Working with start-ups and other early-stage ventures, as well as even more established entities, reveals the undeniable truth that planning is often relegated to the realm of theory or executed as part of an initial checklist to secure outside funding, then promptly forgotten. This is a mistake which can haunt or even cripple a business, and is one that is best avoided by keeping a handful of axioms in mind.
The following list of “Seven Core Elements of Successful Business Planning” is intended to serve as a guide for both enthusiastic (i.e. by choice) as well as reluctant (i.e. forced by circumstance) entrepreneurial souls to help maintain your focus and gain traction in the market as your business matures.
- “Know Yourself.” It is vital, whether you are a lone individual selling a product or service or a corporation of any size to be able to dispassionately assess both your strengths and weaknesses, so you can capitalize on the former and minimize the latter. While this may seem self-evident, many businesses fail to thoroughly undertake this exercise or make the mistake of treating it as a one-time thing, when in reality, circumstances change over time and what were once strengths may no longer be so, while conversely, weaknesses may have dissipated, multiplied or otherwise shifted. It’s a good practice at least once per year to undertake a SWOT analysis to see if changes in strategy are necessary.
- “Find Your Market Niche.” All too often, it’s human nature to want to be universally liked or otherwise in demand. However, for most brands, this is a tall order, and in the effort to accommodate and please everyone, the product or service invariably winds up diluted and really pleases no one to any great extent. This phenomenon is often witnessed when committees or other forms of bureaucracy get involved in the process, and is all too often exacerbated in government. Fundamentally, it is essential that you find a way to be valuable to a targeted niche, ideally one that can meet the prices that you anticipate charging for your solutions.
- “Know the Competition.” As obvious as this may sound, many businesses blithely commence operations with little understanding of what makes the competition tick, or worse, assumes or states that it has no competition, which is the mark of either an arrogant fool or an incompetent. There’s always competition, at the very least indirect, for any product or service with a definable consumer. Don’t make the mistake of believing it hasn’t been done before, because chances are, it has, and if it is no longer in existence, there may be good cause for this. Of course, this doesn’t mean that you may not improve upon another’s offering, but that’s a different story altogether.
- “Decide What Metrics Are Important – And Measure Your Progress Regularly.” This is crucial in understanding whether or not your business is succeeding under its current strategy, or requires a course correction to avert disaster or to capitalize on shifting market trends or emerging opportunities. Anything that is quantifiable can be measured, and as a business owner, executive or stakeholder, or even just an employee hoping to remain gainfully employed in uncertain times, it’s vital that you optimize your performance. While the metrics which are used may vary widely depending on the nature of the business, these should be identified from Day One and monitored closely, and if circumstances change and necessitate the inclusion of new metrics, be proactive and do so. As a final note, don’t be willing to discard or exclude metrics simply because they do not cast the business in a favorable light – that is not a legitimate reason to bury one’s head in the sand.
- “You Can Never Have Too Much Capital.” Two of the leading causes for business failure are under-capitalization (especially at inception) and issues managing cash flow. While it’s true that money can be easily squandered or flitted away on ill-conceived projects and initiatives, this does not negate the reality that having ready access to money (i.e. liquidity), especially cash, is an enormous competitive advantage. If you are raising money, be sure to challenge your own assumptions as to the pace at which revenues, never mind profits, will flow, and always assume that your expenses will be higher than initially projected and revenues lower. Failure to do so tends to have adverse consequences down the line.
- “Have a Strategy (Preferably a Good One).” If you’ve been around business long enough, you come to realize that a surprisingly large percentage lack any form of coherent strategy that can be easily articulated internally, let alone to outsiders. Many businesses are reactive rather than proactive, blindly groping their way through the darkness, hoping to stumble upon an acorn every now and again. This isn’t a strategy, and it isn’t viable for very long. While strategies may evolve or change over time (and correspondingly, impact tactics), they need to be aligned with clearly specified goals. If you don’t know where you want to be, you’ll have a devil of a time getting there.
- “Be Unique (And if You’re Not, Give the Impression You are Anyway).” It’s common parlance among marketers to speak of “unique selling propositions” (USP’s) which make one business different from another. Sometimes these are actually true, but more often than not, they speak to the need to position your business to meet the psychological needs of your target customer. Fundamentally, there is nothing wrong with this, as nothing in business actually happens until someone makes a sale, and part of the process of engaging with a prospective client or customer is convincing the party that you have something worth offering to them that they can’t find anywhere else. They may find something similar (perhaps even strikingly so) to your product or service, but they’ll miss out on the benefits (both tangible and intangible) that you bring to the table if they opt to go with another option. So it’s your responsibility to make sure this doesn’t happen.
By implementing the above list, and regularly revisiting the issues raised, you will give your business an increased chance of successfully weathering economic storms when times are tough and thriving when optimism returns to the market.
Have a business question or want to learn more about business planning and other related services? Black Rock Consulting is available to assist you with solutions that meet your needs and achieve results.