Summary: Create a Business Plan
So you have an idea for a business, that’s great but what comes next? I won’t waste your time writing another article about how to write a business plan, as there are plenty of resources available online to assist you with that. Most of them illustrate what’s the best thing to do in theory, so instead of re-communicating that, I thought it would be more important to talk about how things work in reality.
With that, is creating a business plan still an important step in building a business? If you want to increase your likelihood of success, then yes!
Planning versus Reacting
What would you do if we entered a global pandemic in year 2 of your business? How about if your sales are 20% lower than you had expected? What will you do when life throws you a curveball and things don’t go exactly how you thought it would? This is where having a well-thought-out business plan will offer you the opportunity to act quickly and accelerate your business in the right direction.
Most people don’t consider this when they are writing their plan and that is a huge mistake. This is where it is important to understand the difference between writing a business plan for the sake of borrowing money from a bank versus building a plan that can actually help to guide you through the inevitable challenges you will face as an entrepreneur. For me, I have always found it valuable to work out a number of different scenarios so that I could understand how different events would impact my business and what would be the best way to respond.
When I started my wealth management business, I built 4 different simulations in excel based on different scenarios ranging from ideal, conservative, optimistic, and “catastrophic event”. This scenario analysis certainly wasn’t required by my bank to borrow money to start, but they became invaluable as we entered a global pandemic in year two of our operations. Admittedly, I didn’t know we were going to enter into a pandemic or what that would mean for my business, but I did run a scenario that resembled a global financial crisis, and I used that experience to formulate a plan for what I would do if that happened early in our existence. This was the best exercise I could have gone through in starting a business because when the Covid-19 pandemic hit and fear sunk in for most as we experienced the first lockdown, I knew exactly what needed to be done in our business. I knew that we needed to invest in digital marketing and that this was not a time to be sitting back and building fences. It was a time to be reaching out to people and I knew that 10 years from now I would likely look back and say this was an incredible growth opportunity. I was able to act quickly because I had already thought this scenario through, and my reactions were more like muscle memory vs. trying to figure out the next course of action.
Avoiding Analysis Paralysis
It’s important to understand that you can go overboard in this exercise as well, which is equally detrimental to your business. If you get caught in analysis paralysis because you are trying to think through every single possible scenario that could happen, then you will never achieve liftoff. I would recommend that you try to identify the higher probability scenarios that you could face and walk through those scenarios from start to finish, planning exactly how you would respond so that you never have to react. When you react, you can make bad decisions, you can make mistakes. Responding means that you are acting exactly how you would like to based on the external factors that you are facing. You are making decisions that you will be happy with and that are in the best interest of yourself and of course your mission for your business.
A final piece of advice I will offer you when planning out your business is be ready to adapt and never become married to your plan. Things change. The world changes. Consumer interest changes. Your business needs to adapt accordingly as does your plan. Be prepared for the fact that things will never go exactly to your well thought out simulations, no matter how much time you spend on them. I have witnessed many business owners die on this hill because they try to force their plan while the world around them is telling them that it won’t work. Adapt or die should be a constant part of your philosophy in building your business. When it’s all said and done, planning can help you to lift off the launchpad, but execution is what will get your business into orbit.
For more great Modern Money articles on entrepreneurship and starting a business, click here!
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with iA Private Wealth Inc, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.
