Six Tips to a Top-Shelf Business Plan
By guest contributor Will Katz
It has been my honor and pleasure to work with many veterans who have started small businesses. Over the years, I’ve noticed that people with military experience tend to be excellent entrepreneurs. Why would that be the case? Well, I don’t know this for certain, but I would imagine that the careers of most military personnel revolve around 1) creating a plan, and 2) executing that plan.
Perhaps you will not be surprised to learn that entrepreneurship generally follows a similar roadmap. Entrepreneurs also create a plan, then execute that plan. With that in mind, here are six key points for anybody embarking on the process of business planning:
Begin with the end in mind. You might recognize this as Habit 2 of Dr. Stephen Covey’s The 7 Habits of Highly Effective People. This is always a good habit, but especially so when it comes to business planning.
Of course, it may be somewhat challenging. If you have never written a business plan, the odds are that you have also not seen a wide variety of business plans. If you have not seen a lot of business plans, it may be difficult to envision what your completed plan might look like.
You should ask your network of peers and advisors if they might be able to share some business plan samples with you. If your personal network doesn’t include people who are well-versed in the business planning process, use this as an opportunity to expand that network a little bit. I would recommend that you begin your journey by attempting to read and review at least ten business plans. This will give you a baseline.
Beware of search engine results. Sure, you could type “business plans” into your favorite search engine. Go ahead. I’ll wait…I can tell you what you are going to get back. You will see all kinds of specialty business plan-writing products that will cost you anywhere from $79.99 to about $1,200. Search engines are wonderful, and I frequently wonder how I managed to get by without the ability to find out what time the nearest pizza restaurant closes. But when it comes to complex topics like business planning, I’m not sure that search engines are your best friend.
When it comes to business plans, results with high placement are often placed in your results feed because companies who sell these tools pay for that placement. Their job is to give you “business plan envy”. They want you to feel like you couldn’t possibly do this without them. They want you to think the business planning process is more confusing or more exacting than it really is.
There is no magic format. Believe it or not, there is no magic in how you lay out the sections of your business plan. I’ve seen great business plans with 4-5 sections, and I’ve seen great business plans with 12-14 sections. I’ve seen business plans funded for millions of dollars that were 4 pages long. I’ve also seen plans of every shape and size that were lacking in critical content.
I spent several years working with an aspiring pre-venture entrepreneur who was convinced that there was a magic business plan format. He created a plan and he sent that plan to dozens of potential funding sources. Each recipient of the plan pointed to some issue or issues, and many of them pointed to different problems. Every time he received a response, he passed it on to me with a note, making sure to tell me that he was unhappy that I didn’t see the issue ahead of the rejection!
In this case, my belief was (and still is) that the plan didn’t correctly identify a problem and his corresponding solution. The business notion underlying your business plan is always the main issue. But his belief was simply that if he wrote the “perfect” business plan, regardless of the underlying facts, he would get millions of dollars in funding. (Hint: it doesn’t really work that way!)
Especially if you are in the earliest stages, it will benefit you to think of your business plan along the lines of a simple feasibility analysis. The simple act of viewing your concept and your business idea from that 10,000-foot perspective may well be revolutionary for you. Shoot for maybe 5 or 6 sections, each section being one page. You may be surprised at how far that will lead you.
Research is key. There are a lot of different types of research that might go into a business plan. Foremost among those types of research, I would say, is “secondary” market research.
When it comes to market research, “primary” market research relates to the questions you ask customers and/or potential customers. “Would you buy this?” “How much would you pay?” “What should we call it?” It’s not that these are bad questions, but for most entrepreneurs, it is exceedingly difficult to design the right survey tools and get outside of your comfort zone far enough to ask them to people who will give you unbiased answers.
“Secondary” market research relates to existing sources of information that answer questions one might have. If your business idea is related to after-market car parts, it would be helpful to know how many cars are registered in your metro area. If you are planning to open a nail salon, wouldn’t you like to know how many people in the area have received pedicures in the last six months? (Believe it or not, this is a question that could be answered!)
There are some amazing tools for research out there if you know where to look. Some are free to use, but some are not. Again, it is always a good idea to expand your personal network to help you learn what you know and what you don’t know. If you don’t know any librarians, it might be worth your time to meet one! I’m a big fan of the US Census Bureau tools (https://www.census.gov/smallbusiness/), as well as industry reporting from places like IBISWorld, Cengage, and First Research.
Be specific in your statement of purpose. Yes, you should be as specific as possible in all aspects of business planning. But the reference here is to the purpose for your actual plan. I always like to see a sentence in the first couple of paragraphs that starts like this: “The purpose for this plan is….”
Maybe the purpose is to find a bank loan for 50% of the $100,000 you need. Maybe you are looking for early-stage investors among family and friends. Maybe you are simply putting together a document that will keep you on track as you develop ideas and one that will provide you with direction as you move forward. Whatever the reason is, put it in the plan.
Necessary, but not sufficient by itself. I’m certain that no battles have ever been won by planning unless the planning was backed up by robust action. Know that it will be the same way with your business. Planning alone will never compete with planning AND execution. In your military career, how many of your plans survived first contact with the enemy? Probably not very many! The same will be true of your entrepreneurial pursuits. It’s great to have a plan. In fact, it’s critically important to have a plan.
Just be prepared to deviate from that plan when the situation calls for it!
Will Katz, MBA, CVA is a Certified Valuation Analyst (CVA) and Accredited Business Planning Advisor (ABPA) specializing in valuation support for SBA lending. Will is also Director of the Small Business Development Center at the University of Kansas, where he helps entrepreneurs start and grow businesses. Will has worked with more than 1500 business clients, including hundreds of military Veterans in the Ft. Leavenworth area. Connect with Will Katz on LinkedIn here…
Do you have any experiences you’d like to share about your small business planning process or military-to-civilian transition? Anything that might benefit others in our military community, facing the same challenges? If so, email [email protected] and tell us your story…