We find ourselves ending at the start: the Plan.
While many are aware of the need for a well-crafted business plan, few businesses of any size actually have completed one. There are several valid reasons: a thorough business plan is a complex document, requiring much more than expertise in tradecraft and knowledge of the potential market segment.
One- and five-year financial projections, competitor analysis, growth plans, best- and worst-case scenarios, – even an exit plan – are all part of a comprehensive business plan. Many Small Business entrepreneurs, especially in the current economy, have entered into their business ventures more from necessity than desire. Down-sizing and layoffs, it seems, create more Small Business than a burning desire to “go it alone” and brave the rigors of competition.
Yet as the saying goes, “failure to plan is planning to fail“. You may never have the time to draft a complete business plan – but then you’re probably not seeking a commercial loan or investors at this point. Still, there are steps you can take to give yourself a guide, to ensure that you’re operating on more than just “a wing and a prayer“.
This is a simple document – usually a page or two – though it may take some time to prepare. It is an acronym that stands for “Strengths, Weaknesses, Opportunities and Threats“. If you prepare no other document or plan, I urge you to prepare a SWOT analysis. Take a serious look at the business you’re in or are planning to start or enter into.
Strengths: What qualifies you? Seriously; it must be more than just “I got laid off“, or “I’ve always wanted to do XXX“. Are you REALLY qualified to pursue this line of work right now? If not, how quickly can you get yourself up to speed, and what would it take.??. I don’t ask this to discourage you, but ask you to consider the training, advice, mentoring and networking opportunites available that can enable you to answer this question positively.
But whatever you do, don’t operate blindly with a false sense of optimism: entering into a business venture without proper qualification can cost you more than you’re prepared to pay — in time, money and reputation — and even expose you to litigation.
Weaknesses: This is the inverse of your qualifications. I’d actually focus on this first. You’re probably more aware of why you should enter into your chosen business than why you shouldn’t – after all, noone starts a business expecting to fail. Still, an accurate assessment of your deficiencies and shortcomings automatically maps out a course of action to enhance your skills, increase your knowledge and make up for whatever you determine you lack.
Opportunities: This may seem clear, but think beyond the obvious. If you’re creating custom clothing, might you have an opportunity to repair antique items as a side business? What partnership opportunites are there? Could you conduct a free course at a local college or community center, that would allow you to establish a reputation as a valuable local resource, demonstrate your skill… and discover potential clients in the process? Here is where thinking “outside the box” is most important. Look beyond the surface, and think creatively — try to see things you wouldn’t ordinarily consider when dealing with just your core competencies.
Threats: Competitors. Lawsuits from upset customers. Negative online reviews. Disgruntled employees or partners damaging your reputation. Noone wants to dwell on these unpleasant things, but better to consider them in advance and prepare a strategy, than to be blind-sided and have an otherwise profitable business fail because of unanticipated threats to its existence.
There is also the Strategic Business Plan which, as its name implies, is a more focused document than a full-blown business plan. Where a comprehensive business plan is usually drafted when starting a business with, among other things, appealing to a bank or series of investors in mind, the strategic plan is devised for the business owner, and possible partners or employees, to map out the course of action for a few years.
It is everything from a mission statement to a declaration of intent — it says “this is who we are, why we’re here and what we’re doing“. It’s a good exercise to prepare it, and review every six months or so, to either revise it or simply to make sure you’re still on track with your original… plan of action.
Plan the work, and work the plan. That’s the fundamental key to success… or at least, a good way to avoid outright failure. And that’s been the purpose of this series – not to discourage you, but to point out some of the roadblocks, and help you chart a path over, around or through them.
Good luck to you all. And keep reading – there’s more good stuff to come, from Your Open Source CIO.
The Henssler Financial Group Position Paper
© 2004 The Henssler Financial Group | www.henssler.com