Tag Archives: Industry Word

10 Business Plan Myths That Hurt Your Business

Business Mistakes, business plan,

The need for good business planning is as strong as ever, and the potential benefits are as important as ever. Every business owner ought to have a business plan. But the best strategies for business planning are different than they used to be. And these 10 pervasive business plan myths get in the way, much too often.

This post includes the 8 business plan myths that I listed on my March 2 post on the SBA Industry Word blog, plus two others that weren’t included.

Why does it matter? Because business planning, done right, is a management tool that can help you steer your business.

1. A business plan has to be long (false)

Not necessarily so. A business plan can take whatever form is most useful, even if that’s just a few lists and tables.

2. A business plan is hard to make (false)

It doesn’t have to be. List your key strategy points and key tactics, and a few important major milestones (like deadlines, tasks, the new launch or new website, and necessary hires). Include projected sales, costs, expenses, and cash flow. Voila! You have a business plan.

3. Nobody creates business plans anymore (false)

Well-run businesses use business planning the right way. They keep a simple, lean plan up-to-date and refreshed. The review and revise it monthly. In straw polls I’ve taken for years at management workshops, the best 20% or 30% of the companies represented have a management process that includes a lean business plan as well as regular reviews and revisions.

Smart startups use basic business planning to help them see starting costs, projected early sales and spending, cash flow, and key strategy points and milestones before they launch. Then, they review these monthly.

4. Business plans are for only startups (false)

True, well-run startups generally use business planning to help figure out which steps they need to take, and which resources they need. But that doesn’t mean mature businesses can’t use business planning to constantly set milestones, strategy reminders, and forecasts. Mature businesses keep a business plan up-to-date, and review and refresh it often. The more a business grows, the more it can benefit from good business planning.

5. You can’t plan because change comes too fast (false)

In the real world, a good business plan manages change. It isn’t voided by change. You keep the plan current by making revisions as real events unfold.

It’s like dribbling in basketball: if you plan to go a certain direction, and the other team blocks you, then you go a different way. Having a plan means that you’ll have the information you need to make quicker, easier, and more natural revisions.

6. Forecasts are useless (false)

Forecasts are almost never accurate. But having a forecast gives you a tool to instantly compare what you expected to what actually happened (we call that plan vs. actual analysis, or variance analysis). Then you make business decisions to adopt to change.

Are sales better than expected? Then you look at the causes, and adjust marketing and other expenses to take advantage. Not what you expected? Use your plan vs. actual analysis to make the best changes.

7.   Having a plan means you have to follow it (false)

There is no virtue whatsoever in just sticking to a plan because you have a plan. It has to make business sense. Good business planning is about a bare-bones plan and tracking with review and revision to make it useful.

When things change, your plan changes. The benefit is in the tracking and information that serves like a dashboard, helping you manage the change and make adjustments.

8. All business plans need market research (false)

I read and review lots of business plans from mature businesses that don’t include fancy market research. Business owners have to know their market, and taking a step back to review your market is a good idea. But with good planning process in a business, you can stay on top of your market. You don’t need to include market research in every version of your business plan.

Only in special cases will you need market research to prove your market to outsiders. For example, startups looking for investment, or businesses applying for loans, might need market research. Mature businesses know their market and plan without the research requirement.

9. Investors don’t read business plans (only half true)

I was in an angel investment group for eight years. We didn’t read business plans for all the proposals that came in. We rejected many on the basis of summaries alone. For those that interested us, we invited them to present their pitch decks. From there, we narrowed the list down further.

For those that remained, the business plan was a vital part of due diligence. And for all of them, they should have had their bare-bones business plans made before they wrote their summaries and pitch decks. Without the business plan, the pitch and the summary are like movies made without scripts. Ultimately, seeking investors without a plan doesn’t work.

10. Nobody needs a business plan

Does every business need a plan, strictly speaking? No. But every business would benefit from good business planning.

People, even experts, still say nobody needs a business plan, but only because they are locked into the decades-old mentality of the big business plan document. If we redefine the business plan the way it should be, as a flexible record of key strategy points, tactics, milestones, and essential numbers, then all those experts would agree with me – that every business deserves a business plan.

10 Marketing Plan Essentials for 2016

Marketing, Planning Fundamentals,

(Note: I posted this last week on the SBA Industry Word blog as 10 Essentials of A Marketing Plan in 2016.)

10 Marketing Plan EssentialsClearly, technology has changed marketing a lot. We fast forward through ads on television and block them on our devices. We have amplified word of mouth in social media. We pour over analytics and metrics. But what about the marketing plan? Has technology changed marketing planning?

One thing for sure: The fundamentals still apply. As much as ever, marketing is still getting people to know, like, and trust your business. As much as ever, marketing still needs defining target markets, knowing those market segments, reaching the right people with the right message. Pricing is still the most important message, and the lowest price is – as always – not necessarily the best price.

Another thing for sure: the marketing mix, the tactics, are changing rapidly. Goodbye to the yellow pages, hello Facebook. Goodbye public relations, hello social media. Goodbye advertising, hello content marketing.

And where is the marketing plan, in all this? Let me suggest 10 marketing plan essentials for 2016. The fundamentals still apply, but the specifics are changing.

  1. Target Market. The better you define it, the better for the marketing. Experts recommend describing an ideal target customer in detail. Don’t try to please everybody. Instead, please some specific kinds of buyers who have the right set of needs, habits, locations, etc.
  2. Messaging. A summary of the main tag lines, key selling points, value proposition and so forth (we could call this messaging).  There are a lot of different jargon words for this, so be flexible.
  3. Media. Discussion of media, which almost has to be social media and content marketing these days, but used to be advertising budgets, placement, and so on. I’m growing more interested in taking steps beyond just content marketing, to distributed marketing, and real engagement. That means something more than “post and pray.’ As you think about this topic, think about where your potential customers will see your message. What else do you do to help the right people find your message? To track what they say about it?
  4. Pricing. You have to make pricing match product or service, market, or messaging. Don’t assume that the lowest price wins. Pricing is your most important marketing message. Would you buy day-old sushi because it’s cheap? Your price needs to synchronize with your product offering and your target market. If you discount excellence, it becomes less credible in the eyes of your potential customers. And if your strategy is selling an undifferentiated lowest price product or service, make sure that matches the rest of your marketing
  5. Channels. For product businesses you have the classic question of channels of distribution, either direct (usually web and mobile these days) or via distributors and retail, or direct to retail. Information and service businesses need to consider channels too, even though the channels are marketing channels, such as web and mobile. We all need traffic of one sort or another
  6. Promotion. These days promotion might be as simple as consistent presence in the main social media platforms. It might be email marketing, advertising, affiliate sites, public relations, price promotion, and events.
  7. Tasks and major milestones. Every good plan requires some specific tasks and major milestones to make it concrete. Otherwise it’s just theory. You need to be able to track progress against the plan. Milestones help us get things done. We work towards goals.
  8. Important metrics. It takes real numbers to actually work a plan. That might be sales, web traffic or store traffic, leads, presentations, seminars, conversions, tweets, posts, likes, follows, or whatever. Make it measurable.
  9. Review schedule. Keep your plan as short as possible, just lists and tables, because it’s only good for a few weeks before it needs revision. The real world keeps intervening. You need to plan ahead for a monthly meeting to review results and revise that plan.
  10. Budgets. You have to manage the money. A good marketing plan needs to include budgets for expenses, and the sales that result from the different activities.

Some Recent Blog Posts Elsewhere

Blogs and blogging, , , ,

Because you might be interested in these … 

I posted How to project expenses for a new business overnight on the SBA (small business administration) Industry Word blog. It’s a step-by-step how-to piece on exactly what it says in the title. 

Yesterday and today I posted two different posts on James Altucher’s Ultimate Cheat Sheet on Starting a Business, posted on TechCrunch over the weekend. The first was good advice, bad advice, land mines on the path to heaven, on gust.com, yesterday. The second was James Altucher On How and How Not to Look Professional Raising Investment Money on Up and Running. 

Obviously I liked his “cheat sheet” post.

 

 

3 Business Planning Posts in Different Places

Back to Fundamentals, Business Planning, , ,

I’ve been busy this week, with posts about business planning appearing on my column at entrepreneur.com, my post on Industry Word, and a post on Amex OPEN Forum. Meanwhile, I had one of those travel disasters — boring, you know the drill — getting out of San Francisco. Well, not getting out of San Francisco, stuck instead in an airport hotel. So it seems a good time to share those three other posts:

  1. First, on my column at entrepreneur.com, 5 questions your business plan should answer. Hire people? Change locations? Change pricing? The idea is that if you keep a business plan alive, and maintain good planning process, then your business plan can answer those questions.
  2. Second, as a guest blogger on community.sba.gov, I posted 5 planning fundamentals for every business.
  3. And on Amex OPEN, the real heart of planning as management, steer your business with plan vs. actual.

All three of these are about real business planning, not just a business plan document, but running your business better.

(image: Dimitri Shironosov/shutterstock)