Every time I look at starting a new business, I get the advice “Make a business plan.” I’ve never done one, but what the heck. So I check out books and scrounge the internet and come to the same screaming realization that the people who write these guides are idiots. They’re all writing the same way.
Every single one of them writes for existing businesses. They do not help crack the chicken and egg problem. Worse, they contribute by having you write from FRONT TO BACK.
OK, in general they all tell you to save the executive summary till last. But beyond that they tell you to write in the order of the standard sections:
- Executive Summary
- Business Description
- Market Analysis
- Marketing Strategy
- Operations Plan
- Human Resource
- Financial Plan
The problem is that most people don’t think of marketing first. They think of operations first. The people LENDING (for whom this is written) want to know your marketing first because how you plan to sell it is what matters to them. It’s actually fairly important to you as well given you don’t make money from making, you make it from selling. Still, MOST people… They aren’t in the business of selling widgets, they want to MAKE widgets that they’ll sell.
The reason this is so frustrating is that every guide is confusing for first time businesspeople – people who may know a LOT about manufacturing the product but are still semi-clueless about the rest. At most the guides will say “if you’re not sure, you’re not ready”. Well, yes. But let’s help them think about it, right?
Write one that starts with what they know. OK, you wanna have a restaurant. You’re gonna make food. Good, let’s BREAK THAT DOWN FIRST. That’s operations. Now add to it your expectations of action. You’re going to be open from x to y. You’ll run z tables. You’re going to expect so many minutes of fill on a table, and an average of 2 or 3 per table, all during peak. How long will peak last? How busy will you be in the slack?
And on and on that way. See, here’s the deal – all the issues of marketing and manning and all of that? They’re consequential to the production. If I’m going to keep 20 tables at 75% for two hours, I need to have staff and food, and I’d better figure out how I’m going to persuade people to fill those tables. But I now know HOW MANY PEOPLE I NEED to meet my goals.
Figure out the cost first. How much food, how much staff, how much furniture, how much…? Then look at your expectation of income – how many people average, how much will they pay? THEN tweak it and put some money in bringing people in. And lo and behold you wrote your business plan. You just did it backward according to every guide out there.
Typewriters are almost nonexistent. We use word processors. Those allow us to write sections, then copy and paste them in the order we want. Let’s start taking advantage of these tools to make products meet customer desires.
btw, once I realized all this, the business plan I was sweating practically flew together. Yes, there are still spots I need to fill – questions I have to answer. But I quit trying to start from the wastelands, and it made SENSE.