5 Ways to Tell a Great Story with a Business Plan

Top_5_ways_to_tell_story_with_a_business_planIn my last post, I presented the concept that a business plan really needs to tell a story – if it does, then you are much more likely to achieve your objectives for actually writing the plan, such as to get funded, to get a new loan, to attract new employees, or whatever else your objective is for writing the plan.

Having many years of experience within the field of Public Relations, I can offer a unique perspective on how to accomplish this goal. Below are five strategies or approaches you can pursue to help best tell your story within a business plan:

  1. Start with a Great Title – every reporter that wants their story to actually be read knows the importance of having a catchy title. Newspapers, magazines and websites all know this and how important the title is … that is why they don’t delegate this task to reporters, and instead keep that responsibility with the Editor. Think like you are an Editor working for the NY Times … what are you going to include in the article of your business plan to get it read in the first place?
  2. Include an Executive summary – everyone is too busy to read every document and story we see that passes in front of us or in our inbox. We are simply inundated with things to see, read or participate in. If you have a great title and got my attention to make it to page 1, you best get me excited REAL quick, or else you might lose me forever. The executive summary should be hard hitting. The first paragraph or two should point out something new to me – some amazing fact, or stunning growth estimate that gets me engaged. Now I am primed to learn more about this market need and how your new business will address it, and do so with all deliberate speed.
  3. Provide Third Party Proof Points – at this point, once I have read your executive summary and I am now interested to learn more, you need to sell me that your story is legitimate. In other words, are you just making this sh@* up, or, have you done the diligence necessary to really validate that this need exists? Here your story can go into a bit more detail, as you have earned that privilege based on a great intro. Now is the need to document the market size and the challenge that now exists.
  4. Comparable Products or Services Don’t Work – here is where the story needs to explain that not only does a market need exist, but, no one else has figured out what you now know – the solution. Or, that you possess the unique skills and knowledge to address this market shortfall better than anyone else. The story needs to be why you are a “no brainer” choice, if your reader agrees that the market need does exist and that others haven’t yet addressed this need.
  5. Financial Model Supports the Story – here is where the “rubber” hits the road. You have gotten my attention as a reader, you have pointed out a market need and why you are the person best suited to address this need. Now, can you actually make money delivering upon this need? What do the numbers say? Here is where the financial model must provide the proof that an investor is seeking to see if your story really holds together. Based on the assumptions and market position strategies highlighted in the plan, does the financial model reinforce this story? If it does, then you have put all the “stars” into alignment and have best optimized your chances for success.

 

There you have it. Of course, they are no guarantees. You could have the best business plan writer with the best business plan, but it still may not get funded. But, if you have a great story to tell, can find suitable investors or other target audience members that are open to hearing your idea, and you keep at it, then your chances for success will go up dramatically! And, once you have heard all the “no’s” you will get to a “yes” in the end. Here is where the perseverance comes through and the “doing what it takes” mentality is needed to actually get your plan funded.

At that point, all the work will be worth it. Good luck!

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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What Story Does your Business Plan Tell?

what_is_story_of_your_business_planMost people have a pretty good idea of what a business plan is, and what should be included in it. If asked, I would suspect that many people could also tell you that a business plan should include an overview of the business, what the product or service is, the markets being pursued, the competition, as well as some sort of financial model.

In the same way, if someone asked me how an airplane worked, I could tell you that lift was involved, and that the shape of the wings creates a vacuum, which that then helps the plane to get airborne. But, I don’t think you would want me actually building an airplane …

In some ways, this analogy applies to business plans. There are subtleties involved as well as a good deal of work, which might preclude your ever getting the plan completed. In the end, if your being funded is dependent upon having a plan, it might be worth reaching out to someone who has actually written one before.

As a business plan writer who has written over 25 different plans, I understand that each one serves many needs and provides content for different audiences. For example, one of the sometimes overlooked attributes of a business plan is that it must tell a story – about you, your idea and your vision – and how new funding will make your story come true. If your reader can’t quickly get the story, it is unlikely they will agree to fund your plan.

The Vision

Business plans sell a “vision” or a “dream” of what you see that a new business could be, could operate as and could deliver value to your target audience. Your initial audience are investors, potential partners and initial employees you will need to launch your vision.

In this way, a business plan is really a marketing document that is written to pitch your idea to this group and get them excited about the prospect of “getting in” on the ground floor. This sense of urgency of what a fantastic opportunity that awaits must be communicated. You need to tell a story of how your business can provide a greater good, or how it can help address a common challenge. And, if it is done right, your business could then earn everyone a nice profit at the same time.

If this sounds like what is driving you to prepare a business plan, then you should recognize you have a story to tell. Just like a great Public Relations campaign, you have a story to get into your prospects (i.e. investor’s) head. So, it is time to think like a PR professional, at least with regards to the structure and content you decide to put into your business plan.

In my next post, I’ll offer five ways to turn your business plan into a great story.

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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Leveraging a Blog in Public Relations

blog_lynchpin_public_relationsIt is no secret that social media has a bigger role in the world of marketing communications and public relations. This transformation occurred due to a couple of trends. Notably, the emergence of a “Web 2.0” world where feedback can be provided (and is expected) directly to an author. There is now an expectation that feedback can be provided easily and immediately. Secondly, in today’s digital world, it is increasingly popular and economically feasible to begin targeting ever-shrinking audiences on a wider scope of topics. The economics of yesterday’s printed media world no longer applies. This has had a profound impact on public relations.

Let me explain.

Magazines and other printed publications are really just businesses that must make money to survive. The traditional business model was to drive a large audience, representing a group of potential customers that advertisers were interested in speaking to – becoming a source of revenue for these publications. The path to growth for this business plan was simple – expand your audience. As a result, the natural evolution was a world dominated by a few, large publications with big audiences.

Then along came the explosion of the Internet and Web 2.0.

Now online “communications hubs” sprang up in all areas, on just about any topic. The online “story telling” world became highly fragmented and dispersed. Getting a story out now requires a bit more work … more publications must be sought and more placements must be achieved in order to reach the same sized audience.

At the same time, the cost structure of media publications changed. Gone is the expense of publishing a magazine on expensive paper with capital intensive printing presses. And, no need to pay for delivery or distribution costs … the digital distribution model is basically free. In this new world costs have dropped significantly. So, it can still be profitable for smaller audience publications to survive with a smaller advertiser, provided they can find one. If a value proposition can be derived that makes sense to both parties, then a business model can still exist. The digitization of our newspapers, magazines and other publications made this evolution necessary and, I would propose, also possible.

The Blog as a Lynchpin of your Social Media Strategy

Given this communications transformation, it has now become critical to have a blog as part of your public relations program. A blog provides you with a platform to support Web 2.0 activities – the ability for your audience to directly converse with you – while at the same time offers a highly focused venue for you to speak on niche or highly focused topics. Given the leveling of the media “playing field” and the need to reach out to a higher number of media venues, each with smaller audiences, it can be a real benefit if you have your own platform to manage these communications. With control, you have direct insight as to what topics are more popular, and what pain points are most “top-of-mind” for your audience, which can then be an excellent source for new articles to pitch to other publications.

From a company’s perspective, today’s digital communications world offers a unique opportunity to build an online presence through a self-managed media platform. Of course, transparency is needed, however, wouldn’t you rather find out immediately if a customer or prospect was upset, had questions or was experiencing some other issue that could be addressed? This type of interaction is much better dealt with through a forum that is actively visible to and managed by a company.

Certainly it is an investment to create and build a blog, especially if you are just starting out. But, this investment will pay off once you begin earning a share of voice in your marketplace. After all, a blog is really the only social media venue where any content can be realistically added. It is pretty tough to explain a company’s philosophy or value statement in 140 characters or less. And, even if you could, how long will that message be visible? Blog posts, on the other hand, last for years, provided each post has its own dedicated page that is searchable on the Internet. Over time, you can gain a considerable collection of published articles that are all in support of your value proposition and reason d’être.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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What is Your Exit Strategy?

business_plan_exit_strategyThere are many reasons to start a business, ranging from launching a new product, defining a new market segment or fulfilling a passion to address a market gap. Regardless what your reason is for creating a business, if you need outside funding, then you need an exit strategy. Why? Because an investor needs to know how they will get their money back in the end. After all, they are investing in your business with an expectation of making money.

As I speak with clients, this is sometimes a difficult concept to understand. I hear questions such as “I don’t want to sell my business?” or “How do I know what its value is in the future?” These are reasonable questions that need to be addressed as part of writing a business plan.

Valuing Your Business

With regards to the “mechanics” of business valuations, there are a few different approaches. In the end, however, value is most closely tied to the revenue your business generates, either in the current year, or what “proforma” revenue is expected to be next year. Having said this definition, it is still part “voodoo” and part science. A recent article on Bloomberg pointed out that MLB teams are now theoretically 35 percent more valuable than just a few months ago – ten teams are now valued over $1 billion! See article here.

If you are a buyer, you will likely push for current year’s revenue, and vice versa if you are the owner. In some industries, gross revenue is a suitable measure; in others net revenue is an industry standard. Personally, I think that gross revenue is a better guide to evaluating income opportunity. Net income reflects both the market potential PLUS how well you can keep a lid on costs. Expense management is more closely tied to how you, the operator, manage your business. Either way, a number can typically be negotiated as a reasonable baseline for valuation.

Industry Potential

The next factor to consider relates to what industry you operate, to then incorporate an expectation of future growth. The rationale is simple: If your industry is expected to grow rapidly, then there is a higher expectation of value, which translates into a higher income “multiplier.” As a buyer, I will pay a higher price if I think my investment will grow more in the future.

Having worked in the software and high tech industries over the past two decades, I have seen some of the highest income multipliers in the business – as high as 10X! Other industries don’t have such lofty expectations, so may only have an income multiplier of 1X. What this means is that a buyer will only pay 1X income as a purchase price.

Exit Options

Now you have evaluated a valuation strategy, the last step is to identify how you will sell your business. Here are five options to consider, each of which can provide your investor with in an exit strategy:

  1. Another new investor can replace your current investor’s position
  2. An outright sale of the business can occur to a new entity, such as another owner or business
  3. The current management team or owner can do what is called a “Management Buy Out” or MBO or “Leveraged Buy Out” (LBO), which means that new debt is issued for the current team to buy the business themselves
  4. An Initial Public Offering (IPO) can be performed, leading to public ownership of your business through shares on a stock exchange. Note that this exit strategy typically requires a minimum level of income in the $100 million range or more, so this exit strategy may not be right for everyone
  5. A trade could be arranged whereby you now own a different asset in exchange for relinquishing control of your business

 

An exit strategy is a necessary component to a business plan’s financial model, as it demonstrates that an investor’s money will not simply “disappear” once you collect the check. An exit strategy is part of an investor’s lifecycle. Without this expectation, it is unlikely that any new businesses would be funded, creating enormous problems for those entrepreneurs seeking to challenge the status quo or those inventors that have the next greatest thing that we don’t yet know we can’t live without!

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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8 Ways to Leverage Search in Press Releases

search_engine_publis_relationsIt should come as no surprise that with the transition towards a digital distribution model for news delivery, the importance of Search Engine Optimization (SEO) has only grown. It simply must play a role in any digital public relations campaign. This is hardly a revolutionary thought. What makes this task a challenge, however, is the fact that the factors behind how search engines work keep changing, and the fact that you just have to think a little differently when writing a press release. It is no longer reasonable to simply try and write the best announcement – you must think about SEO as part of the process.

Take Google’s latest Hummingbird algorithm update. Many public relations leverage keyword linking as part of their SEO strategy. Now, keyword relevance has declined in importance, at least according to searches performed in Google. What is more important now are search “phrases” as said in conversation. Google is now placing more relevance on conversation queries, and how they can be best addressed from within a search engine window (ideally from a mobile device). Here are a couple of good articles: FAQ: All About The New Google “Hummingbird” Algorithm and How Google’s Hummingbird Update Impacts a PR Agency.

The take away is that you need to either invest the time to educate yourself on the latest trends impacting search engine optimization, or need to hire someone to do so.

Here are 8 other suggestions on how to best optimize your search engine placement, resulting in better awareness and exposure for your press releases that are issued as part of a public relations campaign:

  1. Be sure to pay the fee and publish your press releases through a news distribution service, such as Business Wire or Marketwire. The ones that offer a “linked” online presence is best. Your story will simply be viewed more times and seen as more relevant via Google, Yahoo and other news search engines.
  2. Use good content in your Press Releases, and publish a copy of the release on your website
  3. Offer a .pdf of your press release, optimized for SEO, on the same page to help maximize your online footprint; .pdf files are indexed just like an .html page
  4. Integrate this release page with other content that someone might want to read after finishing reading the press release, to further engage them on your topic
  5. Offer a registration page at some point during the process to then follow up with these visitors
  6. Write a complementary blog post on a similar topic, to then offer further content and support for those seeking to learn more about the news event you published
  7. Leverage any free PR distribution sites, especially if they offer HTML linked keyword submissions
  8. Broadcast the issuing of your press releases by the social media channels best for your audience so your followers get first notification, which will then also help your search engine rankings

 

As is typically the case with disruptive innovations, the scope of change is often wider than originally conceived at the point of inception. In a paper-based news world, the only distribution options were paid subscriptions and walk-up sales at newsstands. In a digital world, news is found in many different locations in different ways, which includes the searching of relevant topics by keywords. In this world, SEO plays an important, continuing role to ensure messages are heard in a timely manner, by the right audience. In fact, I would argue through a better distribution model that is more efficient than the world has ever seen.

 

Gordon Benzie is a marketing and public relations professional, and a business plan adviser, that specializes in preparing and executing business plans and marketing strategies. Gordon can be found on Google+ or at gbenzie@yahoo.com

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Are Paper-based Communications Dead?

paper-based-communicationsPaper-based media has long played a prominent role as a way to communicate. Go back in time, however, and it could be classified as a disruptive invention. Stone tablets, monuments and cave walls used to be the only options for non-verbal communications, and had done so for thousands of years. Then the Egyptians created Papyrus, which became the new medium to tell a story. This invention dramatically expanded an author’s sphere of influence.

Today a similar transformation is underway. The digitization of communications and knowledge is having a similar, dramatic effect on how stories are told. Access and speed to information has been radically changed – news stories now break in minutes – which has greatly changed how public relations and media professionals work. Marketers must now decide if it is worthwhile to pursue paper-based news publications. How should you grapple with leveraging online PR while not impacting your existing paper-based communications’ effectiveness?

In order to address this question, the right “textbook” answer is to talk with your target audience. What do they currently read? How do they get their news?

Unfortunately, this can be a difficult question to answer. The reason is that the process of how we get our news today has also changed. It is more than simply replacing paper with digital. Let me explain.

Back in the 1970s and 1980s, the way many of us got our news was by listening to Walter Cronkite, Peter Jennings and other news anchormen. They created a predictable framework for us to stay current with the news. CNN changed everything by offering news 24/7. Twitter and social media took this change to a whole new level. Now we learn about news “nugget by nugget.” If a breaking story occurs, those of us with smart phones get tweets, texts or alerts within minutes of the event. Others get news every time they open a web browser, or have a spare 10 minutes, or by still reading the paper over breakfast in the morning. As a result, the answer to the question of “Where do you get your news?” becomes complex – there is no one answer. It comes from a wide variety of sources, which can change from week to week.

As a marketer, this diversity of sources means that public relations outreach just got more complicated. The way your audience gets news has become highly fragmented. And, they have less time to allocate to any single activity. As a result, your marketing communications strategy now must span multiple sources – paper and online – in an attempt to include each of the publications and venues your audience might come in contact with.

It should also now be apparent that traditional methods have lost at least some of their effectiveness. That is why all the big newspapers have invested in building their online presence. Those that don’t will simply be left behind. New approaches are needed to cut through the clutter to gain attention of your audience, at which point they can then be in a position to actually hear what you have to say. When viewed in this light, it is no wonder why public relations professionals have embraced social media as a way to cut through the noise and get their message to a specific target audience. The type of medium isn’t so much of a problem as getting the attention of your audience.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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Giving (and Gaining) Value from a Social Network

The_value_of_a_social_networkRecently I wrote about the concept of identifying “personas” or profiles of your prospective customers, as part of your social media marketing program. Once you have completed this task, considerable value can be obtained by leveraging social media to identify where these Personas “live” or spend their free time. The ultimate goal is to build a relationship from a foundation of trust to gain valuable insights as to how your product or service offers the greatest value to the right audience. Further, if done correctly, this exercise can yield insights as to what future direction you should be taking your product roadmap, or what future markets might be most lucrative to pursue.

The first step is to identify a couple of personas and then figure out what social networks these individuals frequent. Here is where a little market research is needed, as well as a few Google searches. Think like your prospect who wants to learn more about how to buy, use or retire your product – given the wealth of information now readily available on the Internet, this shouldn’t take too much time. Once identified, your next step is alignment – becoming a trusted advisor, an educator or a visionary that offers insights to this group of people that they will value and listen to.

One example of how to accomplish this goal is to reach out to community organizers or owners to see if there is some future event you can sponsor or host. You could even reach out to the community to introduce yourself as a brand ambassador, with the intent of learning how to better improve your product. You could volunteer to offer free trials for new products, or paid focus group opportunities. Public relations can play a role here.

This strategy can help draw out early adopters and others that have a passion for your service or product, which in the end, is the perfect person for you to speak with and draw feedback from. If you gather market intelligence deemed worthwhile and execute upon it, this person will likely become a future advocate.

It is as simple and as complicated as that. I say “simple,” in that if you do these steps and your future product vision is in alignment with the feedback, you have a “win-win.” Things get a bit more complicated if a gap exists between your product direction and the feedback you obtain. At that point, you have to ask yourself, what is the right direction? Either you are going down the wrong path or you are speaking with the wrong prospective customer. After all, if you aren’t designing your products and services for end users to gain value, what is the point?

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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5 Reasons to Write a Business Plan

new-years-resolutionThe tradition of stating a New Year’s resolution is interesting. As the clock nears 12 midnight on December 31st, a popular topic is “what will you accomplish in the new year?” It makes sense … when a significant milestone event occurs, it is natural to reflect on what we have already accomplished, and what the future might hold.

I suspect, however, few New Year’s resolutions actually come true. There are many reasons for my belief, ranging from the alcohol consumed at the time (I said what?) to the motivating factor behind the pronouncement (showing off on a first date?) to simply how much thought was put into the statement. Most importantly, however, is the fact that these resolutions are seldom documented in writing.

Research suggests that the simple act of writing down a goal has a profound impact on actually achieving it. According to a study presented in an article published by the Chronicle, the student-run newspaper of Duke University, it was concluded that:

  • 80 percent of Americans say they don’t have goals
  • 16 percent do have goals, but they don’t write them down
  • Less than 4 percent actually write down their goals
  • Less than 1 percent review them regularly – but – this small percentage of Americans that do end up earning 9X more over the course of their lifetime

These figures are breathtaking. This research suggests 99 percent of Americans are missing out on significant earnings potential, based on the simple fact that they are not writing down their goals and reviewing them. Why might this be the case?

The Importance of Documenting a Plan

My theory is that the act of writing down, and ideally sharing a goal with others, makes you accountable. And, it makes it harder to forget or “de-prioritize” those goals, which you initially set out to accomplish.

Pictures are another helpful technique to be more committed to accomplishing your goals. Do you want to purchase a home? Find a picture of your dream home as your wallpaper on your laptop or PC. Then every time you use your computer you will be reminded of that goal. The logic and psychological effect is the same if you write down your goals.

A Written Business Plan as a Documented Goal

Those interested in starting their own business face a huge challenge, one that can be quite difficult to accomplish. Any help you can do to make this goal become a reality is probably worth investing in, which brings me to this list of 5 reasons why you should write down a business plan if you are serious about starting a new business or expanding an existing one:

  1. Writing a business plan makes you more committed – writing down your plan, and following through with it all the way through funding will keep your momentum moving forward; the act of writing it down forces you to take your plan more serious and puts the odds of success more in your favor
  2. Documenting your plan and sharing it with others holds you more accountable – you simply can’t hide when you go public with these types of statements, which will be a great motivating factor to completing your vision and sticking it out
  3. Better articulation of your vision for a new business creating a detailed plan that is in writing forces you to think in a more comprehensive manner, to better evaluate if your idea could actually work; there is a big difference between talking about an idea and documenting it in writing
  4. Developing a cash flow statement tied to your business idea helps you to better understand how to monetize your idea, adding further testing and review to evaluate if your plan could really work, and you can indeed launch your business
  5. Devoting the time to either hiring a business plan writer or writing it yourself demonstrates commitment to your audience – as you present your idea to potential business partners, investors or potential employees; the presentation of a written plan shows your audience that you have invested time, effort and resources into your plan, so it will be viewed more seriously

Hiring a business plan writer as a third party to challenge your thoughts and evaluate if your plan could really work is a great way to test your vision and lay out all your cards on the table. Getting a third party involved lets investors know how serious and committed you are, just as writing down goals improves the likelihood that you will accomplish your goals.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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In Pursuit of a Social Media Persona

social-media-marketingIn a prior post I made a few observations on the incredible proliferation of social media, and what a great thing this social transformation has been for marketers. Never before has it been so easy to reach out to a group of prospective customers (or clients, which are different according to Mr. Godin’s recent post) that all share a common attribute, interest or buying behavior. This exercise is a given for anyone writing a business plan or hiring a business plan writer today.

The next question is “what do I do next?” How do I take advantage of this built in community?

The first step is to identify a couple of top profiles or “personas” you are most interested in getting to know. Your objective is to identify what type of person is most likely to gain the greatest value from your product or service, and hence could become a future brand advocate. Ideally, this person will become so passionate about your offering that they become an influential reference to secure new business not only for themselves, but for others in their community – your target audience.

It might be helpful to consider where some of your best customers or clients came from in the past. Were these people that bought your service or product for themselves, or were they buying on behalf of someone else or the company they worked for? Was there a life event that triggered the purchase? Or, was their purchase tied to an entertainment choice? In all likelihood, you will identify several of these personas that make up 80 percent of your buyers, based on the 80/20 rule.

Once you have identified the first profile, the next step is to figure out where this persona “hangs out” in social networks. If they don’t, then social media may not be of much value for you. Assuming they do, your next task to join that community. Here is where a line must be drawn – don’t try to fool others that you are a potential buyer – full disclosure is necessary to build trust into your relationship. Deception might get you one sale, but it won’t build you a following.

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When is the Right Time for a Business Plan?

Choosing a time to write a business plan is challengingOne of the questions I hear frequently is that of timing … when is the right time to devote the time and effort to prepare a more formal business plan? It is an important question, and one that must be considered carefully. If you write too soon, your idea may be completely different than what you ultimately go to market with. If you wait too late, much of the benefits will be foregone. How far along in lifecycle in your future business does it make most sense to more formally document your vision?

To start, there is no one “right” answer. Some will argue that there is no point in writing a plan at all, at least in the beginning, as so many factors are subject change. I am reading an interesting book right now by Clayton Christensen titled “How Will You Measure Your Life?” In it, the author talks about the need for two business strategies – a deliberate and an emergent one. I found this analogy quite good. In order to begin a new venture (or adventure), it is necessary to have an initial direction to follow. The author coins this initial decision as being a “deliberate” strategy. He gives the example of Honda entering the U.S. market with a large bike that will directly compete against Harley Davidson’s products. Soon, however, it became apparent that this strategy wasn’t working, as evidenced by a lack of sales. Meanwhile, a group of employees began using Honda’s smaller bikes off-road, and were having a great time doing so. This “unplanned” activity and market segment became an “emergent” strategy, which ultimately gave Honda a foothold into the lucrative US market for motorcycles.

Using this author’s methodology, a formerly written business plan can be a great tool to validate an initial or deliberate strategy. This effort can give you a way to rationally defend your initial decision to pursue a new product or market expansion. As part of this process, you will either gain a greater comfort level with what you are doing, or not. Regardless, valuable conclusions will result (do I “stay” or do I “go”?)

An emergent strategy, however, might be best viewed as opportunistic, and one that might need further validation prior to making the investment in preparing a full, formal business plan. This approach then lets you be open to new “emergent” opportunities while at the same time realizing that you did pick your deliberate strategy for a reason – you need to give it a fair review and effort to validate that it either works, or that it doesn’t. Writing a business plan on the initial deliberate strategy is a great approach to help validate if this initial idea is indeed worthy of the effort.

Christensen states that about 93% of all startups change their strategic direction at least once before getting it right. So, flexibility and preservation of initial capital are clearly critical for survival. But, an initial direction is still needed before you can begin engagement in your idea.

Two Reasons to Write a Business Plan

The role of writing a business plan is really two-fold. The first is to better clarify the strategic direction you want to purse with your business endeavor. If, for nothing else, the act of writing down your objectives, strategic direction and competitive differentiation forces you to really think about these critical thoughts. You can’t go to market unless you are really comfortable in telling your story. Writing it down in a business plan forces you to review all the points, including those you might be inclined to gloss over for lack of interest.

The second role of writing a business plan is to get funding. An outside bank, business partner or venture capitalist will want to have some sort of documentation explaining in detail what it is you plan to accomplish. After all, it is their money that you will be investing. At this point, a more formal business plan starts to make sense. Note that while an angel investor might prefer to hear your “elevator pitch” and in a few minutes, and then decide whether or not they will fund you, it still is very helpful if you have gone through the exercise of more formally reviewing your target market, competition, product positioning and pricing strategy to better understand how to turn a profit.

Alternatively, if by flushing through your new business idea in greater detail, you discover that there is an inherent flaw in your plan, it is better to have found out earlier versus investing considerable effort, resources and money into an idea that really couldn’t work.

The Right Time

Getting back to the question of timing, as you come up with an initial idea for a new business or product line extension, it probably doesn’t make sense to prepare a business plan. First, you need to do some “gut” checks to see what sort of viability your idea might have. That review process might include talking to industry experts, potential business partners, friends and family. If your business involves the manufacturing of a new product, then it might also make sense to get an idea of what costs are involved and what possible patents might be required in order to avoid potential infringement issues.

Once your initial review is accomplished and you feel comfortable your idea definitely has merit, now is probably a good time to consider writing a plan that captures the salient competitive and marketing requirements to get your idea off the ground. Through that process, you will soon realize whether or not your idea could work, at which time it is highly likely you will need to consider the use of outside funding. As your plan will be virtually complete by that time, having the plan already written will let you continue forward without delay.

 

Gordon Benzie is a marketing communications professional and business plan adviser that specializes in preparing and executing upon business plans and marketing strategies. Gordon can be found on Google+

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