Stepping into almost two decades of helping guide businesses towards success and there ’ s one thing I ’ ve learned about nearly all business plans : they ’ re useless . Let me explain .
Imagine shopping at IKEA and buying a chair , a dresser , and a nightstand . You open each box and find identical instructions for each along with a note that simply reads : “ If any of these instructions don ’ t apply , ignore them .” Nightstand doesn ’ t use screws but your chair and dresser do ? Ignore it . Dresser has pegs but the other two pieces of furniture don ’ t ? Ignore it . That is precisely what is happening with business plans these days . You find a form online or worse , you pay an “ expert ” $ 10,000 or more to draft one for you . The template is the same regardless of your industry , product / service , or financial requirements . You simply check the boxes you need and delete what ’ s not required .
“ If you want to write an effective business plan – one that actually does something for you , you need to use common sense and keep it simple .”
If you want to write an effective business plan – one that actually does something for you , you need to use common sense and keep it simple . You also need to understand why you are writing the plan in the first place . Is it to help guide you in running your business ? Is it to raise money ? Is it part of your succession plan ? Knowing why you need a plan will help you prepare it for the correct audience and answer the right questions .
Regardless of your audience and motivation for writing the plan , it ’ s all about the questions you ask . Here are the three critical questions you need to ask to write an effective plan :
What does the business do ?
Knowing what your business will do is as important as knowing what it will not do . They key here is to be specific and narrow down the details of your business . I ’ m an author , speaker , lawyer , and consultant . That can mean a lot of things so it ’ s critical that I know exactly what I will do , which also highlights what I won ’ t do . I don ’ t litigate , I don ’ t practice criminal law , and I don ’ t do any type of immigration work . Doing “ law ” is generic , but writing down that I practice transactional business law is specific . Write down precisely what you do , but simultaneously write down what your business will not do . This part is the key of staying in your lane and ensuring investors and partners understand your scope .
How will the business make money ?
There are dozens of ways to make money in any type of business . If your core business is appliance sales , can you make money from installation ? Repairs ? Product reviews ( i . e ., YouTube monetization , etc .)? This question isn ’ t just about identifying revenue sources , it ’ s also a redundancy check of the first question to ensure you are staying on course . If you have money coming in from five income streams is it because you ’ ve planned for your business to generate income in that way ? Or , is it because you haven ’ t fully defined what your business will do and the money just comes in randomly from unintended business activities ? The tighter you define how the business will make money ,
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