In our last article, we introduced the “6 P’s” of business success (Product, Place, Plan, Process, People and Principles). We established that having a viable product (or service), at the right price, in the right “place” proves crucial. These three principles form your “niche,” which is the basis of your success.
But having a great niche, by itself, does not guarantee success. You must also have a good plan to manage the business. Here many entrepreneurs fall short. About 50 percent of all new businesses in the U.S. fail in the first five years. A failure to properly plan and manage the business may prove the culprit. Planning proves key to management. I am sure that you have heard it said: “If you fail to plan, plan to fail.” Planning simply means thinking ahead and trying to anticipate all the important things you need to get done to achieve your goal. We all do this instinctively. For example, the simple act of going to work on a morning requires us to think ahead and work out all the things we must do to get there at a specific time. Just like your day-to-day schedule, you must work out a plan to deal with issues such as:
Questions to Consider
- What is your niche and how do you win customers over? (your Marketing Plan)
- How much product must you sell to “break-even”, what are the anticipated costs associated with the business and how much capital is needed for start-up? (your Financial Plan)
- How will your product be made, when, where and by whom? (Production Plan)
- Who is going to manage and lead the business, what key people are needed to make this all work?(Leadership and HR plan)
The above are just some of the issues for which you may need a plan and the following are some ideas to help you get started:
Issues To Look Out For
- Planning is common sense. I have heard entrepreneurs say that business planning proves hard for them because they struggle with numbers. While business is based on numbers, planning is based on logic, and you don’t need to be good at math to think logically. What you do need, is to understand certain key business principles and you may have to invest in yourself and get some training, before you invest in the business.
2. Get competent feedback on your plan before you invest capital. Too many entrepreneurs only want to hear positive feedback about their business and many of them rush off to invest, without getting an objective assessment from someone who would challenge their thinking. This usually does not end well.
- Write your plan down and update it periodically. I encourage entrepreneurs to make notes of important business ideas, plan details, strategies and obstacles they must overcome. A business plan is a working document that must be modified and updated as time goes by and circumstances change. It is not a one time deal where you write it and forget it.
4. Get technical help where needed. Planning also requires technical expertise and experience, especially where with a large business with complex issues. Some cultures practice passing down successful businesses from one generation to another, as the old owners train and mentor the new. If you don’t have access to this support, you may need to find someone you can trust to provide guidance and advice when you need it. The great business pioneer Sir Richard Branson credits much of his success to surrounding himself with smart, competent business people and listening to them. Sounds like a good idea to me.
In the next segment, we will consider how Processes and People influence our success. In the meantime, feel free to send me your comments and questions at [email protected] and I will do my best to answer them.