OK, I admit it. My first business plan was drawn on a napkin. Here’s how it looked: $ + $$$ = $$$$$$$$. Translation: Make a little money, put it back into the business, make more money and get rich. However, upon looking back, I wish I would have taken more time like I did with my following three successes…none of them with a complicated plan but with a clear strategy.
Why entrepreneurs tend to overcomplicate their strategy.
Many business owners seek help, expecting to develop a plan and strategy the book size of “War and Peace”. They need to believe that success is complicated, because if that isn’t true then why haven’t they achieved it already? For some, there’s a sort of security in documenting and analyzing every little step before it’s taken. This tendency falls into the categories of procrastination and fear of failure. If you spend more time thinking about your business plan then you do acting on it, this may be your problem.
Not everyone has the ability to grow their business from an abstract reference on a napkin, but small and mid-sized business owners who overthink their plan don’t succeed. Begin your plan with these five questions and stop overcomplicating things. Just get to work.
- Who is my audience?
- If you find yourself using phrases like, anyone who, then you don’t know who your audience is. If you could sell to just one person, who would it be? That’s right, one person or industry. I once mentored a professional life coach who thought his audience was any person who had a bad day. He was barely supporting himself. We narrowed it down to people utilizing a psychologist. His business took off within months.
- Here’s something that’s very important to know about niching: You don’t have to stick with only one. Start with one and when and if the time is right, create a second target. Choosing a niche is not restrictive.
- How will I reach my audience?
- Once you have a niche, you will have a better idea of where they hang out. What are the best social media platforms, the industry events, and associations they’re associated with, and which people in your network are closely associated with them?
- What makes my product or service different?
- This one is difficult for many entrepreneurs. You may believe that one business accounting firm may be just like the next, for instance. When one of my mentees differentiated her firm by offering freelance CEO and CFO services, along with 30-minute quarterly meetings with her clients, her practice grew by 34% in one year. These touches are called white glove service. What’s your white glove?
- What are my costs and margins?
- Once you find that amazing accountant, pay the money to have them calculate your cost of doing business, as well as your margins. You may be amazed at how many entrepreneurs have no idea where their money is going and what their margins are. I had a mentee who sold two different cleaning service types to two different industries (households & business janitorial) but ran her numbers together. It wasn’t until we began working together that she came to realize that one of her cleaning service lines was sucking up profits from the other. It didn’t look that way on paper until she separated the costs associated with running each side of the business. You may think you understand your numbers, but do you really?
- How will I manage my company’s growth?
- Here’s where entrepreneurs fall into a very problematic trap. They end up wearing the CEO hat, along with the other six or seven hats necessary to run their business. If you have the mind of an entrepreneur, it’s not likely that you will excel in performing every task needed to deliver your end product/service. When you’re entrenched in the day-to-day operations, you won’t have time or energy to grow the business. Perhaps you don’t need full-time employees, but you do need to outsource. If you try to do it all you will burn out and fail. It’s that simple.
- What mindset do I need to maintain to become successful?
- Do you have a “lack mindset” or a “wealth mindset”? If you are constantly worried about money you fall into the lack category. If you believe with all of your heart that there will always be more than enough, you tend toward the abundant, wealth mindset. This is not to say that you don’t watch your money, but that you understand you need to spend money to make money (remember my napkin business plan) and you spend it wisely.
- Please know that determining and changing your mindset is not likely something you’ll do on your own. Find a business mentor and invest in yourself. It will be the best money you’ve ever spent.
- What are my company’s values and how will I develop its culture?
- Oblivious to how things must change once they begin to bring employees on board, some entrepreneurs neglect to develop processes and an intentional culture. Before long, the business is a mess. This is a costly oversight.
- Ask this simple question to help lay the foundation for a healthy culture: When employees and customers talk about your business, what exactly do you want them to say and how do you want them to feel? If an entrepreneur does not put effort into building their culture, it will build itself and you won’t like the results.
That’s it. Throw away those pages and pages of notes. Stop losing sleep in search of the magic bullet. If you focus on these seven areas and believe in yourself, you will go much further in life and business.
For more thoughts on startups, view the free video entitled Business Plan Development Session 2.
Copyright ©John Trenary 2021