We’ve all seen wickedly smart, creative and successful people torpedo their small business into the ground.
They typically look upon their strategic business plan as a straight, unfettered, golden path to success. Their entrepreneurial hopes and dreams march in unison toward that great success ahead. No interruptions, no problems, no sidetracks along the way. They’ve got a plan, and success is exactly what will happen if everything goes to plan.
“Everybody has a plan until they get punched in the mouth.”
That’s Mike Tyson, whom I never expected to quote in my lifetime. The former heavyweight champ is saying that a blinding uppercut will inevitably land on every one of us. That’s not the problem. The problem is not knowing what we’re going to do AFTER that happens.
He’s talking about the response—the counterpunch.
The big question is then: what’s the contingency plan?
Regular strategic planning is crucial for any business and any team. You have to plan for contingencies, not perfection.
Not yet ready for the strategizing? Is your small business idea still just a spectacular spark of an idea waiting to be unleashed? We have you covered. Check out our Entrepreneur Academy, Creative Academy, and Small Business Playbook to whet your whistle and come out swinging.
Otherwise, first things first.
- Business plan
Every business needs a business plan. It doesn’t have to be formal or in a particular format (if you’re not seeking outside funding) but every business should have a plan for what you hope to achieve, and how you will achieve it in the next 12 months. It should be written out and clearly communicated to all the important players in the business, even if the important players include you and your dog.
You also need milestones and metrics to measure your success. If you don’t have a map, how will you know if you’re headed in the right direction? For example, if you want to add 500 new users to your product this year, what does that look like on average per month/per week/per day?
Key takeaway: Take the time to get all of your plans out of your head and on to paper. Set some concrete goals for the next 12 months and define the metrics by which you will measure your success.
- Clear customer value proposition
It is mind-boggling how many businesses don’t concisely explain how they are different from or better than their competition. The cold truth is – if you can’t articulate why your customers should choose you, they won’t.
A value proposition is not just the value you intend to deliver, but also your customers’ belief about how that value will be delivered, experienced and acquired.
Key takeaway: Get exceptionally clear on your value proposition by filling out this statement:
For (target customer) who (need statement), the (product/brand name) is a (product category) that (key benefit statement/compelling reason to buy). Unlike (primary competitor alternatives), (product/brand name) (primary differentiation statement).
- Keep your competitors close
Many businesses believe they are too small to need to invest in any kind of strategic competitive analysis, but you’re never too small to know what your competitors are doing. This sort of analysis doesn’t have to be an expensive big data project, as you can conduct it simply with Google and a curious disposition.
You might begin by asking:
- Who’s offering what I do?
- How am I different and unique?
- What results do their products promise?
- What words and emotional triggers are they using to sell their products?
- How much do they cost?
- How are their products/services delivered?
- What bonuses have they thrown in to sweeten the package?
- How are they promoting themselves?
- What are their customers saying about them?
As you begin to answer these questions you will begin to see how your value proposition fits into the conversation — or, perhaps, where you need to shift your value or message.
Key Takeaway: Every business should conduct some level of competitor analysis, and the more you know about your competition, the better you can position yourself as different.
- Positive cash flow
Cash is king in business, and for good reason. You can’t pay your bills or your employees with your orders book. It is vital that any small business has a plan for how they will get paid and in a timely manner. Even the most successful businesses can find themselves in trouble if their money is all tied up in unpaid invoices.
Don’t get caught up in what you think is common practice or industry standard; that doesn’t mean those things are right for you or your company. Can you get paid in advance or at least get a deposit? Do you have to offer Net 15 or Net 30? Can you accept credit cards to help your customers with their cash flow?
Take a look at our Financial Literacy for Small Businesses to get into the nitty-gritty of mastering your money.
Key Takeaway: Devise a strategy that will make it easy to get paid promptly, no matter who you work with. And then be careful not to extend yourself beyond your liquid cash limits.
- Solid marketing plan
I see this happen far too often – a small business has a record-breaking month of sales, or lands one or two really big accounts and, as a result, they neglect their marketing efforts. Suddenly, the next month rolls around, or one of those big accounts disappears, and they are in dire straits, struggling to make ends meet.
The problem is that these businesses have a tendency to focus on marketing only in lean times, when they need the business. The fix is to create a marketing plan that allows you to always be marketing yourself and to cultivate a diverse customer base so that you won’t be left high and dry in lean times.
Key Takeaway: Do some research into which one or two marketing platforms will be the most beneficial for your particular business and commit to them. For example, you might try social media marketing, content marketing, in-person networking, direct mail, or paid advertising. Don’t overextend yourself trying to do everything at once.
This isn’t everything a business needs of course, and your needs may vary by your niche or industry, but this is a solid foundation on which to base a successful business.
Great, you’ve got the basics down. Now it’s time to:
Remember what Mike Tyson said: “Everybody has a plan until they get punched in the mouth.”
We’re in your corner, so if you only take one thing from this post it should be this: If you want to be a heavy hitter, you have to think of strategic planning as an iterative process rather than a one-time main event.
— Molly, trying to think of a parting shot.