Forbes Article: The Document That’s Key To Becoming A World-Class Entrepreneur Posted on 11 Jan 18:01
The Document That’s Key To Becoming A World-Class Entrepreneur
Successful business owners are not usually “fly by the seat of their pants” entrepreneurs, but rather everyday people who employ a sound planning process that details their business plan, avoids mistakes and minimizes risk. That process should be detailed in a comprehensive business plan that clearly defines their business, identifies their goals (both short- and long-term) and serves as their company’s roadmap for success.
A business plan also helps business owners hire the appropriate people at the right time, schedule capital expenditures, manage cash flow and handle unforeseen complications. It organizes key information about their company, their capital requirements, their operational needs and how they will market their products and/or services. The business plan is the repository of all proprietary information (financial, operational, etc.) about their business.
Many business owners, however, hesitate to update this critical document they created for their banker, their investors or their franchisor when they decided to purchase their business in the first place. They cite a fast-changing marketplace or not enough time. But just like a builder wouldn’t work without blueprints, business owners should avoid heading to market without a detailed plan for their success.
So what goes in a business plan? The body of the plan can be divided into four distinct sections:
- Description of the business: What does your business do, what makes it unique, what products or services does it offer?
2. Marketing: Who is your target audience, who are your competitors, how will you go to market?
3. Finances: What are your income projections, what are your projected costs, what are your cash flow requirements?
- Management: Who are the key players in your organization, what are their roles and responsibilities, what are their experiences?
After completing the business plan, the next step is to create a sales and marketing plan that supports your business plan. So what goes into a successful sales and marketing plan? At a minimum I suggest you include:
- Your vision/mission
- Objectives/key performance indicators (KPIs)
- Success formulas
- Activity levels (minimum, target and overachievement)
- Competitive environment
- Market definition and segmentation
- Market messaging (internal and external)
- Infrastructure requirements
- Milestones/contingency plans
The most successful business owners review their business plan on a quarterly basis and update their plan throughout the year based upon changing market conditions.
Once these plans are in place, effectively grow your business by following three key steps:
- Know your numbers. Before you create, amend or update your business plan, take a hard look at your numbers. Specifically look at revenue growth, cash flow and margin performance, but more importantly, look at profitability. The more successful franchise owners I know establish sales metrics and sales management KPIs to check the pulse of their business on a weekly, monthly and quarterly basis.
- Track your competitors. Be aware of who your competitors are and how they position themselves in the marketplace. Constantly evaluate your competition and your competitive differentiation.
- Staff up for growth. Adding staff increases overhead, but being understaffed might keep your business from growing at all. For instance, if you’re considering adding a salesperson, ask yourself, “How much revenue does this person have to generate to pay for themselves?”
Given all the changes taking place in the business world today, more and more people are starting their own businesses in an effort to control their future. Unfortunately, about 25% of new businesses fail in the first year and 50% of new businesses fail within the first five years, according to 2016 statistics published by the Small Business Administration (SBA). The ideas I shared will increase your chance of being a successful business person as well as being recognized as a world-class entrepreneur.
Originally posted at Forbes Online.
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