It’s never too late to make a business plan. That is, it’s not too late if you can keep the doors open.
If your business has been running a while, even a few years, should you bother to make a plan? You bet. I can guarantee you are wasting money and losing opportunities if you have no plan. But a plan for a business that is already running is different from a business plan at launch.
I recommend starting with the most important items. Use the 80/20 rule. 80% of your expense goes to the top 20% of your expense items. 80% of your income derives from 20% of what you offer. So focus on the big stuff that can be planned.
Like what?
Marketing.
Do you even have a marketing budget? Most small businesses do not. That’s pretty amazing because a small business particularly needs a marketing budget. And that budget needs to includes projections on return on investment. What will your marketing budget produce? The better you get a predicting that, the more successful you will be.
Don’t merely plan to spend money. Plan to make money. If you spend $5000 on promoting your business, you should be able to plan on seeing an increase in sales but an order of some magnitude in relation to the spend. This varies by industry but the ratio needs to be worth the risk and effort—probably 5:1 at minimum. That means if you spend $5,000 you should get NEW sales of at least $25,000 or your marketing failed. Most of your early marketing attempts WILL fail.
What else needs to be part of your plan?
What will you do with the extra revenue? Plan it and stick to it. Devote some to improving the business. New tools or some work on your shop are good places to start. If your business has debt, set aside a fixed percentage to addressing debt.
Unless we do these things, our business will continue to struggle.
Plan marketing. Budget the sales increase. You must learn that business is not a series of reactionary jumps from fast decision to faster decision. Failure to stop and plan is a plan for failure.
I’ve given you the first step. Plan your marketing and learn to estimate the return. Make a plan and set the budget for 30, 60, and 90 days. Stay on plan.
What else should you plan?
New offerings. A thriving business should have a new offering every 6-8 weeks. These don’t have to be huge. It can be a simple new product or service. But you must constantly offer new things to your customers. Do you have 3-4 new offerings in planning right now? You should. Some new offerings can be “limited time” products. October is the season for Pumpkin spice everything…Starbucks has pumpkin spice coffee. We love it and it sells well. Until we get sick of it. Then we get egg-nog everything. See? Some products can be planned in limited runs.
So there are two big things to plan. Marketing and new products. Think about this and I’ll write more in the next post.
Let’s have a great Q4 2016!
Chris Reich, TeachU