Entrepreneurs aren’t made by luck. Sure, luck is always part of the story, but it can’t be counted on to appear whenever you want it. Instead, the most successful entrepreneurs often learn to make their own luck – by mitigating risks and seizing opportunities that come their way. In order to assess whatever risks and opportunities might appear, it’s best to have a plan set well in advance. A plan is like a roadmap, showing you a destination and the stops along the way. If a road becomes closed, that’s fine; you can use an alternative route to get where you’re headed.
I borrowed the roadmap metaphor from the U.S. Small Business Administration, which outlines nine steps for creating a business plan, from a company description to market analysis to funding requests. Visiting this site is not for the faint-of-heart; the would-be entrepreneur can wade through pages upon pages of useful information. Instead of repeating this information, I’m just going to focus this post on two broad aspects of a business plan that have helped guide me: that a business plan is “living” and that it can be “lean.”
A “living” document is any document that is constantly revised and updated. An article on Wikipedia is a living document. While an individual article may not change for days or weeks, it is always available for revision to Wikipedia editors. The U.S. Constitution is also a living document. Although it is updated cautiously and only occasionally by the Supreme Court, it can have amendments added to it. Like Wikipedia, the U.S. Constitution is not completely “set-in-stone.” It may change over time.
Business plans should be treated as living document. All kinds of critical changes might occur in the life of a business – partners might leave, new laws and regulations might appear, or the business might grow beyond its original product or purpose. A good business plan will foresee some of these changes and must accommodate the rest. Revision and updating will be constant. Given the possibility of so many iterations, how can you tell if your current business plan is good enough? Ask yourself carefully: is my purpose in this business plan clear? Does my mission statement provide me with guidelines in case of big changes? SBA recommends that your company description include at least the following:
- The problem your company solves or the needs you satisfy.
- The specific consumers that your company will serve.
- The unique, competitive aspects of your company that will make it succeed.
If your mission statement is adequately clear, it will serve as the roadmap for your company. When a risk or opportunity presents itself, you’ll be able to weigh it carefully against your intended destination. Does this get you closer to your goal? Does it get you there faster? Is it headed in a different direction?
In addition to “living,” business plans can be “lean.” This concept is borrowed from lean startups, which examine how development cycles can be shortened and made more efficient. The “lean” mindset relies on continuously examining your business, measuring your progress, and revising your goals. In this sense, a lean business plan is closely related to a living business plan. But with lean business plans, the goal isn’t simply to be open to changes. The goal is to be open to only the very best changes, making your business run smoothly and effectively.
Lean business plans skip the pages and pages described on the SBA website and get straight to the heart of your business. They often use bullet points rather than paragraphs. They include milestones, and each of those milestones is discretely measurable. How much product? How much money? How many customers? How much growth? At every stop on your roadmap, you provide the numbers that you will need to see to ensure your business is growing. While you won’t be able to provide exact numbers beyond a year, you will be able to provide estimates and you will be able to provide dates when you can update those estimates. While some of your investors may miss the dense portfolio of traditional business plans, others will appreciate your attention to detail and numbers.
Personally, I enjoy writing lean business plans. They are usually short and small, allowing me to assess only the most critical aspects of a business. Rather than be distracted by shine or potential, I can focus on the whether or not the business is likely to succeed. I wrote up three potential business plans this month, and I’ve chosen one to pursue in the coming months. It was not my favorite, but it was the one with the least risks and the quickest growth. Perhaps one day, it will provide me with the funds necessary to pursue my other ideas. If I had started with a traditional business plan first, I may not have come to the same conclusion until many months had passed.
If you’d like some practice at building lean business plans, you can’t beat the Business Model Canvas by Alexander Osterwalder. We have a very chic version of the business canvas just for Lady Bosses. Like the traditional business plan, the Business Model Canvas is divided into nine areas that relate to your product, partners, and sources of income. The difference is the size; the Business Model Canvas forces you to limit your ideas and keep only the best. You can change sections if your business relates to education or nonprofit work, but try not to enlarge the canvas. The point is to keep things short.
Once you’ve drafted your canvas, shop it around! Seek feedback from potential customers, trusted friends, and business owners. Or attend one of our Lady Boss chapter meetings – remember that they are always free-of-charge, and you can sign up for a 15-minute timeslot to present your business plan to other female entrepreneurs. The trick to a successful, living and lean business plan is to seek revisions and be open to new ideas. Remember that nothing about your business is “set-in-stone” and there is every opportunity for it to grow, blossom, and thrive.