VIDEO RECORDING:
https://youtu.be/R0tuKHGxHWs
RELATED LINKS:
https://www.facebook.com/groups/balancedbusinessleaders
https://linktr.ee/liminalclarity
https://www.liminalclarity.com/podcasts/
TRANSCRIPT:
Hello everyone, welcome to the Balanced Business Leaders Podcast hosted by yours truly, Claire Jones, owner of Liminal Clarity. We are a business development agency that helps small business leaders scale and grow without burning out.
This is the next podcast in a series where we will be discussing the various trials and tribulations that lead me to creating my Three Pillars of Business Success, a framework that represents the foundational systems that contribute to sustainable business growth.
If you’re interested in learning more, please join us in our free Balanced Business Leaders Facebook Group at facebook.com/groups/balancedbusinessleaders.
Ready? Alright, let’s dive in.
[musical intro]
So I started this podcast as a way to tell my story, particularly when it comes to the many, many different lessons that I have learned over the years when it comes to founding, developing, running, and growing small businesses.
This particular episode is about the first step to creating effective Processes & Systems for your business - a solid business plan. These are important because you need to plan out all of the aspects of your business that contribute to long term success.
To give you a little bit of background, my first business plan that I ever made was part of a capstone project that was required for the Art & Business Semester Program that I did as my abroad education during my junior year of college. It was part of the Sotheby’s Institute of Art in London and, as part of our schoolwork, we had to develop an art business idea that we were “pitching” to a group of investors - who were basically our teachers posing as important bankers and financiers.
It was a group project, so I wasn’t alone in creating the whole business plan by myself but it was a great introduction to what was required in order to conceive, plan, develop, and pitch a fleshed out business venture.
My second opportunity to create a business plan was when I started my own first business about four years later, but this time I was doing it all by myself.
And it was definitely much scarier because it felt like it was for real this time around, but I was well-armed with my research skills and looked to Google in order to figure it out. I put in the time, did the research, made the spreadsheets, and then used it to secure funding - and it worked!
I ended up fundraising around $30k with an additional $10k coming from my business partners, and that’s pretty much how I started my first business. It was a brick and mortar general store devoted to local goods so it required a lot of start up capital as well as generated a significant amount of overhead on a monthly basis.
Fast forward another four years, and I found myself (yet again) creating another business plan. This time around, though, it wasn’t as in depth or as formalized as my previous one because it was for a service-based at-home business - which turned out to be Liminal Clarity.
For my current business, I didn’t need to develop the business plan as comprehensively because I knew that my overhead expenses and operational needs would be minimal as a home-based business. So I set up the processes and procedures that I knew would be necessary and left the rest for later on.
This is all to illustrate that a business plan serves several purposes. It can help convince investors or lenders to finance your business, and it can also persuade partners or key employees to join your company. Most importantly, though, it serves as a blueprint guiding the management and growth of your business.
Writing a business plan is an opportunity to carefully think through every step of your company so you can prepare for success. This is your chance to discover any weaknesses in your business idea, identify opportunities you may not have considered, and plan how you will deal with challenges that are likely to arise. Be honest with yourself as you work through your business plan. Don’t gloss over potential problems; instead, figure out solutions.
A good business plan is clear and concise. A person outside of your industry should be able to understand it. Avoid overusing industry jargon or terminology.
Most of the time involved in writing your plan should be spent researching and thinking. Make sure to document your research, including the sources of any information you include.
Avoid making unsubstantiated claims or sweeping statements. Investors, lenders, and others reading your plan will want to see realistic projections and expect your assumptions to be supported with facts.
And I truly believe that a business plan should be a living, breathing document that you return to and update every single year. Because things always change.
The industry changes, culture changes, people change. Change is a constant so you need to routinely tweak and adjust your plans accordingly.
For example, many companies do their yearly planning around October since that gives them a rolling 3-month runway into the new year.
This is a perfect opportunity to dust off your business plan and update it.
Personally, I block out a whole week in October where I work exclusively on yearly planning. I update my business plan, my cash flow predictions, and my strategic timelines for the upcoming year. So then when January rolls around, I already have my plans in motion and am prepared to keep the momentum going.
Alright, so starting with the basic outline of a business plan -
There are nine main parts:
The executive summary The company description Your products & services Your marketing plan Your operational plan The management and organizational structure Your startup finances Your financial plan And the appendicesSome other parts that are important to include are a:
Cover sheet with your business name (and logo, if you have one) Confidentiality agreement (basically a small blurb asking the reader to agree not to share your business plan information with anyone else) And a table of contents (so that readers can navigate your plan easily)And remember to number your pages along with a copyright notice, you don’t want anyone stealing your shit.
Business plans tend to vary in length, depending on how complex your business is. Sometimes they’re a couple of pages, sometimes they're upwards of 20 pages in length. The point is to clearly and concisely describe each aspect of your business so that you have a solid blueprint of how you’re going to manage and grow your business.
The main questions that you’re trying to answer here are:
What values does your business live by? What are the guiding principles that inform all of your business decisions? What is your long term outlook for the business? What do you ultimately want to achieve? And, what specific milestones will get you there? Who precisely are you serving? What does your business look like in the eyes of your customers? What product or service does your business provide and what result does it help your customers accomplish? What are your competitive advantages and how do you plan to maintain your market visibility? How exactly do you provide your product or service? What are the exact steps, systems, support structures, people, or softwares that you need to provide a quality product or service? What does your financial forecast look like? What kind of financial support or systems do you need in order to be profitable and sustainable? And, overall, what variables could make or break your success? How do you plan to manage them?If you figure out all of these factors ahead of time, it will be much easier to make decisions as you go. A business plan represents your overarching strategy so that you can better align your daily, weekly, monthly, and quarterly action items with your long term goals.
Whenever you’re trying to decide whether to go in this direction or that, you can return to your business plan and use it as a guide.
Only if you know WHERE your business is going, can you know WHY the specific behaviors, actions, or activities are important.
Instead of getting stuck in a guessing game, where you spend too much of your time throwing spaghetti at the wall to see what sticks - a solid business plan will help you better prioritize where you and your team invest your time, money, and energy.
And, like I mentioned before, business plans can be created or updated at any point in time.
I’ve worked on business plan programs with some clients who have been in business for 2 months, 10 years, and 55 years.
The common denominator was that they were looking for clarity. They were looking for a specific plan to grow their business in one way or another.
They had a vague idea of where they wanted their business to go but didn’t know how exactly to get there. So, instead of guessing in a game of trial and error, they made a business plan to guide their actions.
Some people call this a “hedgehog idea”. If you haven’t already, I highly recommend that you go check out a book called Good to Great by Jim Collins. In it, he presents decades of research into why some companies go from mediocrity to greatness and some don’t.
One of the key factors, he asserts, is this idea of a “hedgehog concept”. It comes from Isaiah Berlin’s famous essay called “The Hedgehog and the Fox”. In it, Berlin divided the world into hedgehogs and foxes, based upon the ancient Greek parable: “The fox knows many things, but the hedgehog knows one big thing.”
As Collins explains, “The fox is a cunning creature, able to devise a myriad of complex strategies for sneak attacks upon the hedgehog. Day in and day out, the fox circles around the hedgehog’s den, waiting for the perfect moment to pounce.”
Whenever the fox does get an opportunity to attack the hedgehog, however, the hedgehog simply “becomes a sphere of shark spikes, pointing outward in all directions… Each day, some version of this battle between the hedgehog and the fox takes place, and despite the greater cunning of the fox, the hedgehog always wins.”
Berlin, in his essay, divides people into the same two categories: foxes and hedgehogs. “Foxes pursue many ends at the same time and see the world in all its complexity. They are ‘scattered or diffused, moving on many levels,’ says Berlin, never integrating their thinking into one overall concept or unifying vision.
Hedgehogs, on the other hand, simplify a complex world into a single organizing idea, a basic principle or concept that unifies and guides everything… For the hedgehog, anything that does not somehow relate to the hedgehog idea holds no relevance.”
And, they’re very successful as a result. That’s what a business plan can be. It can document your business’s hedgehog idea, an idea that will unify and guide everything you do.
So next time, we’ll be going more in depth into the second step of Processes & Systems, Business Finances. I hope to interweave my personal experiences with the business lessons I learned along the way so that I can paint a full picture for you guys.
And please let me know what you think! I am always open to feedback and love connecting with my audiences.
If you want to learn more, I personally invite you to join us in the Balanced Business Leaders VIP Group Program. In as little as one hour per week, you will walk away with a clear action plan to grow and scale your business sustainably.
Please visit linktr.ee/liminalclarity for more information.
You can find the episode outline, video recording, transcript downloads, related links, etc. below.
And, until next time, love you all, take care, and I hope you have a good day wherever you are.
[music outro]
