surprisingly prevalent (some would say dominant) in much of our lives. The other Saturday I made a day trip to York. To summarise my day in terms of times …

5.15am Rude alarm awakening

5.59 Three trains to arrive in York (on time) at 8.31

9am parkrun time 23.32 (9 seconds off my personal best for York)

11.30am and 1.00pm – Two meetings

3.00pm  York City vs Tranmere Rovers (my team) – 90 minutes + 9 minutes extra time

18.31 Two return trains arriving (4 minutes later than advertised) 21.11

The first blog in this pair on the theme of time [https://enterpriseessentials.wordpress.com/2015/02/24/time-trials-1-precious-time] shows how the importance of time depends on the context.

At The Repair Shed – our burgeoning social enterprise in Hemel Hempstead – we’re enjoying funding support from the Innovation in Waste Prevention Fund. The implication of this is that we have to account for our spending (how much) and demonstrate our achievements (how well) in a time-limited period that ends on 30 November 2015.

I’m the first to say that, when spending someone else’s money (and even when we’re not -see https://enterpriseessentials.wordpress.com/2014/04/29/building-a-shed-the-second-100-days) we should be accountable, but the clocking is ticking. We now have to try to realise the plan of action we submitted to the funders according to the timetable we presented with our bid for their support.

But where ‘innovation’ is concerned there’s inherent risk that things will not happen when/how it was intended – assuming the innovation is real. And we’re working with volunteers who can simply walk away, so there’s no guarantee of having feet on the ground and hands on deck to make it happen at all!

So the time pressure is real and I’m reminded once again of Olive Quinton‘s insight around starting a business (she created social enterprise Lofty Heights) – be patient; other people’s timetables will be different from yours.

I’ll try to be patient Olive, but it won’t be easy.

PS Here’s a tip when organising meetings. If you advertise an unusual start time – 2.13pm say – people are more likely to remember it and turn up on time!

 

Beyond funding

IMG_2377I’m sure you’ve done a bit of day-dreaming in your time about how you’d spend £1M if you won the lottery.

I avoid such speculation (mainly because I don’t do the lottery) but I do imagine from time to time what I’d do if I had an unlimited amount on money to invest in my current ‘good cause’ whatever that may be.

Interestingly, it’s not as easy an exercise as you might think (try it yourself…) even though most not-for-private-profit organisations seem to be fixated about money.

While concern about ‘the bottom line’ is sensible of course, I sometimes think that money, and the responsibility that comes with spending other people’s, gets in the way of organisational success. It’s the old conundrum – being too busy fundraising to do the work for which you’re fundraising!

Which is why I’m looking at non-financial resources for organisational success below, and at a training day at the end of February.

What makes an organisation sustainable?

Years ago I came across a brilliant toolkit which explored what it takes to make an organisation sustainable (note: there was a separate list for financial sustainability). Their recipe for success included…

  • having a clear strategic direction
  • being able to scan the environment to identify opportunities
  • being able to attract, manage and retain competent staff
  • having adequate administrative and financial systems
  • being able to demonstrate effectiveness and impact to attract resources
  • getting community support for, and involvement in, the organisation’s work

How does your organisation stack up in these areas? Be honest now.

Being a train…

Worth re-visiting the Gina Negus (founder, The Projects Company) analogy of viewing your organisation as a train – firmly on track, destination ahead down the line, resources fuel the journey, all on board travelling in the same direction, in control of the speed and direction of travel.

Is your organisation a train or an octopus (drifting, reaching out in all directions, just ’going with the flow’)?

The power of people

Online: I have a love-hate relationship with social media. I love the fact that (along with the rest of the universe of course!) I can now communicate with thousands of others easily, affordably and, if it’s done well, effectively. But it also brings what Adrian Ashton describes as ‘faux companionship’ that has a place in reducing isolation but, in my opinion, is no substitute for ‘face-to-face’.  For me the ideal blend is using the arm’s length facility to make things happen face-to-face*  In your organisation do you use social media effectively?

Offline: Here’s another question for you. If your organisation was threatened with closure, which 10, 20, 30, 40 people (that’s 100 in total) would you contact first for support? Applying the pareto principle [that 80% of your business comes from 20% of your contacts] which 100 of your 500 best contacts are the most important for your organisation’s survivial? The list could include your local newspaper editor, the printer who gives you extended credit, or maybe your frontline staff – the people who greet visitors and answer the phone – and an ever-dependable volunteer.

If you don’t already know who these people – your VIPs – are, find out and make 2015 the year you really look after your greatest assets!

If you’re interested in exploring these and other non-financial routes to sustainability and success, join me for a training day at the end of February. Details at http://www.voluntarysectortraining.org.uk/courses/event/89/Beyond-Funding-its-not-all-about-the-money and book now for a 10% early bird discount before the end of 2014!

*More about online and face-to-face communication at https://enterpriseessentials.wordpress.com/2014/04/08/local-social-online-and-connected-2)

Enterprise essential – be an information gatherer

Never stop looking, listening and learning. There’s a wealth of accessible and affordable sources out there – much of it online and free. Try the Business Planning Guide for Social Enterprises at  http://issuu.com/fs12pbl/docs/new_busplanguide?e=4544798/5782269 to get started.