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When is the Right Time to Write a Business Plan?

When should I write a business plan?Most people that come to me for help writing a business plan when they are down the line of either building their product already or growing their business. Everyone wants to jump into the fun part of the game, thinking about all the functions and features, designing how it will look, specing out the services you will provide, dreaming of all the money you will make, talking to potential customers etc… Sometimes you get product/market fit right out of the gate and before you know it you are selling like mad and find yourself trying to figure out how you are going to scale. (a good problem to have, but I’ve seen this problem more then once bring businesses to their knees and in a case or two shut the business down)

My experience working with fellow business owners is that a lot of time, effort and money is wasted that could have been avoided, or pain at least minimized, by going through the exercise of building a business plan at the start. It’s not the business plan itself that is the magic, it’s the thought process that you go through in building the plan that is the value.

Business plans are not like the old days where we used to sit down and write a thirty page document. We as entrepreneurs have gotten more efficient at the process and now are able to get it down into the form of a power point presentation with less then twenty slides. It does not mean that you could not write a thirty page document based off your slides, but there really is not a need to do that. The slides act as your financing pitch deck if you are going to raise money as well as a business guide to your short and long term goals.

A few things to keep in mind about your business plan:

1) Review your business plan frequently.
Business plans aren’t meant to be static. I have over fifty versions of our business pitch for the business I currently lead. A business plan is mainly long-term strategic tool, but to be effective you need to look at them regularly and update your strategies. How often? I’d suggest quarterly. Look at which of your strategies are working and which aren’t. Do more of what works and less of what doesn’t. Sounds obvious, but even the most experienced business owners forget. Ask yourself why some things are working and some aren’t. What can you learn to make your business stronger?

2) Consider a lifestyle component to your business plan.
I have yet to see a business plan that includes your ideal lifestyle. Does a bank care about your lifestyle? Probably not. But you should. Take time this week to add a lifestyle page to your business plan and put it at the back of your deck as a reminder to yourself “why” you set out to build and run your own business. At a minimum, include how many hours you want to work, where you want to work, how much vacation you’d like and what schedule you want. Then go through your business plan and make sure your business strategies support your lifestyle strategies. What you may find is that you’ll have to add strategies for hiring additional staff, streamlining operations, and creating better business systems.

3) Turn your business plan into an action plan.
Your business plan is all about long term strategy. It’s the big picture about how you’ll run your business. Take that long-term strategy and turn it into a short-term action plan. For each strategy you have in your business plan, write a short-term action plan. Include what the actual activity will be, what resources you need to do it (employees, money, time, equipment, etc) and write out a detailed plan for it including deadlines. This plan should be for the next three to six months. The action plan should include every step you will need to take to accomplish each goal in your plan.

The first time you do these exercises may take between two and eight hours. It depends on how much detail you provide. My experience shows that the more detail you include the more effective your plan is. The next time you do this (remember to review and revise this quarterly) it will take a lot less time. Each time you do this will build on the time before and your planning will become more and more effective. Now you’ve got a business plan that works.

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