What’s a simplified business planning process that you can use to make sure all aspects of your business are ready for the new year? There’s a lot of stuff out there. You’ve heard of business plans, and they can get intense.
Business Plans are Out
I had this client who had a good product, but he spent five years trying to perfect his business plan so he could go out and get investors to bring in money and grow his business. If he would’ve just brought on a client five years prior and used the revenue from that, the business would’ve had history and that would’ve been enough to bring on investors.
So, I say that as a cautionary tale. Don’t overthink your business plans. They should not take five years to create. They should not take very long at all to create.
Also, I find business plans in general, once they’re created, are never looked at again. Traditional business plans more often than not end up being just a waste of time and energy.
Back in the day I went through a course with Goldman Sachs called 10,000 Small Business where they teach you how to create a growth plan. The entire structure of that course was focused on creating a growth plan for your business.
I did a presentation many years ago on the growth plan. I’m going to really, really quickly go through the content here so that you have an overview of the plan. I’m happy to give you my presentation slides if you’re interested in more details of the growth plan for your business.
Make your business work for you. A growth plan is not a business plan and it’s not a budget.
I like the growth plan more than I like the business plan. There’s a lot of similarities, but the focus of the growth plan is how you are going to grow. Not just how you are going to be in business.
Vivid vision is a concept created by Cameron Herold. We used this in our company for nine years, and it worked pretty well. However, some things don’t work for everybody and that’s okay. But if you want to get more information, Cameron has a bunch of stuff out on the web about vivid vision. Our vivid vision was like five pages.
Define who you are as a leader. This is a very important aspect of your growth plan. Especially when you can design your business, you want to make sure you’re designing it to work the way you want to work. You don’t want to create a plan that’s going to put you in scenarios that you don’t enjoy. And yes, sometimes we have to take on tasks we don’t enjoy for a short period of time, but the plan would be to get us out of those as quickly as possible. Business owners don’t take enough time usually to identify what that looks like.
What’s your style as a leader? How are you planning on growing as a leader? Are there external advisors that you need to bring in? Coaches? Are there areas of your business you’re uncomfortable with? That’s where a coach really can come into play because they can either help you level up or they can take the knowledge that you don’t have and apply their knowledge into that area of your business.
What are your growth aspirations? What are your five-year business goals? Evaluate opportunities for growth. Understand your value. How will you hire the best people? Create a strong culture. How will you solve issues and inefficiencies? Build processes for as much of your core operations as possible. Know your financials and KPIs.
As you can see, it’s very easy to get carried away with the growth plan and have it be more complicated than it needs to. However, because of the focus on growth and thinking through the future, it’s better than a traditional business plan.
I don’t really use a growth plan that often anymore. A big reason is it’s a five-year plan. If I thought back five years ago, would our business be where it is now? Honestly, I couldn’t have envisioned it. That’s one of the dangers of taking time to try to perfect something that’s so far out, things change. Environments change, which means maybe the approach we take to growing the business changes. You might have a Black Swan event, like covid, that comes into play, which obviously kind of put some people’s plans on a different trajectory.
That’s the danger with these plans. They focus a little bit too far out.
Wealth Building Framework
I’ll share with you a simpler method that I use nowadays.
I like looking at, in a lot more detail, one year out. To help me do this, I created a tool that walks me through all the necessary details. I also fairly recently did a four-part webinar series going over every part of my business planning process with that tool that we called the Wealth Building Framework.
It’s designed to go over your business and forecast financials for the next year. The perfect time start your own business planning process for the coming year is at the end of the calendar year, like November or December. That way you can plan the entire year.
Here’s a very brief overview. Input your revenue. Think through what you’re hoping to do revenue wise. What are your goals? Are you adding any new service items? Are there items you’re taking away? What are those?
Next input your COGS. Referencing your revenue items, think through what the cost of goods sold is going to be on those income items?
Now for your expenses. What expenses are you going to have? Are there going to be any new expenses? Are there expenses you should look at that you’ve had in the past that you don’t need anymore because they’re not productive?
I learned from Keith Cunningham, the best way to filter your expenses is to determine if the expense helps you keep a customer or get a customer? If it does either, then it’s a productive expense and should probably stay. If the expense does not help you keep or get a customer, then it can probably be cut. It’s a great lens to look through.
At the bottom you can see a few other random, but important things to track and forecast. Do you have loan payments? Are you buying any assets? Also use it to track your bank balance.
Simplified Business Planning Process
Having an idea of where you want to go in five years, not an issue. It’s fine. I just wouldn’t spend a crazy amount of time creating a perfect document, because ultimately five years out is a lot less likely to happen the way you currently envision it. But a year out, you can wrap your mind around, pretty concrete, what it’s going to look like.
My business planning process starts with the numbers in the wealth building framework tool. I then ask myself questions based on those numbers. Do I want to add a new service, or increase a current income stream? What do I need to do? What do I need to bring into my company in order to make that happen? Is it training team members more efficiently? Is it adding more team members? Is it getting rid of team members?
Looking at how I want my financial statements to look like in the upcoming year allows me to ask the questions of every aspect of my business that’s going to help me accomplish that goal that I can visualize 12 months out.
Feel free to use the Growth Plan as an outline to follow as it covers many aspects of a business that are easily overlooked. Then be sure to account for your goals in your financial forecast.
Keep your business planning process simple by planning out one year at a time. It will allow you to focus on the details of all aspects of your business to make sure you’re ready for the new year.
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