Got a Plan?

It's been said that when the only thing in your toolbox is a hammer, everything starts to look like a nail -- and perhaps we can go over that one in the next Aphorisms post. This particular saying definitely has a grain of truth to it, and I was reminded of it when I came across an "article" on the Onion website about someone trying to start a small business venture without anything resembling a business plan. Now everyone knows that I'm a planner; that I compulsively generate contingency plans for every occasion; that I deal with uncertainty and other stressors by working out what to do in advance. So perhaps it isn't all that surprising that I took one look at this piece and thought "What a cretin! Everyone needs a plan!" Or that I consider it relatively easy to begin writing one...

The first step in writing a business plan for a new start-up venture is to determine what, exactly, you are trying to do. In the example given in the Onion's fiction news story, the protagonist wants to launch her own line of gourmet dog biscuits. These will be better than existing products in both taste and nutritional content, and are intended to appeal to both dogs and their owners on this basis. In business terms, this is called a Mission Statement. It's really the answer to a question, and the question is, simply, "What are we doing?" In this case, the answer might be "We are making dog biscuits that are superior in taste and nutritional content." Some of you will have encountered much longer and more elaborate Mission Statements, particularly if you've spent time in an industry that has been overrun by high-priced management consultants who need to justify their large fees. But a mission statement does not need to be several pages of jargon, and it fact will probably work best if you can quickly and clearly articulate it.

The next logical question is probably "Why are we doing this?" Or, if you prefer, "Why, out of all of the millions of pursuits to which we could dedicate our lives and our fortunes, are we attempting to produce a better snack food for animals that will cheerfully eat decaying roadkill?" The answer to this question should probably cover the fact that dog biscuits contain ash, preservatives, and chemicals that are not good for the animals' health, and at least suggest that just because dogs will eat garbage that doesn't mean they should have to. It might also explain why the founder or founders of the company want to produce a better product, and what they hope to accomplish by starting the company. These comments, collectively, make up what is usually called an "Operating Philosophy" or "Business Concept" statement. These should also be easy to understand and quick to write; if you are not clear on what you are trying to do, and why you intend to do it, you probably need to think things through a little better before you go borrowing money or committing time and resources to the project...

Now, I know it might seem obvious that you would need to consider what you want to do and why you want to do it before launching any project, let alone a new business venture into which you are going to pour your hopes, your dreams, and quite probably your life’s savings. Yet one of the most common questions I was asked while I was teaching business plan writing was “Do I really have to write a Mission Statement (and an Operating Philosophy) for my business plan?”

To which I would always reply, “You don’t have to put any of this in the business plan, if you don’t want to. But you do need to know what the answers are before you go any further…