Contrary to what myriad Internet sites would have you believe, there is much more to small business planning than a good marketing mix and solid financials. Whether you want to sell the next big thing or you simply want to rev up sales and profits for an existing operation, no business plan template will adequately address the complex psychology of being an entrepreneur, especially a successful one.
To illustrate what I mean, let's pretend you aspire to be the next coffee shop ingénue. You have articulated a comprehensive business plan; you have chosen your product lineup, location, promotion plan, and pricing strategy; and you have snagged some decent financing to keep you running for at least a year. On paper, you are a coffee empire in the making. “Great!" you think to yourself. “Let's get started!"
You proceed to sign the lease, shell out some bucks to a lawyer and an accountant, order a few gazillion pounds of coffee beans in anticipation of your success, and open for business. About six months and a few hundred lattes later, you realize that you do not possess high tolerance levels for the teen angst, high turnover, and sleep deprived yet incredibly nitpicky about extra-hot-no-whip-non-fat-double-mocha-latte-now-or-I’ll-go-postal cranky clientele that have suddenly become an intimate part of your life. You despise this situation but also realize that it will probably be your reality for many years to come, or at least until you can make enough margin to take a day off and enjoy a five-dollar coffee poured for you across the street at Starbuck’s.
Perhaps this all too common scenario points to one explanation for the alarmingly high failure rate of small business start-ups in North America. The Business 101 textbook explanation of this phenomenon would state that failure to plan is the root cause of most small business shutdowns. Indeed, without some kind of road map, inspiration can quickly turn to chaos if not complete financial ruin. But even the most well crafted business plan cannot cement the road to success, and an entirely fabulous product is no guarantee either.
Work-at-home business gurus, Paul and Sarah Edwards, cite two independent studies involving a number of successful entrepreneurs. Both studies concluded that business plans are overdone in many cases and their importance even overemphasized. What is needed, the Edwards say, is a succinct plan that uncovers key aspects of the market you wish to pursue and a simple roadmap for pursuing them (www.workingfromhome.com/pages/faq.htm). Of course, in approaching the planning process this way, you are more apt to make strategic changes when necessary because you will be less “invested" in the document itself and more interested in doing whatever it takes to succeed.
Failure to plan is a symptom, not a root cause, of small business collapse. The true “illness” lies within the heart of western entrepreneurship and the bizarre twists and turns it has taken in the information age. Get-rich-quick schemes abound in magazines and on the Internet, yet the only ones getting rich from these programs are the passionate individuals who envisioned the intricate pyramid of wealth in the first place. However, one need not take such an unethical path of deception toward financial independence.
My overpriced but thankfully small “l” liberal education taught me something I have not seen in any business textbook: Determine the correct questions before seeking answers. In saying this, I am not at all trying to sound literary, highfalutin or Stephen Covey-esque (loved 7 Habits by the way). I write only what I know from observation and experience, and it would seem to me that you cannot derive health, happiness, or wealth from something that does not reflect your personality, your vision of your best self, or your basic code for living.
Money in the hands of an entrepreneur who does not know himself might as well be lumps of coal. And a business plan written by such a person is not worth much more. No bank loan or angel moneys can replace the value of introspection. Some questions you must ask yourself:
-> What are my reasons for pursuing this venture?
-> Will those reasons be enough if I don't turn a profit in the first five years?
-> What will I have lost if the business fails? What will I have gained?
-> Does this venture reflect who I am? Or am I only trying to be someone I think I “should” be?
Such questions should be fleshed out long before you begin typing up that business plan. How you honestly answer those questions should subsequently color every element of your marketing mix. Passion must precede planning. This authenticity will shine through in everything you do and say thereafter, and—in this day—there is nothing so irresistible to your prospects as authenticity.
****** Karri Flatla is a business graduate of the University of Lethbridge and principal of snap! virtual assistance inc. , a small business consulting firm providing online marketing services to the progressive entrepreneur. Karri also produces Outsmart, the newsletter for small business with big purpose. Visit http://www.snap-va.com for more information.