Joanna Shows, a business coach with business coaching firm ActionCOACH, says that she sees a solid business plan as the single most important step in laying the groundwork for future success. “The business plan is absolutely the breathing embodiment of the business,” she says, adding that a good business plan will provide space for flexibility while still setting parameters on heedless ambition. “Business is almost like a cattle field,” Shows continues. “You can roam all you want within the field, but once you hit the electric fence it is going to zap you.”
Stuart Skorman, a former rock band manager who was an early investor in Whole Foods and has since earned a reputation as a serial entrepreneur, says that he thinks anyone who plans out their business before their marketing strategy is foolish. When Skorman was launching his chain of video stores, called EmpireVideo, he planned on big success, but was strategic about who he would target. “I designed the whole company for 200 people,” Skorman says. And he doesn’t mean 200 customers; he created the company for people who could provide publicity, including editors at national publications. “Your story has to be viral,” he says.
“Plan no small plans,” says Craig Jennings, serial entrepreneur and founder of Powhattan Consulting Corp. Paul Graham, investor and founder of start-up incubator Y Combinator, offers similar advice in a 2006 essay he wrote, titled “The 18 Mistakes That Kill Startups.” Graham wrote that entrepreneurs seem to sometimes unconsciously avoid risk, stepping away from challenges in ways that are hard to recognize in ones self. “If you make anything good, you’re going to have competitors, so you may as well face that,” Graham wrote. “You can only avoid competition by avoiding good ideas.”
At some point, a company may need to change direction, and the founder has to be willing to go along with this change. “The key design work often happens after launch,” Skorman says. “Being agile and flexible means that no matter how much I love this idea I have to be flexible. It’s also a sort of opportunism.” Changing course doesn’t always mean adapting to failure. Sometimes it may be a matter of seizing a market opportunity that had not before been apparent. Tom Ehrenfeld, author of The Startup Garden: How Growing a Business Grows You, says, “Be prepared to constantly ask what exactly you are selling right now, what solution you are dealing with for your customers.”
Whether you’re pitching to investors, motivating employees, or selling your product, be sensitive to the kind of response you are getting from your audience. Skorman says he learned this lesson, that enthusiasm is not always contagious, over time. “If you had talked to me thirty years ago, I would have said it’s easy to start a company,” he says. “All you have to do is mortgage your house and be ready to work 20 hours a day.” Entrepreneurs often get carried away with their own ideas, Skorman says, to their companies’ detriment.
Shows says that her work sometimes requires that she tell business owners the very thing they don’t want to hear, like they’re targeting the wrong market, for example. She’s obligated to just “sit down with them and be very honest,” she says. “Being nice only means that nothing inside me cares enough to tell you what the reality of it is.” The ability to take that strong criticism may counteract the failure to learn, which Ehrenfeld says can bring down any start-up. “When things don’t go according to plan, throw blame out the window,” he says.
Many small business owners may be tempted to drain themselves dry when it comes to financing their business. When a founder has already sacrificed his sleep, other career opportunities, and perhaps a small portion of his sanity, it seems only natural to try to make it work by investing as much as you can. However that won’t work, says Jennings. “The purpose of the business is to work for you,” Jennings says, and a founder should be sure to provide for himself even while the company is growing. “A modest salary is critical to your well-being.”