How is your business foundation? When you got started in business, did you lay a good foundation? Did you create any kind of a plan? A business plan? A financial plan? A strategic plan? A marketing plan? Most entrepreneurs don’t, they go right from concept to starting to work, and few give little thought to the basics.
Don’t get me wrong, you can be highly successful without any of that stuff, but it sure helps make life easier if you take the time to do a little planning.
A business plan doesn't have to be a 75-page, leather bound document with gold leaf writing on the cover, kept under lock and key on a special shelf with a spotlight on it. If you don’t need to borrow money, then a couple of pages that outline things like what you want to do, where you want to do it, and how you plan to achieve it will be enough. It should contain information about your competition, focusing on whom you see as your biggest competitor. It should also include a frank SWOT (Strengths Weaknesses, Opportunities, and Threats) analysis of your capabilities.
I like to take a different twist on the SWOT analysis. Once you have all of your factors written down, I like to cross out any strength, weakness, opportunity, or threats that you believe your competition also possesses. If you list a weakness that your completion has, it isn’t a weakness. If you list an opportunity that your competition also has, that isn’t an opportunity. You want to find your uniqueness, that’s where you will find your gold.
Develop a financial plan. List your assets and your liabilities. Create a cash flow analysis, and create a profit and loss statement. Get familiar with your costs and your expenses, so you know if you are making a profit. Consider setting up an hourly rate for jobs that are heavily loaded on the labor side and one for jobs that are high on materials and low on labor. You will find that your profits will increase.
Develop a strategic plan, that states your goals for the next year and extend it out to three years. Decide what you need to do to increase your business, and then write down the details. Think of all of the possible pitfalls that you may encounter and develop contingencies to help you get around them. Decide who should be accountable to reach those goals and then give that person or persons the authority needed to attain those goals.
Develop a marketing plan that ties back to the strategic goals that you set for the next year. Your marketing initiatives must show a direct correlation to the goals you want to achieve. This becomes your road map to success and it helps prevent you from buying into advertising programs just because they sound good. If the program doesn’t support your specific goals then you can just say no to that program. Ultimately using this approach will help you realize your biggest and best return on your marketing investment.
The key to building a successful foundation for your business is to review the plans that you created at least annually but every six months is better. You should consider your plans to be flexible documents that grow and change over time. If you find a new niche that is more profitable than your original direction, there is nothing wrong with changing direction. After all, they are your plans and you can change them or adjust them as needed. By the same token, if you find that you are veering away from your intend course and it isn’t as profitable, then make a course correction and get back on track.
The great thing about having a plan is it helps you get where you want to go, because as Yogi Berra said, “If you don't know where you are going you'll end up someplace else.” Something magical happens when you write down your plans, your brain has an inherent ability to help you attain your goals, and the act of creating your plan is the key that starts your brain down the path of focusing your thinking in areas that make achieving your goals possible. It takes time and effort to create your foundation plans but ultimately the rewards for doing it will make it worth your time.