Have you learned how to write the “perfect” business plan? Whether it is a beautiful document, slide deck or video, the words have been crafted to say all of the right things. The charts are all up and to the right, with revenue, profit and cash flow increasing steadily from day one. The five-year financial models are complex. Your “perfect” business plan looks pretty damn impressive, right?
Unfortunately, those beautiful and complex business plans fall apart at the first interaction with reality. The world does not act in accordance with our plans. Potential lenders and banks do not always understand our vision. Customers do not act the way we expect. Startup and high growth businesses rarely hit their forecasts. Life happens, and complex plans fall apart. The “perfect” business plan is lost in history, never to be seen again.
Traditional business planning methods are not generally effective when it comes to entrepreneurs, startups and high growth companies. However, entrepreneurs and new businesses grow into successful companies every day. People work together to achieve a common vision and create tremendous value in both the capital markets and our world, often without a formal written business plan.
Let’s dig into how you can build a simple business plan that will serve as a roadmap to guide your business every single day, how to implement the plan, and adapt on the fly.
The link between your vision and execution
is a simple, clean action plan that everyone on your team understands. In my experience, the secret to
success lies in a business planning and management process based upon the Rockefeller Habits. The business plan
looks more like a one to two-page bullet point document with elements like:
- Mission (why
you do what you do) - Vision (what
you want to do) - Strategy (how
you want to do it) - One year goals (what you will do this year)
- Quarterly Goals (what you will do THIS quarter, or in the next 90 days)
- Monthly Priorities (what must be done this month to hit the quarterly goal)
- Weekly Action Items (what must be done each week to achieve the monthly goal)
- Daily Action (one intention for each day, so you will complete the weekly action items)
Accountability for individual daily
actions is the key element in executing the plan. In my experience,
weekly team reporting and discussion works well in fast moving and less
predictable environments. Weekly
accountability groups also work well for solopreneurs and direct sales
professionals.
A key element in accountability is
data. What are the numbers you need to track in your
business? Do you fall into the trap of
having so much data that you no longer know which information really
matters? Narrow down your focus to the
top three to five metrics that measure the income producing activity in your
business and know those numbers inside and out.
The closer you get to the daily action
required, the more likely you are to achieve your plans. Think of this as the “chunk it down”
approach. Let’s walk through an example:
- Let’s say you want to generate $100,000 of
sales from new customers next month. - Your average sale is $1,000, so you need to close 100 new customers next month.
- You close 25 %of sales opportunities, so you need to present to 400 prospects next month, which breaks down to 100 prospects per week.
- Assuming you work 5 days per week, you will need to present to 20 prospects per day.
- Assuming you work 8 hours per day, you will need to present to 2.5 prospects per hour.
Sounds good, right? Well, maybe or maybe not. Do you really spend eight hours per day
talking to prospects? Do you have enough leads coming in to be able to present to
two to three people per hour? Can you
actually present your product or service in fifteen minutes, and help your
prospect reach a decision? What are the
other ways that reality could diverge from this plan? How different is this plan from the way you
currently spend your time? NEVER
underestimate the time and effort required to change your daily habits and
activity patterns.
This exercise helps link your business plan
to reality. In other words, how does your business plan stack up to daily life?
What are the key levers you can pull to drive your business? What are your current numbers for those
levers? If you want to improve these
metrics, do you have a clear action plan to do so?
This model also works for individuals in
sales roles or direct sales entrepreneurs.
It is easy to break down your income
goal into daily actions required, once you know YOUR numbers. For
example:
- Your company pays a 30 %sales commission.
- Your average order is $150 (calculated as monthly sales divided by the number of orders).
- Your closing rate is 20 % (calculated as the number of conversations about your product last month divided by the number of orders).
Your goal: Monthly income of $1,000.
Action Required: 3 conversations per day
- $1,000 divided by 30 % = $3,000 total order value
- $3,000 divided by $150 = 20 orders
- 20 orders divided by 20 % close rate = 100 conversations
- 100 conversations divided by 30 days = 3 conversations per day
What does your sales funnel look like? What are the daily actions required to grow
revenue? Take a few minutes and outline
your own sales model.
Now you have a plan to operate your
business. It is time to get out of the business of planning
your business and start operating your business. The magic happens only when you execute the daily actions
required to execute your plan and achieve your goals.
Make the shift from wantrepreneur to entrepreneur by doing the work.
Dedicate yourself to taking the daily action. Make the sacrifices. Immerse yourself in your
target market. Talk to prospects, close
sales and generate revenue. Now you’re
really in business!
Jennifer Turnage is an entrepreneur, business advisor, speaker and author of Honey, You Got This! Technology Made Easy for Network Marketers. As the Cofounder and CEO of myBeeHyve, she combines her experience from multiple tech company exits with her mission of empowering individuals to achieve financial independence through entrepreneurship. Connect with her on LinkedIn, Facebook or Twitter for support on your entrepreneurial journey.