Back when you were all wide-eyed and energized about starting your business, you may have written a business plan. It held all of your audacious goals, romantically defined your market opportunity and came with a beautiful spreadsheet of your yet-untested financial forecasts. You even took your limited desktop publishing skills to it, so the document would look extra snazzy.
Well, where is your business plan now? If you haven’t reviewed it in 3 months or more, guess what – it sucks.
Even if you do read and revise your business plan regularly, it might still be unrealistic, incomplete, or otherwise less useful to your business than it could be. Here are just three of the many ways a business plan can suck.
1. Your revenue or profit forecasts follow a hockey stick pattern.
Let’s face it, folks: most businesses do not explode out of the stratosphere in their first three years, and yours probably won’t either. If for some reason your sales did take off like a bear running from a cat, you’d likely need to hire a whole bunch of staff really fast to accommodate the volume. I’ve seen dozens of business plans that don’t adequately assess their labor costs and their profit forecasts look ridiculous as a result. Experienced investors and lenders know that it takes people to run a financially successful company that makes millions. Lots of people. Lots of good people. (By the way, did you outline your hiring process in your business plan?)
2. You claim that you will capture a share of “just 1% of the market.”
You can’t. Well okay, maybe you can. Are you selling robots that stuff envelopes for you, eliminate the need for file clerks and only cost $1,000 a year to operate and maintain? You could probably get 1% of that market. But your pasta sauce? The one that’s “like nothing else on the planet”? I hate to break it to you, but there’s actually a lot like it on the planet – and the pasta sauce market’s worth over $2 billion. Just because you can tell your sauce apart from the rest doesn’t mean that your buyers can. It’s going to be really hard to capture 1% of any market (but if you do, please let me know, and I’m your loyal customer for life).
3. You assert that you have no competitors.
You have competitors. Don’t even try to argue this. A few types of businesses have no direct competition, but every business has some kind of rivalry. Think of it this way: no matter what market need you’re serving, your future customers are currently meeting their needs in some other way. Look at how they’re behaving now and who they’re buying from. Those are your competitors. Even if you open the only organic coffee shop in town, you’re still competing with McDonald’s.
Are you guilty of having a sucky business plan? Have a read through and checked whether you’ve made any outrageous claims about your business’s potential?
Better yet, have someone else read it for you; someone who you trust to give you honest feedback. The kind of person who would tell you if you had spinach in your teeth®.
With recommendations from your trusted readers in mind, you can now set time aside to rewrite the parts of your business plan that no longer make sense. Review it quarterly (ideally with your staff) to make sure that you’re staying on track, and make adjustments if you need to. A business plan is never really complete; it’s a place to start – a benchmark, if you will – and you can change it as fast as your business changes. So, as you follow your entrepreneurial journey, make sure you un-suck your business plan as often as you need to.
And each time you’re done, for goodness sake people, proofread.
So, what do you think? Are you going to dust off your business plan – or maybe write one for the first time? I’d love to hear your thoughts in the comments.