ESYB2 036 - What Is A Business Plan
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[00:00:00] Now let's get into a little bit of theory of what exactly is a business plan and I want to cover a lot of issues that typically come up during business planning. The first thing is, a lot of people just want to have a business plan document just to have some document. They feel good about it, but it's not some kind of a homework assignment and it's not to be used as a tool to procrastinate.

A lot of people use business planning to not start the business. They're in perpetual planning and at some point they have to start. So make sure you do not use that as a way to procrastinate. And when you're planning, it must have good implementable strategies so that sooner rather than later you can begin implementing the strategies.

And the quality of the strategies equate to the quality of the business plan. The quality of the business plan is not using some pretty template or pretty fonts or having it being long or being [00:01:00] complicated. No, it's not that. It's just the quality. of how realistic are the strategies and there's a couple of mistakes that people make all the time.

A lot of people like to outsource business plan writing. Guess what that people who are writing it do? They just copy and paste their previously written business plans and just change your name and a few details of course and some numbers but really they're just copying and pasting most of the time unless they're charging really high end fees.

And Often people who are planning, they like to use random templates as guides and again it's just random templates, nothing specific for your business. And the same thing with using business planning software, most of them are not that good as just fill in the blanks, but it's not specific to your business.

That's the problem with all those cases. And anybody experienced like an investor, like a good potential partner can immediately tell. If the business plan is good or bad, or if the [00:02:00] strategies will work. So when you're writing it, get coached. Instead of just hiring somebody random to write it, get coached and write it side by side with somebody because during that writing, they can Help you catch a lot of mistakes and they can train you and they can explain things to you it will end up being a business plan that's unique for your business with quality strategies for your business and ideally always get coached by somebody who has been successful in specifically the kind of business you are planning because they'll know The ins and outs of that specific business and industry.

Now, let's also talk a little bit about the purpose of the plan and when you need to have it. A lot of people think, I'm going to give my business plan to a bank. Well, guess what? Banks often do not loan to companies which have not started. That's very rare. If you want to take a loan to fund a company which hasn't started, it's usually through a personal loan, which is [00:03:00] problematic in its own case.

So it's a little bit of a misconception that a business that's not started will get a loan from a bank. Also, a lot of people think they're going to give their plan to investors. Well, investors like real world traction and real world implementation. And they prefer shorter pitches rather than longer plans because investors, real investors get bombarded with these plans and they just don't have time to read through all the details.

So there are two instances when I recommend having a business plan. In all cases, you need to plan so you can organize your idea. And there's always a balance. No planning is terrible, and too much planning is terrible. You've got to find that middle ground. Because the point of planning is to catch a lot of the mistakes early.

You're never going to get all the mistakes out, but you'll catch a lot of the errors, and every error you catch is directly proportional to increasing the chances of your [00:04:00] business's success. So of course, you should always plan just to organize your ideas. It doesn't have to be a written plan necessarily, because you might not end up giving it to banks or investors, but you should have it for your own sake, maybe just in your head.

And you specifically should have it if somebody Like a bank or an investor, if they actually ask for it, then of course you write it and before writing it, you should ask them, what's the length? Because an investor might ask for a one pager, they might not want a whole business plan, like 10 pages. And actually that's something you can ask them, no problem.

Now let's talk a little bit about The business plan definition and business models. So a business plan, the way I like to think of it is it's an outline of your business model. All it means is how different parts of your business function on their own and most importantly, together. And from the plan, it should be easy to determine, is the business feasible?

Do you see the light at the [00:05:00] end of the tunnel? And of course, whenever you hear me talking about business planning, you know I start with a three sentence plan. What's the business? Marketing. How does it make money? Those are the core aspects and under those core aspects are many other aspects and those subcomponents can make a business complex.

For example, you might have inventory, you might need to ship, you might have logistics, you might have storage issues, or you might not have them at all. You might have vendors or you might not have them at all. So in many different cases, there are many, many sub components. For example, even in your marketing.

Under marketing, you can have business card marketing, flyer marketing, networking marketing, event marketing. And it's very easy to get lost in them and to have them make things confusing. That's why it's important to start with the three core aspects. That three sentence business plan. The simpler you keep it, the better for you.

Because complexity, it might seem attractive in theory, but actually complexity can hurt because you want to have things clear and simple. And [00:06:00] all the time, when you're planning and when you start your business, what you want to do is adjust the parts of the business so that they work well together. For example, if you change your business a little bit, well, some marketing can stop working.

So you'll have to adjust the marketing. And maybe you'll adjust the marketing, but maybe it becomes too expensive, so it's no longer profitable. Oh my god, so you have to change how the business is, or maybe redo the marketing again, so it's profitable. And so you kind of shape your business model over time.

So your business model is something fluid, that you keep on adjusting, adjusting, adjusting, and improving over time.

