Tag Archives: Business Plan

3 Reasons Why Your Business Plan Stinks

There’s a problem with your business plan. I haven’t read it. I don’t know what your product or service is, or what problem it solves. But I know this: there are holes in what you think is an amazing business plan, and you need to fix them if you want anyone to read it, let alone invest.

Most people never even finish reading poor business plans because they have learned to recognize instantly when an idea hasn’t been fully fleshed out, the entrepreneur doesn’t understand the problem they’re trying to solve, or when there’s just no evidence to support the claims being made in the business proposal. I go over how to write an effective business plan in my book on business success, in which I lay out the principles you need to know to write a convincing proposal that really does your idea—and the work behind it—justice.

Your Idea Gets Lost in the Details

Any good idea you have is lost in an overwritten business plan. Sure, people want figures and facts that will back up your business plan (market research, competitive analysis, budget estimates, financial projections for the first few years, etc.), but these elements should be referenced in your business proposal, not spelled out in full like a master’s thesis.

Unless you avoid common mistakes, people will spot you as a entrepreneurial wannabe.

Unless you avoid common mistakes, people will spot you as a entrepreneurial wannabe.

Hide the details elegantly; you don’t need to front-load everything into the proposal. If an investor is intrigued, they can drill-down into that cost analysis to see your staffing plan, your materials estimates and your projected revenue. Put those things in separate documents and keep the main proposal itself as a birds-eye view of the business plan essentials, as laid out in my book, MakeMillions.Com:

  • The problem that needs a solution.
  • Your solution to that problem.
  • Convincing evidence that your solution will work.
  • A non-sugar-coated assessment of the risks associated with your venture.

If you lay these things out in a simple, easy-to-digest form that doesn’t try to win readers over with jargon, your idea will be able to stand on its own. You’ll really have a good chance that people will read the whole proposal, and your research will show through in the organization of the data you’ve collected.

Your Market Research is Light or Nonexistent

If it’s evident that you haven’t done an exhaustive amount of research on the niche you want to occupy, people will simply pass your proposal over. In fact, I’d say that a proposal without research isn’t really a proposal at all; it’s just wishful thinking on paper.

No one will believe you can compete without understanding the current players in the market space you want to break into. No matter how impressive your product is, investors will want to be reassured that established players don’t already have something better in the pipeline. If you’re entering an already competitive niche, you’ll really need to spell out why you’ll be able to compete with the big players in the space, and that your idea is unique enough not to get lost in the crowd.

The worst thing you could do is leave out analysis of some of your obvious competitors in the space or ignore similar products to yours from even smaller players who may be poised to eat your lunch. If someone can find out more about your competition with a simple Google search than they can reading your proposal, they’re not going to take you seriously, and they shouldn’t.

You Don’t Talk about What You Don’t Know

Experienced investors and business people will be able to see blind spots in your plan. Do you? If so, you’d better spell them out in detail, describing exactly what information you don’t have that could impact the likelihood of success, and why you think you’ll be able to succeed anyway.

Every business plan involves some basic assumptions (about the economic climate, about customer demand, about competition, etc.), which you should spell out logically in order to show your investors and potential partners that your plan is firmly based in reality. Avoiding these subjects makes it seem like you’re either unprepared or being deceptive about the actual risks associated with the proposal.

Mike Mann, social activist and serial entrepreneur, is the author of MakeMillions.Com, a business book focused on making money in small business in order to better serve society. Read or download the book today for insight on his philosophy on wedding entrepreneurship and charitable goals

What are Best Practices?

My business book describes many “Best Practices.” A Best Practice is an ideal procedure for your business. It might be a certain hiring strategy, a certain production plan, or a certain marketing technique. You must employ a Best Practice in each of these areas to be successful. Get the right people on your team, find the most efficient way to produce your goods or services, and get your target audience to buy what you sell. Together, multiple Best Practices make up a business strategy that puts you ahead of your competition.

How to Identify Best Practices

To identify your Best Practices, test everything you do in your business. Document every procedure in your company and check it for efficiency. Make certain everything your business does is effective. To identify the Best Practices of other companies, study them and figure out what makes them successful. When you find their strength, you should figure out a way to imitate that strength or to capitalize on your existing strengths to surpass theirs.

The business book MakeMillions.Com highlights several excellent Best Practices for you to start with. Some of them are:

  • Pay attention to details, especially when communicating!
  • Be polite and patient with customers and clients
  • Work quickly and constantly strive to improve your practices
  • Spend 85% of your time on profitable activities and the remaining 15% on improvement
  • Make sure you and your team are constantly reading to stay up on new practices

The Origin of Best Practices: Kaizen

The concept of Best Practices actually comes from the Japanese term “kaizen,” meaning good and continuous improvement. Kaizen includes five principles: tidy, orderly, clean, standardized, and sustained.  An attractive and organized workplace that is free of clutter is key to maintaining productivity. Employees in such an environment will naturally be more efficient and effective. Then you can work to find what is most efficient and effective and make that your standard operating procedure. Once that standard is in place, you must work hard to sustain your success.

Best Practices depend greatly on context and will change as your industry changes. To sustain your success, you must review and revise your Best Practices often to make sure they are still best for your circumstances. To stay ahead of your competition, you will probably need to make changes in your products and services, your marketing, your business plan, or all of the above. Each time you make a change, your business will be stronger for it. You will be able to leverage your business to meet your goals.

Leverage your Best Practices for Success

Once you have identified the Best Practices for your business, you must use them to leverage your success. To implement a Best Practice, document it by describing the practice and offering a brief explanation of why it is best. You will remember the Best Practice better, and your team will be able to adopt it more easily. Once you and your team have adopted good procedures, you can focus on growth.

Your business strategy must constantly evolve as the market changes. Your target audience may grow, shrink, alter their preferences, or change in other ways. You must adapt with them in order to keep your edge in the market.

Everything you do in your business must be bankable. While there are some necessary activities that do not make money, the vast majority of what you do should generate strong profits. When you get to this level of operation, you will never need to worry about breaking even. Instead, you will be able to focus on staying ahead of your competition and keeping the market share you need to succeed.

Take Nothing for Granted: Write a Plan!

The market changes rapidly, and you must constantly change with it. You can never take anything for granted, especially what happens within your organization. Your business will never make millions unless you constantly reexamine every process in your company. Never assume that you will be profitable tomorrow because you are profitable today.

Get the Right People on Board

Your team is crucial, and you cannot succeed without them. Make sure you hire the right people, and make sure that they fit together well. If any member of your team does not buy into the vision of your business, they will hold you back. Motivation is more important than their skill level. Of course they need to have the skills, but they also must want to build your company. They must also be able to follow your lead without always needing to be told what to do.

Offering stock options is a great way to find employees who are truly committed. Skilled applicants who are willing to take a lower salary in exchange for stock options will be motivated to help the company succeed. This approach will also help minimize your losses if your business venture fails for some reason.

Write a Business Plan

No business is going to make millions without a well-prepared plan. Not only do you need to be able to show your plan to investors, but you need to be able to review and revise it constantly. Writing it down can reveal key weaknesses you need to fix. If you do not see any weaknesses as you write it down, look again. Never assume that your plan is the best it can be.

Write your plan for investors and not just employees. Keep your plan simple and easy and never assume that your readers know what you are talking about. Make certain that each sentence in your plan can only be interpreted one way. Since each investor will look for different things, your plan must be very detailed but easy to navigate. To help them find what they need, use a lot of headings so that readers know exactly where to look. Try to explain as many things in graphs and charts as you reasonably can. They are much harder to misinterpret than prose, and many investors prefer looking at them to reading anyway. Avoid too many buzzwords and explain any you do use.

Execute Your Plan

With a good team and a solid plan, you are ready to make millions. Your plan will detail your Standard Operating Procedures and provide your employees with the direction they need. When you put it into action, you may decide that adjustments need to be made. Make sure you write those adjustments down in your plan for your investors and new employees to see. New employees should know exactly how your company works by reading the plan, which will save you on training time.

When you choose the right people, write an excellent business plan, and put it into action, you set yourself up for success.

Finding the Right Industry for You

If you want to start a business, the ideal industry is one that you both have previous experience in and a high degree of knowledge about. However, this may be impractical if the industry is oversaturated or is not a good source of money at the moment. In such cases, you need a backup plan.

The Right Backup Plan

Most people make the mistake of choosing an industry they have experience but little interest in, but it is actually better to do the opposite. If you need a backup to your ideal plan, it is better to go with a field you are passionate about but lack experience in. You can always educate yourself in the industry as you get started. It’s the passion you feel that will provide the drive you need to be successful.

You should begin by looking for an under-served market that strongly interests you. Identify a need in that market that you can train yourself to fill. Then start reading everything you can about that industry, particularly in trade journals and business periodicals. Find people who are willing to be mentors for you as you get started.

One possibility you should consider is to find a specialty role in a particular industry. In an oversaturated market, for example, you could specialize in a particularly difficult skill that few people in that industry possess. You could also fill a supporting role in an industry that interests you, such as marketing computer software rather than programming it.

Transferrable Skills

You will find that a lot of skills from your previous work experience will transfer to your new business, even if you have never run a business before. All businesses require strategic planning skills and an ability to analyze problems. They also all require an ability to multitask and manage time well. No matter what field your previous career has been in, you have probably learned these skills to some extent. You have hopefully become proficient in communicating and interacting with others. With these traits, you can become successful.

Some specific skills transfer readily from one industry to another, such as statistical analysis or working with databases. Nearly every industry now uses statistics in some way, and every company has some sort of database. Other transferrable skills, however, are not as obvious. For example, if you previously worked in tech support, you learned many customer relations skills that you can apply to client management. If you were a car mechanic, you learned some complex problem-solving skills that could help you enter the IT industry.

The Importance of Research

Before you start your venture, you need to do some market research. Businesses only survive if they produce products and services that people want. Figure out who your target audience is and incentivize them to participate in a survey. In this way, you can find out what they want and what will motivate them to buy what you offer.

When you plan your survey, try to survey a variety of people and get a large sample size. Prepare your questions carefully to differentiate between segments of your target audience. Marketing efforts are always more effective when they are targeted toward specific groups. Your survey can help you determine what groups from your population you should focus on in your business. This way, you will be able to begin operations without making too many uninformed guesses.

Having picked the right industry and done proper research, you are well on your way to a successful start. From here, the key is to stay motivated and passionate about what you’re doing and give it your all. It is time to turn your research into a business plan and start looking for the capital you need to begin working. Success will come as you apply your passion to your chosen industry and use your market research as a plan of action.

A Long-Term View

If you’re not looking ahead, you’re falling behind. At all times, you must be looking toward the long-term future of your business or charity. This requires intense focus, hard work, and an ability to multitask. You must set demanding goals and simultaneously pay attention to the big picture and small details. Above all else, you must have full confidence in yourself. There is no room for self-doubt in business.

Setting the Right Goals

While goals about next month’s revenue or this year’s product sales are important, they are not enough. You must also set goals for the years ahead. A successful business plans three or more years ahead and sets appropriate targets to meet along the way. If you are not constantly working for a goal beyond the current fiscal year, you may lose sight of your vision. Meanwhile, your competitors who do focus on the future will rush past you and claim more market space.

Your goals should challenge you. If they seem easy to achieve, you will not reach your potential. The best goals will seem a little beyond your ability—the route to the finish line will not seem totally clear. James Collins and Jerry Porras defined such goals as “BHAGs” in their book Built to Last: Successful Habits of Visionary Companies. BHAGs are “big, hairy, audacious goals.” BHAGs encourage creative thinking and problem solving that will open doors to new possibilities. You can only become aware of opportunities if you are looking for them. Along the way, set achievable targets that will serve as mileposts on the way to your BHAG.

Splitting Your Attention with Focus

There are only so many hours in the day. Most people work as many of those hours as they can. The only way to get ahead is to be more efficient during those hours by using Best Practices. To do so, you must focus on many tasks and projects at once. You also must take care when splitting your attention to look at details. By nature, multitasking leads to a quality loss unless you take care to avoid it. Focusing on details enables you to maintain top quality on multiple projects.

When examining the details of many projects at once, it can be easy to forget the big picture. You must always keep your ultimate vision in mind as you look at each individual project. One way to accomplish this is to limit your projects to only those that accomplish your BHAGs best. Being the best in your market space is what makes you successful, and that requires a big-picture view to achieve.

Maintaining Your Confidence

Confidence comes with direction. If you have set a BHAG and appropriate milestones along the way, you set the stage for confidence. Confidence also comes from knowing your talents and knowing the industry. Staying up to date by reading articles and going to conferences is a critical part of maintaining your confidence and keeping your skills sharp.

However, you will make mistakes. It is crucial that you do not let mistakes shake your confidence. When you feel confident, you can make decisions faster and respond faster to the demands of our rapidly changing economy. If you feel self-doubt, your decisions will always be made after hesitation, and your more confident competitors will beat you to the finish.

Winning Success

With a solid plan, challenging goals, and confidence, you are on the path to success. When you split your attention between the details of each task and the overall vision, you ensure that you stay on that path. The only ingredient remaining is motivation, and that comes with passion, which we talked about earlier. When motivated, you will reach your goal. To stay motivated, you must find something that drives you. For some, it is charity. For others, it is providing for a family. The best motivator comes from deciding what you most want out of life and making it what you work for.

Please share your thoughts on what your vision is. What goals do you set, and what motivates you to get there?