There I was, at a Christmas party where my partner and I did not know anybody but the host. Of course introductions were made all around until one young woman started declaiming on her entrepreneurial history. Not about her actual business but how she did not see the rationale for having a business plan or to have goals or to even keep track of her business results. She just was in it to be successful and her way to do it was to do the “Ready, Fire, Aim” thing. Under other circumstances it might have been interesting to poke her a bit and challenge her assumptions but it was just not the time or place to go there. But I was struck by how glib she was about her need to avoid structure and planning. In fact what she was describing was more like Fire, Aim, Ready…
I felt this young woman was being irresponsible to herself and her customers and investors. If she has a salable and desirable product it is likely she will go out of business and deprive everybody of the benefits if there is no plan for success and growth. If her product is half-thought-out and non-functional then she has wasted everybody’s time and money. If her product is actually viable it is likely mispriced or misplaced in the market. Everybody loses.
She was right about one thing though. In becoming an entrepreneur at some point you do have to just dive in and swim. You can’t stand on the shore of the icy cold lake of commerce continually thinking and planning and hoping things will just happen. “Just Do It,” as Nike tells us. That does not mean that you have to make the dive without any preparation – you are allowed to use water wings or a life jacket and you can even take swimming lessons beforehand by getting advice from mentors or consultants or taking continuing ed courses on entrepreneurship. Although I’ve certainly used the Ready, Fire, Aim approach myself at times in my career I’ve always felt the need to have specific goals in mind – to have a game plan. Consider it a form of drownproofing. If you find yourself floundering after you start up your business and you have to call out for the lifeguard to rescue you at least you can more easily keep afloat until you are pulled out of the water.
At the very least you need to know what success means to you. How much money do you need to earn so you can quit your day job? Is that in line with the amount of money your business is capable of earning as profit? Many small businesses just start up, sometimes inadvertently – your neighbors tell you how great your cupcakes are or how cute your sewing is and how they would pay money for them. So many people just jump in without a thought about whether the business can actually make money or not. And when they fail, many others lose with them.
Without doing any market research how do you even know if there are any people who will buy your product at a price that makes you a reasonable profit? Without doing at least some fairly simple math figuring out your profit margin & breakeven how will you know if you are actually liable to make money? If you just want a hobby, fine, go for it. If you think that hope alone will make you the next Apple or Facebook that’s OK – let me how that works out for you.
A business plan does not have to be extremely complex but I do recommend it for any business whether in startup mode or in full operation. When you write out your goals and your plan to get there it becomes tangible. You now have a path to follow.When your spouse or friends or partners see it then you have made a commitment rather than just talking endlessly about your get-rich scheme. You can even change course in midstream and then track the effect of the change. Without a plan, though, you are swimming in that cold, icy lake without looking to see if you are headed to the shoreline of success or if you are just swimming around in circles eventually to tire and sink to the bottom.
Larry Earnhart
Alchemy Business Consulting
January 2, 2015
For business advice and coaching email me at: AlchemistLarry@gmail.com
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