Yes, You Absolutely Need One of These
Write a Sensible Plan. It has become trendy over the past 15 to 20 years to say, “I don’t need a business plan. That’s passe. I get up every day and roll with it and, so long as I have a general sense of where I need to be, I’ll get there. I’m an entrepreneurial athlete!” But here’s where I disagree. I go with Yogi Berra, “If you don’t know where you are going, you’ll end up somewhere else.”
The key is to write a sensible business plan. The business plans of old are simply nonsensical in today’s world. 100 pages of fine print detailing a course of action based on a set of assumptions that are outdated as soon as the file is created.
Today, a sensible plan is one that sets out your assumptions supporting the business case, outlines the business model, details your objectives and desired timing for achieving them, describes the team that will be executing the plan, assigns accountabilities for executing the plan, and provides financial projections for a base-case scenario and perhaps some alternative scenarios. It might be 10 pages, it might be 40 pages. The length is unimportant, provided it is sensible when it is made. The reality is that circumstances change and virtually every plan becomes outdated almost immediately. Hence, the next point.
Make the Plan a Living, Breathing, Organic Plan. In today’s high velocity, highly complex world, I like revisions to plans as often as necessary. If it’s a sensible plan, as opposed to a gazillion-page complicated plan, it should be relatively easy and quick to revise when circumstances change. The key is to get the senior leadership team to buy into the initial plan and a set a cadence for revising it on a regular basis. I analogize the situation to that faced by an ocean-based sailing team in their naturally chaotic race environment. They must adjust constantly – in real time - to changing currents, winds, variations in the performance levels of team members, equipment problems, among other factors.
Understand Your Audiences. The plan should serve your purposes. They will vary from situation to situation, but generally your team needs you to have a plan. Your investors need you to have a plan. Your strategic partners need you to have a plan. Perhaps your customers or clients need you to have a plan.
Create a Plan That Serves All Audiences. I asked a client once to see their business plan, and they set several on the desk in front of me. “Here’s one for our investors. This one here’s for our lender. We use this one here for senior leadership…” I said, “Whoa, let’s start talking about a single, integrated, holistic plan that serves your various purposes. You are confusing the hell out of everyone!”
Be Prepared to Pivot. Sometimes you’ll make a mistake in starting or trying to grow your business. Sometimes the market changes against you. A tailwind becomes a headwind. The beauty of any of these situations is that you learned something very useful, and you are better prepared for success on the next try. You are learning the value of failing forward.
Twitter (now X) started as a podcast subscription network called Odeo. Slack began as an internal communication tool for a gaming company. YouTube launched as a video dating site. Starbucks originally sold coffee beans and equipment. Nintendo was started as a playing card company over a century ago.
It is almost a certainty that regardless of your original plan, you will need to pivot. The two key questions to ask are:
· What do we pivot to? My answer is to dig back into How To GROW Your Business and start over. You undoubtedly either made a mistake or the market shifted on you, and you need to make sure your failure moves you forward.
· When do we pivot, given you want to be neither too early, nor too late? Yes, this is the tough one. My advice to you is found in several places in How To GROW Your Business. Research deep and wide for relevant data. Call your coaches and mentors. Ultimately, use your intuition.
GROW and SELL Advisors, wholly-owned by Traversi & Co., LLC, is a premier sell-side M&A advisory firm – a boutique investment bank – serving the lower middle market. Visit us here.
For a short video clip on this topic, click here.