Business planning can be scary for small business startups. This is because the planning process forces you to begin to examine the dream of your new business idea in the cold reality of daylight, which could burst the dream bubble or minimally cause you to see its imperfections.
Additionally, most people believe that once the business plan is written that it will be set in concrete, never to be changed. This is partly because they dread the prospect of revising their business plan, especially if it is a lengthy document.
The Business Plan Psych-out
I once had a client, whom we will call Becky, who was taking a multi-week business planning class while she was working with me on her marketing strategy. Her business planning class was structured such that any student who finished the class would be reimbursed their registration fee of approximately $250. The logic behind this offer was to motivate the students to complete their plans. The business plan for the class did not have to be perfect or even the final version. It just needed to be completed and presented to the class. The reimbursement offer was simply to compel students to go through the process of writing the business plan from start to finish one time, given that a business plan will typically need to be modified multiple times.
However, even with this reimbursement offer, at least half the students would drop out of the class without completing it. This is at least partly due to the fact that facing the reality of actually launching your business idea can be pretty intimidating. (Undoubtedly, students were also nervous about making a presentation, especially if they were concerned that their business plans were not “perfect.”)
In fact, Becky freaked out just before the last class and was about to quit. This was not a great idea, partly because Becky was on a very tight budget, so she really needed to have that class fee reimbursed. I had to explain that the business plan was simply a snapshot of whatever information Becky had gathered up to that moment in time. In her presentation, Becky could clarify what she still needed to find out and then modify her plan again later after she had gathered more information. As to making the final presentation, Becky had an added advantage. She had worked in sales. I explained how making this presentation was similar to making a sales pitch to prospective clients, especially when she did not have all of the data she needed. Becky calmed down once she understood that things did not have to be perfect. She made her presentation and got her class fee reimbursed.
However, in her class, over half of the other students dropped out. Obviously, Becky was not alone in her fears.
Reframing the Business Planning Process
If you feel extremely challenged by the business planning process, you might want to start with a business plan format that is a bit less intimidating. Some examples are given in The Right Brain Business Plan book by Jennifer Lee and The One Page Business Plan book by Jim Horan.
While developing your plans for your business, consider the following to help you reduce your fears:
- Business planning can be a wonderful journey of discovery about both your business, as well as yourself. It is a bit like a treasure hunt, where you are searching for hidden gold nuggets of valuable information to help you prove that your business can be profitable. If you uncover any unpleasant surprises while digging for information, it is much better to discover those before launching your business. That is because it gives you the opportunity to modify your plans before you begin to spend your money.
- Most experts nowadays recommend that the written business plan be brief, between 1 to 5 pages, even if you are pursuing investors. Please note this is in contrast to the mountain of papers you may gather while doing your research. The written business plan should be a high level summary of what you learned, plus appendices for important details such as financial projections, staff bios, etc.
- Remember that the written business plan overviews what you have learned so far. In other words, it is a snapshot of a particular moment in time. As I mentioned earlier, as soon as you put your pen down (or stop typing), the business plan essentially becomes out-of-date. In other words, don’t sweat the minutiae. Focus on creating a high level overview of your idea in the written business plan.
- Once the business plan is drafted, reread it as if you were a potential investor in this new business and knew nothing about it. Consider what questions you would want answered if someone else approached you about investing in this business idea. Most of the time, you will discover key facts that you accidently left out of the plan, such as forgetting to describe the contingency plan if your one and only supplier gets hit by a natural disaster. *
- Since the business plan is a snapshot of a moment in time, that means you should periodically consider updating it. Obviously, when the business plan is shorter in length (under 5 pages), this is much easier to do. Updating your plan allows you to quickly revisit the assumptions you made initially and determine whether any changes need to be made.
How Much Business Planning is Needed?
My clients and students ask all the time about what is “enough” planning for launching a business. The reality is that planning is an ongoing process, especially when the business is up and running, because that is when you will learn the most. Essentially, your business is a big project, which needs to be planned and managed as you move forward.
Therefore, you need to strike a balance between the list of what you do not know today about your business and the amount of your savings which you can afford to put at risk. In my experience, no matter how much planning you do upfront, small business owners will typically change one or more things about their business within the first few months. This might include their business direction, the product or service they planned to offer, their target market, their messaging and the list goes on. This is simply because you cannot fill in all the gaps before you start. You need to accept that you will learn as you go.
Try to produce at least a draft of your written business plan, if not the final version, within a few days or a couple of weeks just to get you started. If your initial business idea does not appear to be viable, then see if you can transform it into another business idea and keep moving forward.
Let me know what techniques you have used to reduce your own business planning fears.
Best wishes on joyfully creating your business plan!