theStartups

The #1 key to a successful business is…?

Actually, we’re really curious how would you have answered this question. Let’s take some lucky guesses.

It has something to do with marketing & advertising, right?

Is it the amount of money you invest in your business?

Smart ownership/ management is also on the list.

Oh no, wait. Maybe it’s the sales.

Is it good partnerships?

Technology?

The customers?

Your team?

Or could it be connected to the “mission-vision-values-commitment-determination” blah blah?

Oh, come on, which one is it? Are we even close?

OK, we’ll spare you the struggle.

*drum beats*

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Ta-daaa!

Dearly beloved, the number one “secret” to running a successful business is PLANNING.

Nothing in this world can ever be built and/ or expected to work properly unless you have planned for it first.

Why is planning important? Drama aside, the reason why we’re having this conversation is that the number of people who believe they don’t need a plan to build or grow their business is s̶u̶r̶p̶r̶i̶s̶i̶n̶g̶ shocking.

Think of a random thing. It can be a car, a house, a spaceship or a matchbox. Let’s take the car for example. When you first see a car, it doesn’t look too complicated. In fact, a car looks so simple that, upon sipping the last drop from a 1L bottle of vodka, some people would swear to God they can build one with their bare hands (we all remember Fred Flintstone’s man-made, weird-looking pile of rock and wood he drove to get from point A to point B, right?).

Now here’s a fun fact: according to Toyota, a medium-sized car is built from about 30.000 pieces. Now, do you still think you can assemble it by yourself, without the plan? ‘Cause if you do, your result is probably gonna’ look like this:

Image source: richardsona.com

And you don’t want that for your car. And you don’t want that for your business.

What should I include in my business plan?

We’re going to “humanize” this chapter, for the fun of it.

  • business strategy – this is the skeleton. It’s where you project the entire journey of your business, from conception to fully-grown: what’s your starting point, where you’re heading to and how will you get there.
  • departments – the vital organs. The departments can either be developed internally or outsourced (we already talked about it here, we won’t be going back), what’s important is that you decide from the start what are the business areas that will keep your company alive.
  • tasks – fuel for the organs. Your business plan must include the main actions that need to be completed in order for each division to contribute to the prosperity of your company.
  • flows & processes – the veins & ligaments. Once you have a clear vision on what are the core responsibilities in each department and you’ve established the best practices and procedures to complete them, you need to connect every task with all the other tasks it impacts. This will give you an overview of how your business works and you’ll be able to constantly improve and optimize your processes.
  • budget – the blood flow. The budget includes all money traffic, every in and out from your company: acquisitions, investments, profit, costs & expenses, losses, margins, and any financial forecast.
  • human resource – the good bacteria. Now that you have a functional body, you need to colonize it with some skilled people and decide who’s in charge of ensuring the good functioning of every department (key roles).
  • timeframes – estimates for incubation and development. You want to know how long will it take for your business to go from baby to adult, and the only way to find out is by estimating how long will it take for every component to reach its maturity.
  • KPIs – the eyes. Determine which are the most important indicators that measure the performance of every department and use a KPI real-time reporting system to make sure you are constantly aware of how things work.

When is it OK to deviate from the plan?

If you’re absolutely sure you’ve built yourself a realistic plan…

1. never deviate from it, if he plan is working properly and the only reasons why you would change its course are because:

  • you had a cute dream last night about doing things differently;
  • your associate is the kind of person who’s full of creative ideas but somehow he never managed to build a long-lasting thing in his entire life;
  • the voices told you to do it.

2. deviate from it immediately, if:

  • your business stops making money;
  • your business starts bleeding money;
  • your associate is the kind of person who’s rational and reasonable and he shows up in your doorstep carrying reports and proofs that things went south.

… because even when you’re absolutely sure you’ve built yourself a realistic plan, you should still keep in mind that you’re a human being. And humans make mistakes.

Plan B

Highly recommended, totally doable, however, most companies won’t have one.

Why have a plan B? Because it’s good to have a safety net should you ever need one. Or because you found a 2-way solution on a matter and, depending on the direction you pick, you’ll know what to do next. Backup plans are like life insurances. You pray you won’t have to access them, but if shit goes down at least you’ve got your ass covered.

And if I have a plan, can I still fail?

Well.. yeah. First of all, downloading a bunch of ideas and opinions on a whiteboard and then using numbers to prioritize them isn’t exactly a plan. Building an accurate plan takes time and attention to details and vision and good business knowledge and experience and strong management and decision-making skills.

Secondly, there are plenty of other things that could go wrong:

  • you don’t keep up with trends or technology and someone else comes up with a better version of the products you sell or with sexier services than the ones you offer;
  • some other key members from your team fail to follow the plan and the whole thing blows up internally;
  • totally random or unforeseen stuff happens: political or economic situation goes awry, investors decide to withdraw from the business, associates stab you in the back, the company gets involved in a major scandal and loses global trust

and so on.

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Planning is the ground of a healthy business. It helps you set the right direction and have control over your business, it gives you the feeling of security, it helps you increase efficiency, handle your resources, make good decisions and achieve your biggest goals.

Have a business specialist help you with building your plan, especially if entrepreneurship is new to you. One of the vital components of a plan is knowing how to calculate the risk, and an expert is best qualified to help you avoid disasters. Otherwise, it’s all just flipping coins and Hail Marys.

Authors: Vlad Diaconu, Andreea Mares

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