A successful entrepreneur does not wing it: An entrepreneur who wants to win has an attack plan — a strategy that puts him into a position to succeed. If you don’t know where you are going, then how will you know when you get there? Few things in the business world have a positive result without a general plan. Besides being an absolute requirement to obtain outside financing or attracting investors, it helps to keep you on track, and it provides a road map so everyone knows what the goals are and how well you are progressing.
Entrepreneurs who believe that success can be attained through their guile or instincts are playing a fool’s game. And no, the concept of embracing risk does not mean being unprepared and shooting from the hip. Great accomplishments do not happen by chance or through the result of random activities. They happen because there was a plan and all parties committed to its execution. In other words, they were prepared.
In my opinion, there are two essential requirements of a good business plan: it should be clear in its direction, and it should have simple objectives. Let me explain:
Go for clarity, not certainty.
A business plan should provide an easily understood outline for what you need to accomplish and how you do it. Moreover, it needs to provide clarity, not certainty. That’s because there are too many circumstances beyond your control, and you want the plan to guide you, not limit you.
At a minimum, a worthy business plan provides a framework to keep you moving forward and focused on your objectives. The original RME business plan that my partner Phil Turk developed was just a few pages long. It gave us a basic outline from which to begin. It wasn’t complicated and jargon filled; it clearly articulated our plan and how we were going to accomplish goals in a simple format.
The idea of clarity pertains more to the direction you want your business to be moving rather than the degree of detail and the language you use. Phil’s plan followed a basic outline: What is it we want to accomplish? When do we want to have it completed? How do we get it done? Who is going to own this objective, and how do we know when it’s been achieved? He imparted clarity by pointing us in the right direction and not demanding that every exact detail be addressed before moving forward. Clarity means getting right to the point and avoiding unnecessary subtext.
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An entrepreneur who demands certainty would be frozen in place awaiting all the missing details to complete his or her plan. And for what reason? Overcomplicating a plan and trying to account for every possibility, situation, or outcome creates bureaucracy and inflexibility that negatively affects your successful journey. New entrepreneurial businesses must be fluid entities and have latitude to shift within the market, the business environment, and more important, as the customer requests change. With RME, we completely changed our business plan within three years of opening.
Keep it simple.
A large risk in developing a business plan is that you must live up to the plan’s commitments; otherwise, it’s considered a waste of time. At RME our first serious strategic long-term planning effort didn’t happen until five years after we switched to the Seminar Success business plan.
Our two-week prep included having small committee meetings to assign homework and research tasks. Then we got together with our facilitator to build a grand strategic plan intended to guide us for the next five years. The whole process took around two months, and when finished, it was the most detailed and comprehensive plan in company history.
However, this plan did not come to fruition because it was far too ambitious and complicated. All tasks were possible and within our core capabilities except that it would have required twice the personnel and budget. We learned a valuable lesson: Simple is better than complicated — not because we were not capable of implementing the plan, but because we could only commit to a small portion of it. Any plan developed is a plan you must be able to commit to 100 percent, and in this case, the plan’s complexity made that impossible.
We gained valuable business planning insights, but in the end, the steps we took to grow, the steps that worked, looked nothing like the plan, because sometimes opportunity appears when you least expect it and you just have to grab it.
© 2014 Tom Panaggio, author of The Risk Advantage: Embracing the Entrepreneur’s Unexpected Edge
Recommended Books and Products on Business Plans:
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- Myths and Realities of Business Plans
- Luck By Design: Living and Working with Purpose
- How to Start and Succeed in Freelance Copywriting
- What is Franchising?