From the course: Small Business Secrets

Exploring the elements of a simple plan

From the course: Small Business Secrets

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Exploring the elements of a simple plan

Many business owners have heard that they need to have a plan to help them be successful in small business. My perspective on a business plan is it's a bit like a map. Now if you've seen any movie about sailing or even a pirate movie, you know that the captain has a map in the cabin. And it's something that they refer to regularly to make sure that they're staying on course. That's exactly my perspective on a business plan. It's more to help you navigate the treacherous waters of being an entrepreneur. And it's to help you stay focused, to make sure that you're consistently heading in the right direction. Now, we've provided a single-page worksheet that you can use to create a basic business plan to stay on course. If you're trying to get funding or to approach the bank about getting a loan, you'll want to certainly expand on this and turn it into a multiple page business plan. So, let's walk through some of the basic elements of the plan. I'm not going to go into these in-depth. I'm just going to give you a basic idea of what the plan should contain. At the top, you'll see a section for targets. I recommend that business owners have two targets that they try to accomplish each quarter. That allows you to progress the business and move it forward quarter to quarter, but not get bogged down in trying to accomplish too many things. Next, you'll see a section for Most Valuable Indicators. I call them MVIs. Sometimes people refer to them as key performance indicators. The idea is that we're measuring, through numbers, how successful the business is. I have provided three suggested MVI's that I ask business owners to track. Number one is cash on hand, how much money do you have in the bank? Number two is net profit. How much profit did you make, in the previous quarter? And number three is your pay, as the business owner. How much do you receive for all your hard work and effort, each quarter? Now, you'll also see a blank for two wild card indicators. That's just where you get to pick two things that you think are good indicators of how healthy your business is. Next, you'll see a section for Most Valuable Employee. Now this is not a particular individual, it's the profile of the kind of person that you want to hire to work for your business. We want to define what that profile is, and then you'll see a section where you can measure percentage-wise roughly, what percent of your employees fit that profile? Next is the section for Most Valuable Line. That's short for most valuable product or service line. There are lots of things that many small businesses sell. You may sell 10 different products or services. But one of those is most valuable, most profitable to the business. And we want to define that clearly and also measure, in rough terms, what percent of our sales fit that profile. That will help us stay even more focused. Next is a section for Most Valuable Customer. That's the profile of the best possible person to do business with your business. What are their demographics, what are their psychographics, what do they look like and act like, and then what percent of our sales, roughly, fit into that category, that kind of person? And the last section is Most Valuable Message. This is a summary, in just a few words, of the reason why people do business with you. And that why becomes the basis of your marketing message. And then roughly, you want to measure what percent of your overall marketing shares this message. Are you focused in your marketing, or are you a little bit scattered? Now there's one final section that really relates to you personally, but it does have a huge impact on the business. And that's your Harvest Strategy. Now, typically, business plans have a much more detailed harvest strategy that deals with how we're going to get out of this business. How we're going to sell it or whatever. I go a little deeper and a little more personal. I recommend that you have a harvest strategy for yourself, personally, in terms of what you get daily, weekly, monthly, and yearly, out of your business, and also defining what the ultimate harvest is. The idea is that you continually move forward in your business, and you're always getting some reward for the hard work and effort that you're putting in to it. Remember, a business plan is about focus, it's job is to help you stay the course, and make sure that you're achieving that destination that you set out in your mind to reach, in the beginning.

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