Sirens blare and traffic parts. Someone is rushed down the hall to the ER on a gurney. It’s an emergency—a business plan emergency!
OK, they’re not nearly that dramatic. It’s more like someone calls me in a tizzy, saying they desperately need a business plan ASAP. Their story goes something like this:
Scenario 1: Veronica Entrepreneur is starting her bistro. She’s got money in the bank, equity in her home, experience in the industry, and a decent credit score—everything her loan officer said he needed to get her business started. So Veronica starts negotiating the lease for her restaurant, hires an interior design team, and even starts reaching out to contractors and vendors. Veronica walks into the bank to solidify the loan and gets passed off to the business development officer. After handshakes, a cookie, and some schwag, the business development officer asks Veronica for her business plan. Oh snap!
Scenario 2: Justin Inventor has been prototyping his Next Best Thing app with his group of engineering buddies. They are just about out of cash, and Mom wants to know when she can clear them out of the garage. Justin puts together a great pitch deck that shows the problem the app can solve and how it can generate real value. He even describes how his beta testers responded. He networks into a couple open sessions at an angel fund and hones his pitch. Finally, he gets a response: a potential investor loves the concept at face value and asks to see Justin’s business plan. Oh snap!
Both scenarios illustrate the same point: sometimes, entrepreneurs put the proverbial cart before the horse. And yes, Masterplans.com helps people navigate this scenario in our business planning process successfully every day. We’ll work all weekend to crank out a quick-turnaround business plan—but you better believe it costs more, and it’s not ideal.
Whenever possible, we like to avoid business plan emergencies. And you should too.
Here are my top 5 reasons to avoid business plan emergencies, and how to prevent them:
- You’re trying to force a square peg into a round hole: If someone is pushing to build a business plan in a hurry, they’re often trying to force the business concept to fit the financials, market, and even the physical space needed to execute properly…when in the harsh light of day, their concept just doesn’t work. Slow down, be honest, and admit you need to go back to the drawing board.
- You’re focused on success, not customers: Sometimes entrepreneurs love their concept and think that’s all that matters, forgetting that customers’ needs should dictate everything. Turn down the volume on your desire for success, and instead tune into the potential for demand and true ability to monetize customer pain. How far do area residents in my radial analysis have to drive to get quality bistro fare? Does my app save time or money and give users what they want? Don’t rush to get a business plan just because you’re in love with your idea. Before you spend any money on development, assess market trends and customer needs.
- You haven’t thought through the financials: “I have an investor meeting tomorrow! Help!” Slow down, there. Solid financial forecasting is more useful than convincing someone to fund you, because it gets at the heart of the matter. After selling my first business, I wanted to open a swanky coffee shop (after all, I live in Portland). The first thing I did was build a financial model. I researched average square footage, determined my estimated rent, figured my COGS, looked into the build out, assets, insurance, etc. and then determined how many cups of coffee and croissants I’d need to sell in order to turn a healthy profit. I was startled to realize I’d either need to learn to be a barista or to import and roast my own beans to keep my costs down. I wasn’t passionate enough about coffee to schlep beans from sun-up to sundown. One of the most valuable things a business plan can do is provide a solid gut check. Do you really care enough about what you are proposing to give everything it takes to turn a profit?
- You’re trying to do too much yourself: Lots of young entrepreneurs try to wear every hat. But you can’t and shouldn’t--business concepts born in a vacuum of talent, opinions, and argument are often weak. Be real with yourself about your strengths and your weaknesses, and use an early-stage business plan to recruit top talent, commit them to the concept, and hear what they have to say. Then redraft the business plan. I guarantee that the more POVs you have from people qualified in their respective disciplines, the more refined your product/service and business plan will be.
- You’re trying to move way too fast: It’s a bit difficult to quantify, but there is real power in planning. If you put together a hasty pitch or go to the bank without doing your homework, it’ll feel like a gut punch when tough questions get asked. Ever hear the saying, “Luck favors the prepared” and “Fortune favors the bold”? These are clichés because they’re true. If you understand your market, you know when and where and how you want to do something, your confidence will translate into the support you need.
Instead of a business plan emergency, our most successful clients at Masterplans do these two things:
- They start planning early, often before they commit to the venture. Many clients use our planning process to vet the concept before they commit their own time and energy in building a team, aligning resources, etc. It’s a very inexpensive exercise to gain confidence in your future business.
- They revisit the plan often. Whether they do it on their own or utilize the expertise of Masterplans, successful entrepreneurs understand the business plan is a living document, a repository of changes, innovations, ideas, mistakes, and solutions. A disciplined entrepreneur will revisit her plan quarterly at minimum as a note-taking medium, and annually for an overhaul and to provide key insight and objectives for the year to come.
Your business venture is worth doing right. Give yourself the time and research you need, and you can easily avoid a business plan emergency.
Brent Butler is Masterplans' CEO. Connect with him on LinkedIn.
How to Create an Amazing Customer Experience
How to Minimize Risks as a Franchisee
What is Mezzanine Financing and Is It Right for You?
Are You an Entrepreneur?