Small Business Plans.
How to create an effective small business plan to help you develop and launch your business, with Henry Lopez. Henry is a serial entrepreneur, small business coach, and host of The How of Business podcast.
On this episode of The How of Business podcast Henry focuses on Small Business Plans. Do you need one? What should you include in them? Who is it for? How do you go about completing one?
What is a Business Plan and why do you need one?
A business plan is a document that organizes and explains your plans for a new business. A good business plan not only helps you focus on the specific steps necessary to make business ideas succeed, but it also helps you achieve short-term and long-term objectives. It also helps to create some order from the chaos that is part of starting a new small business. It helps you communicate your business idea to others, and validate your business model.
Who is the Business Plan for?
It’s important to first understand who is the audience for your business plan, and that audience will likely change as you progress with the development of your new small business. Determining who the plan is for will help with deciding what it needs to contain and how formal it needs to be. Initially, your business plan is for you and perhaps your business partners. Then you may need to create a version for investors, lenders and potential landlords.
Do you need a formal Business Plan to be successful in business?
No, but it certainly helps! If done right, it helps you validate that your idea actually has the potential to become a successful and profitable small business.
There many different types of Business Plans, and the format or type that’s right for you depends in part on what phase you are in and who is the audience. Some argue that formal business plans are outdated and nobody reads them. That’s not necessarily true. It depends on your audience and objective. There are plenty of examples of highly successful business that started with no formal business plan (i.e. Southwest Airlines) and others that started with a more elaborate university project (i.e. Dell, FedEx).
The most common reason small businesses fail is that they run out of money! To avoid this you need to plan for enough up-front and on-going working capital and track cash flow. These are essential components of an effective small business plan.
Join Henry Lopez for the next Business Plan Workshop. Learn how to create you Business Plan to help you start your small business.
How do you create a business plan? Do you need a small business plan? What should I include in my business plan? To help you answer these questions, The How of Business provides podcast episodes and resources to help you create the and most effective business plan to help you launch you small business.
Lean Business Model Canvas:
The Lean Business Model Canvas is a template used for developing new business models. It’s a visual 1-page description of business plan.
The nine “building blocks” of the business model design template that came to be called the Business Model Canvas were initially proposed in 2005 by Alexander Osterwalder. Since the release of Osterwalder’s work around 2008, new canvases for specific niches have appeared.
The Lean Business Model Canvas is also great for internal planning.
Advantages of the Lean Canvas approach include:
- Supports quick launch and iteration.
- Avoids writing a lengthy document that no one reads.
- Avoids the analysis paralysis that often comes with long business plan development.
- Works well for lean start-ups and also works well as a starting point to iterate through ideas
Download an example: Lean Business Model Canvas
Use the Lean Business Model Canvas either early in the process of developing your business, as it’s a great way to quickly validate the business model. It’s also a great way to develop and execute on an MVP (Minimum Viable Product) approach to developing a small business.
Pitch Deck or Business Summary
A small business Pitch Deck or Business Summary is often appropriate for sharing a summary and the highlights of the business in the early stages of business development. It’s and ideal type of business plan for potential investors, partners, and landlords.
The contents of a Pitch Deck or Business Summary usually include:
- Project Summary
- Your Team
- Business Model Highlights
- Preliminary Financial Projections
- Capital Plan
Complete Formal Business Plan
A complete small business plans includes all of the details of the proposed business. An effective business helps you create an effective strategy for growth and profitability, helps you determine initial and future financial needs, and can be used to attract investors (including angel investors and VC or Venture Capital funding) and lenders.
Free Download: Business Plan Outline
Common Business Plan Mistakes
The biggest mistake with business planning is to not create one at all. Other common mistakes include getting stuck because of the writing, worrying about what others will think about your plan, telling yourself what you want to hear and not getting help to challenge your assumptions.
Aside from creating your business plan, what most important is that you engage others (a mentor or coach) to challenge the assumptions you have made in your plan.
Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of this episode of The How of Business podcast show – dedicated to helping you start, run and grow your small business.
Resources:
Free Downloads:
Videos:
- A Plan Is Not a Strategy – Harvard Business Review
A comprehensive plan—with goals, initiatives, and budgets–is comforting. But starting with a plan is a terrible way to make strategy. Roger Martin, former dean of the Rotman School of Management at the University of Toronto and one of the world’s leading thinkers on strategy, says developing strategy means going outside an organization’s comfort zone and escaping the common traps of strategic planning.
Books mentioned in this episode:
[We receive commissions for purchases made through these links (more info)].
Related Workshops:
Related Podcast Episodes:
You can find other episodes of The How of Business podcast, the best small business podcast, on our Archives page.
Transcript:
The following is a full transcript of this episode. This transcript was produced by an automated system and may contain some typos and some other minor inaccuracies.
0:00:05.6 Henry Lopez: This is Henry Lopes, and this episode is all about business plans. Do you need a business plan? What should you include in them, who is the business plan for, and how do you even go about completing one, to receive more information about the halos ness, including the links to the show notes page for this episode, and to schedule a free coaching consultation with me, just visit the holiness dot com. So what is a business plan and why you need on a business plan is just a document, and it really initially, certainly doesn’t matter what the format is of this document, but it’s a document that organizes and explains your plans for a new business, a good business plan not only helps you focus on the specific steps necessary to make business ideas that succeed, but it also helps you achieve short-term and long-term objectives related to getting your small business launched, it creates an order to a big extent from the chaos that’s part of launching any small business, it helps you communicate your idea, but beyond the idea, it helps you communicate what is the business model behind this idea that will actually make it a successful business and not just a good idea, it helps you validate them that this business model behind the idea is solid.
0:01:45.0 HENRY LOPEZ: Of course, we’re just projecting, but it’s important to validate and to have that challenged, and I’ll come back to this point ’cause it’s so important.
0:01:54.0 HENRY LOPEZ: And that’s one of the key benefits in my experience, we’re developing a business plan before you launch your business and as you’re launching your business.
0:02:03.3 HENRY LOPEZ: Who is a business plan for…
0:02:05.2 HENRY LOPEZ: I think that’s another big question that you have to ask yourself, and depending on what stage you’re in in your business, it’ll be for different audiences, initially, the business plan, the audience, where their business plan is you, perhaps you and your partners, if you have partners in this business, that’s who this business plan is for, then eventually as you develop your ideas, you develop your business, you may have to present it to investors if you’re seeking investors, and so the business plan needs to take on a different form in order to satisfy what an investor might be looking for… Then you might want to seek a loan for your business from a bank, and most banks in my experience, are going to want to see some version of a business plan, especially the financial projections portion of a business plan, and then if you’re looking for a brick and mortar space, if you’re going to lease a commercial space, landlords often will ask for a business plan before they will consider you for release space, so those are some of the audiences that we wanna keep in mind, and the reason it’s important is, especially initially, what takes a lot of pressure out of creating this business plan is to think about it as just being for you and your partners, so don’t worry about how eloquent it is or how pretty it may or may not be, or how good the grammar may or may not be…
0:03:29.8 HENRY LOPEZ: It’s about using this tool to begin to gather your thoughts and your plans and begin to validate that the business model for your idea makes a sense, it’s just for you initially, and I think that that takes a lot of the stress off of… And a lot of the paralysis that comes from not getting a business plan done, so do you need a business plan to be successful in business? Well, the truth is, no, but in my experience, it certainly helps if it’s done right, it helps you validate that your idea actually has the potential to become a successful and profitable business, then when it gets hard though, when you go and get to the point of having to actually build this business plan, that’s when I see a lot of people disappearing or stopping or not making any more progress on their idea, because talking about an idea is the easy part, ideas are the easy part. Typically, it’s actually taking the concrete steps, the actions forward and capturing that in some sort of a plan is when things start to get hard, and that’s when most people walk away or stop or get distracted or get side-tracked, so
0:04:46.9 HENRY LOPEZ: Remember again that you’re not writing a novel here.
0:04:50.4 HENRY LOPEZ: So don’t let that be the reason that you don’t begin on a business plan, especially that initial version is just for you under your partners, you could be an outline, it doesn’t have to be anything that’s really elaborate as long as it serves the purpose of gathering your ideas, putting the paper, what the business model will be, creating some financial projections, and then having those projections validated, and I’ll come back to those different components here in a moment.
0:05:22.2 HENRY LOPEZ: On Episode 48 of The How of Business podcast, I had the opportunity to chat with Peter met, and Peter is a specialist and an expert and focuses on helping businesses with business planning. So I encourage you to go back and listen to Episode 48 for more inputs and his perspectives on business planning, but he summarized it with this one sentence, Peter says, Your business plan is your dress rehearsal for your success in business quotes. Peter recommends that your business plan or in your business plan, rather, you answer at least these four questions, so here now I’m gonna begin to give you a few different ideas on what should be in an effective business plan. So Peter suggests that you answer these four questions in a business plan, number one, who is your customer, number two, how will you reach that customer, how will you get to them to offer them your product or services? Number three, how will the business be structured and operated, that speaks to the business model, how well now you take this idea and turn it into a business. And number four what are your financial projections? So that gives you one simple format there, if you will address just those four items in your business plan, you’re well ahead of most people as far as the planning phase, and if you’ll just concentrate on answering knows four questions.
0:06:53.5 HENRY LOPEZ: You’ll be way ahead of the game, and you will have really, if you do it right, have hopefully mitigated some of the risk that’s naturally associated with starting a new business.
0:07:05.1 HENRY LOPEZ: There are different types of business plans, I just gave you a very simple outline on what should be in a business plan, but let’s talk about a couple of other different styles or variants of business plans, one that I really love, especially early in the process, and that’s what I’ll answer the question as to what type of business plan you create… I mentioned a moment ago that depending on your audience, that would dictate as well the version or how elaborate or what questions your business plan needs to answer, depending on whether it’s for you or for an investor or for a lender. And the approach that I really liked that, that has become very popular, especially in the early phases, early phases of developing a business, is what’s generally referred to as the lean business model canvas. The Lean Business Model Canvas. So this has been really… There’s a lot of iterations of this, but the Business Model Canvas is a template that’s used for developing new business model, it’s a visual layout on one page that is a high-level description and validation or helps to ask the right questions to validate your business. It’s nine blocks typically on one page of this business model design, and it’s a template that you can use that, and it came to be called the Business Model Canvas, and it was initially proposed back in 2005 by a gentleman by Leon Alexander Oster Walter, I think I’m pronouncing his name correctly.
0:08:41.5 HENRY LOPEZ: And then since then, since he developed this initial idea, there has been lots of other versions of this canvas for specific niches and types of business, but essentially, even if you just Google search lean… Of Business Model Canvas or lean canvas, you’ll find something that will help you with this idea. I’m also going to have a link on the show notes page for this episode at the holiness dot com, and you can download an example that I have that you can use. So one of the reasons this approach, this Lean of Business Model, Canvas, business plan approach, and again, I like to use it early in the process, I think it’s great for that, I think later on, especially as you’re starting to share the business plan with external people, you need a more formal business plan, and we’ll come back to that, but a lot of people will argue that the formal business plans are outdated and nobody reads them, and there’s certainly a lot of truth to that, but on the other hand, it’s still… If it’s done right. Serves a very important need. I’m talking about the formal or longer business plan, so more than just one page, again, it depends on who is your audience, what’s your objective, what phase are you in in the development of your business, and then I think that that dictates what type of business plan is most appropriate, there are plenty of examples of highly successful businesses that started with no formal business plan, very famously, Southwest Airlines was apparently sketched out on a napkin, at least initially, and others may have started with more elaborate university projects, companies like Dell or FedEx.
0:10:33.7 HENRY LOPEZ: So there’s the whole range. There’s never in business just one way to do it, but I do think there are advantages, and especially the advantages of the lean canvas… Let’s stay on that for a moment. Again, it’s the lean business model canvas, but I’ll probably abbreviated throughout here in this conversation as the lean canvas approach, the reason is so powerful, it supports a quick launch and iteration, getting launched quickly and iterating, if you’ve been listening to this podcast for any length of time, you know, certainly that that is a common theme with, that I’ve shared and also that my guests have shared this idea of trying to start as small as possible, validate that the market that you’re going after actually wants and want and we’ll pay for your product or service. And then you iterate. So the lean canvas approach really supports this idea, and I have found it will initially I thought this was only good for tech startups, for software development type companies, in other words, businesses that really do naturally lend themselves to starting small. I have found that you can apply it to just about any type of business, and if you have any thoughts about that, I would love for you to share your thoughts.
0:11:54.4 HENRY LOPEZ: Either email me or leave a comment on the show notes page for this episode at the holiness dot com. Again, the advantages of the lean canvas approach included it supports a quick launch, an iteration, it avoids this paralysis that comes from having to write a lengthy document that maybe nobody reads, and so that overcoming that at least you’re making progress, at least you’re putting something down to paper, that helps you answer. And then again, you need to have someone to challenge you, but it begins the answer, is there a business model here beyond just an idea, can we make money with this idea? Now again, the audience thing comes into play, if you are being asked to provide a business plan by a lender or an investor, the lean canvas doesn’t completely answer the questions that though, that that audience has, and so you might share a lean canvas, but you’ll probably need more than that, more additional to validate for them what they’re looking for, for example, when it comes to the team, there’s not much on the lean canvas that explains who you are, what your background is, what your team is, what consultants you’ve brought on board, none of that is really explained in the one page lean business model canvas, but let’s talk about what is and why I love it so much, especially again, in the early phases, it helps you very succinctly because it’s all on one page, so it forces you to be very specific and not to elaborate and pontificate for pages upon pages about your business, and I have found, and I’m sure you have read and found as well, that if you can clearly and simply articulate an idea, that’s when you really have got it down, that’s when you really thought it through when you can simply explain an idea, so the one page leading Business Model Canvas, how you define briefly the problem, your solution, your unique value proposition, your competitive advantage, what are your segments, your customer segments and channels, the key metrics by which you’re gonna measure success and then the cost structures and event revenue streams, so there’s nine boxes essentially that you complete with maybe a paragraph, but it’s very succinct to very on point, and it’s a great first tool to validate an idea that you have, has a good business model, at least the beginnings of a good business model behind it, so that’s the lean business model canvas again, I like that and recommended very much for the initial planning phases, or if you are in fact going to take very aggressively that MVP, that minimally viable product approach.
0:14:50.3 HENRY LOPEZ: Get something out there, validate and then iterate, and so it’s much more nimble, much more flexible of an approach to planning that allows you to get to validation as quickly as possible, so that then you can adjust and pivot if you need to, and iterate until you get to finding the right solution for the market that you’re going after, another version of a business plan, particularly as it relates to sharing the idea or the plan with others, is what often might be called a pitch deck or a business summary, so it’s appropriate for sharing the summary and highlights of the business in the early stages typically, and then perhaps that the later stage is depending on who the audience is, but what is the summary of the business idea, this is again, great for potential investors or partners that you might be trying to bring on might be equity or other for landlords, any of those other parties that need to be sold on your business idea, so a good pitch deck or a business summary might include a project summary, usually a one-page or one slide. Who is the team? That’s a big part of it.
0:16:07.7 HENRY LOPEZ: Throughout many episodes on the how a business, when I’ve asked people about what’s most important when they look at investing in a business, so from a venture capital or angel investor perspective, and as I’m sure you’ve heard many times, it’s about the people, more so often than it is about the idea or even the business plan. So a good pitch deck or a business summary has the information that’s necessary, typically, again, in one page, depending on how big the team is, on who are the people involved here, what are the experiences and background that will hopefully lead to success. Then it’s a highlight of the business model, how will this business generate revenues and profits and in preliminary financial projections, so a summary might be a summary of the PNL, I’d be a summary of the potential or projected returns, especially if you’re trying to attract investors, and then what’s the capital plan? How will this business be funded… Well, they’ll be lending, who’s putting in cash, who will own the business, those kinds of things. I most recently used a version of a business summary because in looking for a commercial lease space, the landlord that I was negotiating a lease with wanted to see a summary of the business, and so the pitch deck that I provided them, where I called it a business summary had a lot of graphics in it, pictures, images, so that it very quickly communicated what was the idea of why we thought we were gonna be successful, who’s the team, and it even included some preliminary layouts and design ideas for the actual physical space.
0:17:52.4 HENRY LOPEZ: So that’s when you might use a pitch deck or a business summary, often you might have it in addition to a more formal business plan, because it serves a particular purpose, a particular audience that you need to communicate your business idea and plans to. Now, let’s move on to a more complete or a formal business plan, and I’m gonna walk through at a high level the sections that I think that a business plan should include, and maybe you don’t need all of these sections, I’m gonna highlight the ones that I think are absolutely necessary. As with most business plans, you wanna start with a summary, people used to call this an executive summary, but I just think that’s an outdated name, it’s a one-page ideally summary of what your business is, think of it almost as this is a more elongated version of your elevator pitch, but summarize it in one page, so if that’s all anybody glance is that they can take away from that one summary page, what this business is about, then I think you need to communicate as well what the mission is, what is the why of the business, again, no more than one page, maybe half a page, to communicate the mission of the business, then you’re gonna articulate, of course, What are their products and the services, what’s the menu of offering, what is it that you’re going to offer? Your customers or clients, so you need to describe that to some level of detail, what is the product and service that you’re offering your target market, which is the next section, and again, you can certainly arrange these in a different order, so don’t get too hung up on that, but the target market that might be the…
0:19:30.9 HENRY LOPEZ: Certainly, it’s in the top of sections that are most important, who is it that you are going after and hear the key, especially initially, is to niche down as much as possible. Be as specific as possible and who you’re going after.
0:19:48.7 HENRY LOPEZ: Of course, there are exceptions.
0:19:50.3 HENRY LOPEZ: You might be going into a business that is purposely appealing to everybody, the masses, but likely… And in my experience, for most of us as small business owners, we have better opportunities for success if we focus very hyper-focused, that doesn’t mean that you can’t expand later to other markets, to other customer segments, but being hyper-focused, I think is very important to success early on. So what is that target market then the business model, I’ve been talking about this concept of the business model several times here throughout this conversation, and let me explain what I mean by a business model. There’s one thing to have an idea of business, I’m gonna sell something, but then the way that you validate that that actually becomes a business is by laying out how you will actually deliver that product or service and validating that you can make a profit in delivering that product or service.
0:20:50.7 HENRY LOPEZ: That’s the business model. How will I go about delivering this product or service to my customers, not the product or the service that’s separate… You’ve already defined that in the business plan, but how does my business model work and some components of that might be, I’m going to have a retail location, or my focus might be that I’m going to only wholesale or I’m only going to sell online that… Those are components of your business model, but then also it’s about looking at your cost structure and the distribution channels and your supply chain, and what are the costs involved there can you actually deliver this product or service in a profitable and consistent manner, what will it take what kind of staffing is required, what kind of certifications are required, what kind of licenses might be required, how does all of this work, how will it actually work? So it’s the how of the business, not just the what, and that’s a key component to any business plan.
0:21:54.1 HENRY LOPEZ: That’s also where it gets hard because that’s where you really have to now figure out how you’ll actually deliver this product now, if you are launching a business that already exist, in other words, there’s of competition, then it’s easier because you likely are just going to replicate to a big extent how others are delivering the same product or service, perhaps with a tweak here or there, or an emphasis in some area, but ideally you’re able to learn from and watch and observe how others are doing the same thing, if you’re developing something completely do where it’s completely new, where it’s disruptive, well, that’s gonna be a lot more challenging to predict the business model. And another reason why starting with an MVP approach, a lean canvas approach makes a lot of sense, so that you can actually validate that this new idea or a completely new way of doing something has a market, that there’s people that will actually pay for that. Alright.
0:22:54.0 HENRY LOPEZ: So you have the business model.
0:22:55.3 HENRY LOPEZ: Then it’s the marketing plan, so some plan, at least at a very high level of how you will market your product or service, how will you let your target market know that you’re there and that you have this product or service to sell, then you need an operations plan component, how will you actually run this, who are the people… What roles, who will play some of those key roles, for example, how will you go about staffing, will it be employees, will it be contractors? Will it be sub-contractors? How will you structure this? How will you actually operate… Do you need a physical facility? What does that look like at a high level? So all of that goes in the operations plan section of the business plan, and then we get to what I think is perhaps if you do nothing at all, there’s two sections of their business plan that I think are the most important one is, who is your target market, because that’s how you’re identifying who you going after, and I gotta take that back, I wanna say three. Who’s your target market? What’s the business model? In other words, that’s how you’re laying out how you’re going to make this business profitable, and then the third is your financial projections, some people will call these performers, whatever it’s your projections of how the finances will happen in this business, what are the projected revenues minus expenses, and projective profitability over a period of time, and that is the heart of a business spin, if you do nothing other than the financial projections, that is a huge step to helping you ensure that you’ll have success, so let’s break down financial projections because it’s so critical, I think that the financial projection section of your business plan need to include at a minimum, these things a projected profit and loss statement, and what you need is the first year of that projected find financial profit and loss statement, the P and L needs to be by month so those first 12 months at least, and we’ll come back to the break even here, but those first 12 months on a monthly basis, so you have a spreadsheet that has rose at the top for your revenue sources, that rose for your expenses, and then you calculate the profit or the loss, and then the columns in that first year are the months January through December, and I’ll come back to why you need to break it down by month, but the work then is in collecting the data, analyzing and researching to try to best estimating, guess what your revenues might be for this product or service that you’re offering, and then what are the expenses, both your fixed expenses and your expenses by variable, I mean typically what might often be called the cost of goods sold or the expenses that are related to producing a product or a service, which are variable because it depends on how much of that product or service it make or deliver, but then I’ve got fixed and fixed expenses like my rent that I have to pay at the beginning of the month, and regardless of whether I should one or 100 million widgets, I have to pay that same rent amount, so those are my fixed expenses, so I lay that out for a year on a monthly basis, and then typically you’ll want them on a yearly basis, at least three to five or six years out.
0:26:34.9 HENRY LOPEZ: Of course, there’s no doubt the farther out you’re looking, the more vague that come that becomes, the more… That’s just a projection, but it’s important to have those long-term projections, certainly a lender is going to want to see that, they wanna see that you’re projecting farther into the future and what that might look like, but also it’s the only way you’re gonna be able to then calculate what your potential return on investment for this business. Alright, so we’ve have the P&L or profit and loss projection for year one by month, and then on an annual basis for at least three to five years out, you then coming back to the P and L, that is the detailed monthly panel. You wanna calculate where your break-even is, so break-even just means that what point in the business lifetime do I start to make more revenues than I have expenses, and typically, we have a ramp-up time. So it might be a month, it might be six months, it might be a year, something in that range is typical, but you know, there’s always exceptions, but I need to calculate when will I start making a profit? Because the most important thing that then that helps me calculate is how much working capital I have to have into business, this is the number one reason businesses fail is they run out of cash, and nor are two primary reasons why that happens to people.
0:28:08.5 HENRY LOPEZ: One is this point that you didn’t put enough cash into the business to get you through that ramp-up time or to get you through unexpected events that might happen that might bring your revenues down or might shut you down for a period of time, if that sounds familiar, so you have to somewhat plan for that, and that’s called working capital, so what I observe is, because people go into businesses, understandably, I’ve been there with little resources, that’s one of the areas where we cut… We cut on the capital that we have in reserves now, if you are going to get lending, especially if you’re gonna get an SBA loan, the bank will require you SBA were required to have short amount in cash reserves, you’re going to have to show that in your business plan, because they know how critical that is to the success of your business. The other reason why people have to shut down a business because lack of cash is they underestimate how much money they’re going to need for their personal expenses while this business is ramping up, one of the big, common mistakes I see is people projecting very aggressively when they’re gonna start making a profit, or how much they’re gonna start paying themselves, and the reality is that it usually takes longer than you thought it was to start paying yourself a salary or distributing profits, that’s why that component of the P and L is so important.
0:29:40.9 HENRY LOPEZ: In this financial projection section of your business plan, you’ve got the P and L, you’re going to calculate break even, you’re going to calculate what my working capital, what your working capital needs to be to cover you through that ramp-up time, and then for any time in the future where you might have someone expected expenses, you’re also gonna take it into section what are your start-up expenses, add up everything that you need, including working capital that you’re gonna need to make this project happen, and then you’ll start to look at where is that money going to come from some of it, or all of it might be from your savings, or maybe you’re gonna tap into your investment, or you’re going to seek investors, or you’re going to get a loan or some combination thereof, but you need to lay that out and then you’re gonna calculate the potential return on investment for this business idea, and usually what I like to focus is the portion that I personally or myself and my partners are gonna put it in cash, are our cash that we have in savings, that portion of the investment how long before the business pays that back to me, how long before I get that back, and that’s how you calculate your return on that cash investment that you make in the business.
0:31:03.8 HENRY LOPEZ: But that’s all it is. This is my rule of thumb, is a business needs to give me back the cash that I invested within three to five years, that’s the range I typically at every business is different, and it really depends on the type of business as to what makes more sense, but it usually needs to be, if you talk to most small business owners, something in that range, in other words, if the business doesn’t have the potential to pay me back my initial cash investment within that time frame.
0:31:34.1 HENRY LOPEZ: Well then the risk goes way up that years into this and I still may not make back by investment.
0:31:41.1 HENRY LOPEZ: Alright, so that’s the financial production projections section of a business plan, then there’s last two sections typically are the funding PLAN, although I touched on that already, how and where will this money come from to start their business, and then your team. That’s important as well. Again, defining who your team is now, you may have done some of that, or maybe you feel like you did that completely in the operations section, and that’s great. Now, what I’m gonna share with you on the show notes, speech with this episode is a free download with this outline, so it’s great if you were taking notes, but for those of you mostly who are listening at the gym or walking or in the car, and you don’t have a chance to write all this down, just go to the show notes page for this episode, the holiness dot com, when you get there, depending on when you’re to this episode, just search for business plan and this episode will come up and on that page, you can download a free outline for this business plan that I’ve just laid out for you.
0:32:42.4 HENRY LOPEZ: Let me touch back on a couple or a few rather common mistakes that I often see when it comes to business planning, first and foremost, as I touched on is you get stuck because of this paralysis over the writing of the business plan. There are people who you may not be comfortable with writing, or you may not think your writing is good enough for, that might be something that comes a little bit more challenging to you, don’t let that be the reason that you don’t move forward with the plan. It might be that a great place for you to start is with the lean canvas approach, with that type of a one-page plan or just do a bullet point outline of your plan, don’t let the writing of it be what stops you, especially initially when it’s just for yourself or your partners, so just do an outline of what it is that are these key points, these key components that I’ve talked about in this episode that you should be thinking about and putting to paper, don’t worry about what others might think about your business plan this is not an essay exam, just use it as a tool for yourself and for your partners to keep you organized, to put your thoughts in one organized place so that you can begin to execute on getting your business launch, and then here is perhaps the biggest mistake besides not doing one at all, is that you lie to yourself into projections, you tell yourself that you somehow are gonna get a premium price for something that others are selling for a lot lower price, or you’re convinced that this new product or service people are gonna pay X amount when you haven’t even validated it, or you underestimated your expenses or how hard it might be to deliver this particular service or product, and therefore the expenses associated with that, or you’ve drastically or estimated how quickly the business will pay you a salary or distribute profits and then it doesn’t, and things get tight and that’s when it all falls apart.
0:34:52.5 HENRY LOPEZ: So the most important thing after actually creating a business plan is to have it validated and challenged by a coach, by a mentor, by potential investors, by a lender, all of those people… You gotta get it in front of these types of people at some point to have it challenged if you… All you do is create it in a bubble and you don’t have someone else, ideally a third party and uninvolved party validated or give you some feedback or challenge you, then you may end up with something that’s really unrealistic and then it really doesn’t serve you in the end. So other than not creating a plan at all, the most common mistake I see is not having that plan validated or challenged by someone else that you trust or that you’ve brought in for that purpose, like a coach or a mentor, so I’ll recap here under free resources but I wanna announce an exciting workshop that I have coming up, the first one is coming up soon, if you happen to listen to this episode after the workshop, there are others that will come, but this will be the first workshop that I’ve done in quite some time, that will be in person.
0:36:03.5 HENRY LOPEZ: Now, as to where it’s gonna be in Plantation, Florida, which is a suburb of Fort Lauderdale, Florida, and maybe for those of you have been listening for a while, you know that I’m a minority partner in a business there called evolutions, it’s a co-working space, and we have meeting facilities there as well, so that’s where I’m going to be hosting the next online marketing workshop, this is a paid workshop, we’re gonna spend an entire afternoon on a Thursday, and you’re gonna walk out of that workshop… For those of you who are in the area, or I can make it physically to the workshop, it’s just gonna be in person, not online, and at this workshop, at the end of it, you’re gonna walk away with some actionable items, and we will actually make it a working session, we’re actually gonna get some things done to improve your online marketing and to give you a plan for how to get yourself visible and found by your clients and customers online, so we’ll touch on everything from websites to SEO, to Google My Business, but all from a business owner perspective, nothing technical. And I’m gonna walk you through it all.
0:37:13.1 HENRY LOPEZ: We’ll start with clearly making sure you have a clearly defined target market and target avatar you might think you do, but I’ll challenge you that often, this is certainly even if you do, a great, great exercise to do on a regular basis, to make sure you really are targeting a specific audience as small business owners, as I mentioned with the business plan, and of course applies to marketing, we need to be very niched, were very specific and targeted, so that with our limited resources, we can more effectively reach more clients and customers that want the products and services that we have to offer. So this upcoming workshop, the next one is August 19th, and you can get more information on the show news page of this episode, it’ll be in person, I’ll be the one conducting the workshop, there is truly limited seating… This is not online, so there’s only so many seats, and of course, we have to hear to some level of separation and have a space for everybody to work, so there will be limited capacity, so if you’re interested in this, and if you’re listening and you’re in the Broward Mayday County area, that I encourage you to come join me, it’d be a great opportunity for us to meet and a great working session for you to improve your online marketing.
0:38:32.8 HENRY LOPEZ: It’s really more than online marketing, you’re gonna benefit from it to read as it relates to all of your marketing, but because online market is such a big part of what we need to do a small business owner, and… There’s so much confusion there. I felt this would be a most productive area to focus on in this afternoon workshop, so look into that, I hope to see you and have you join me for this next online marketing workshop in Plantation, Florida in August. Right, the other resources I mentioned, which you can find at the holiness dot com and the show notes page is the free download for this business plan outline that I walk through, so it’s an outline for your business plan. I have a link there for you to download as well, an example of a lean Business Model Canvas, so you can use that. So either one of those, again, depending on what stage you are with developing and planning for your business is what I would recommend for you, so be sure to get those resources at the holiness dot com. So my key takeaway for you is that I highly encourage you to put some type of plan together to take you from the idea phase to the actual execution phase on this business that you have wanted or maybe have just started planning to launch.
0:39:53.3 HENRY LOPEZ: It’s what’s gonna get you there. And more importantly, if it’s done right, it’s what helps you to validate that you actually have a business model that has an opportunity to be successful, that has an opportunity to be profitable, and again, remember that the most important thing after actually creating a business plan is to have it validated or challenged by a mentor, a coach, and investor, people that will give you some valid feedback, not your friends. I’m talking about people who are either existing business owners or that you trust or that you hire as a coach or you bring on as a mentor.
0:40:32.2 HENRY LOPEZ: Get that validation and push back, so that you have a higher level of confidence that what you’ve laid out is a good plan and not just reaching for the stars, and there’s no guarantees, because at the end of the day, it is a plan, and ideally then by also taking a more lean approach, by also taking an MVP approach, being highly focused and starting a small as possible that gives you the opportunity and the flexibility to pivot, to adjust, to iterate, and so that’s something that I hope that the planning process will also highlight for you.
0:41:10.6 HENRY LOPEZ: So remember the free downloads and also the upcoming online marketing workshop. I invite you to join me for that. This is Henry Lopez, and thanks for joining me for this episode of The Howard business. We release new episodes every Monday morning, and you can find us anywhere you listen to podcasts or at our website, the holiness dot-com. Thanks for listening.