When you’ve got a basic idea of the business you want to build, then you’re ready to put together a business plan.
You don’t have time to write a 90-page plan. Not when you’re launching your business in 90 days.
So, what should you focus on? Crunching the numbers and getting feedback as quickly as possible from potential customers. Here are five tips to get started:
- Start with the last page first. In most business plans, the finance section comes last. Here’s the problem, if you get to the end of your business plan, only to find the strategy you laid out doesn’t pencil out, you have wasted valuable time. What I recommend is to start with the the financials first. Once you have figured out how to make money and generate free cash flow, the rest of the plan will write itself.
- Use conservative estimates. Most entrepreneurs I know are natural optimists! They need to be in order to overcome the challenges they face each and every day in their business. Yet sometimes an entrepreneur’s optimism can become their achilles heel. Their rose-tinted view of the world prevents them from seeing reality. This is often the case when it comes to projecting income and estimating costs. Don’t base your business plan on best-case scenarios. They rarely happen. Take a tough-love approach to your projections. The long-term survival of your business and your personal bank account depends on it.
- Manage against your plan. Once you’ve crunched the numbers, don’t put them away. Instead, use your model as a tool and everyday reminder of how you need to be running your company. The worst thing you can do is ignore or manipulate the numbers based on a gut feeling. By tracking your company’s performance against your financial model, you will put yourself in the best position possible to identify gaps, make adjustments, and improve where necessary.
- Choose your feedback partners wisely. A mistake I see entrepreneurs making all too often is getting feedback from the wrong people. Sure, you can show your business plan to family and friends. They’ll want to encourage you and support you, which is great for your motivation levels. But don’t take their feedback too seriously. Most people who know you will tell you only what you want to hear. For valuable feedback, you need to get your idea in the hands of potential customers as quickly as possible, then take what you learn to iterate and improve your plan.
- Leave your desk behind. You can’t prepare a solid business alone, sitting in your office chair. You need to get out into the market and talk to people. While you’re working on your business plan, at least half your time should be spent out of the office and in front of potential customers, partners, vendors, etc. This is especially important if you’re entering a new industry where you don’t have experience. Hearing what others think will give you a better perspective.