Last week I attended an event in California that brought together women entrepreneurs from across the country to learn about ways to raise capital on their own terms. These remarkable women are chasing their dreams and building businesses that will change industries and even how the world works. It was an incredibly inspiring three days full of great teaching, shared ideas and warm hearts.
One business leader is turning locally grown small farm second grade produce that used to get tossed into salable products for the farmer. To date Preserve Farm Kitchens has kept tons of perfectly usable produce from the trash and added tens of thousands of dollars to small farmer bank accounts in the process. Do good and make money simultaneously — an excellent combination!
Another is creating a product that will change how we do death. An amazing idea that blends a beautiful way to say good bye to a loved one with an environmentally friendly technology that is simply amazing.
In addition to businesses that make products or provide services that are equipment intensive, were companies that provided straight services to a wide variety of markets. Altogether there were close to fifty business owners who attended.
These very disparate businesses have a lot in common. They all recognize that the highest probability of long term success includes being well-capitalized to have funds for getting off the ground and navigating the inevitable bumps in the journey that happen to every business as it gets established and grows.
These determined and imagination filled women also know that having a business plan is foundational. More specifically, going through the process of developing the plan. The process is the key because it forces you to think through every niggling little detail of how your company delivers the products or services you sell.
The final numbers in your business plan almost never be what really ends up happening. Getting to those numbers — putting down on paper (even if it’s digital) ALL of the assumptions behind the numbers is where the gold lies. And once you’ve purged your brain of all you can imagine, ask somebody you trust to review and test your assumptions. There will probably be things missed — it happens to all of us.
So now the business plan is developed and you’re on your way — business plan tucked safely in a drawer somewhere. Fine, for a while, but don’t leave it there forever. Use it over time to check and re-check your assumptions and make course corrections.
Want a specific example of this? Years ago I started a pottery studio with a business partner. We spent many hours determining if there was a market, planning how it would run, what was involved, how many private studios, all the firing processes, prices, costs, and on and on. It was a beautiful business plan and it helped the bank we approached to give us the funding we requested for all the capital needs involved. So far so good.
We were off and running and all seemed pretty ok, but as the first year progressed, certain revenue streams were not what we had anticipated. If something didn’t change we would always struggle to break even. We had made an incorrect assumption, but because all had been thoroughly documented, we were able to course correct quickly. By eighteen months in we had sustained profitability and were debt free in five years. No small feat for a pottery studio. Over time, other adjustments were made to bring in even more revenue, but it was the first pretty major course correction that enabled us to succeed so quickly. We had the benefit of thinking through in detail and documenting every little detail we could envision. The numbers may have ended up different, but the process was priceless.
Have you taken the time to really think through a business plan in detail? If you haven’t, I recommend you do even if your business is well underway. The exercise is worth every minute. If your eyes glaze over at the mere thought of getting to that level of detail and you’d prefer to be guided through the process, then by all means, let’s schedule a time to talk to see if and how I can help.