They had built a seven-figure business in less than three years. It was at that point when I asked these entrepreneurs, who happen to be my daughter and son-in-law, about their business plan. As they exchanged humored looks, my son-in-law asked, "What plan?" I laughed because, of course, you have to have a plan. As I persisted, he finally shrugged his shoulders and drew their plan on a napkin. Here's how it looked:
$ + $$$ = $$$$$$$$
Translation: Make a little money, put it back into the business, make more money and get rich. Today, they are on their fifth self-funded business--all of them very successful, none of them with a complicated plan.
Why entrepreneurs tend to overcomplicate their strategy.
Conversely, many business owners come to me for help, expecting to develop a plan and strategy the size of Long Island. They need to believe that success is complicated, because if it isn't, then why haven't they achieved it already? For some, there's a sort of security in documenting and analyzing every little step before it's taken. This tendency falls into the categories of procrastination and fear of failure. If you spend more time thinking about your business plan than you do acting on it, this may be your problem.
I'm not sure that everyone has the ability to grow a business from an abstract reference on a cocktail napkin, but I do know that small and midsize business owners who overthink their plan don't succeed. Begin with these seven questions and stop overcomplicating things. Just get to work.
1. Who is my audience?
If you find yourself using phrases like anyone who, then you don't know who your audience is. If you could sell to just one person, who would it be? That's right, one person or industry. I once worked with a professional speaker who thought his audience was any company that had a sales force. He was barely supporting himself. We narrowed it down to the sales force within manufacturers and distributors in the medical supply industry. His business took off within months.
Here's something that's very important to know about niching: You don't have to stick with only one. Start with one and when and if the time is right, create a second silo. Choosing a niche is not as restrictive as you'd believe.
2. How will I reach my audience?
Once you have a niche, you will have a better idea of where they hang out. What are the best social media platforms, the industry events, and associations they're associated with, and which people in your network are closely associated with them?
3. What makes my product or service different?
This one is difficult for many entrepreneurs. You may believe that one business accounting firm may be just like the next, for instance. When one of my clients differentiated her firm by offering freelance CEO and CFO services, along with 30-minute quarterly meetings with her clients, her practice grew by 34 percent in one year. I call these touches white-glove service. What's your white glove?
4. What are my costs and margins?
Once you find that amazing accountant, pay the money to have he or she calculate your cost of doing business, as well as your margins. You may be amazed at how many entrepreneurs have no idea where their money is going and what their margins are. I had a client who sold two different product types to two different industries but ran her numbers together. It wasn't until we began working together that she came to realize that one of her product lines was sucking up profits from the other. It didn't look that way on paper--until she separated the costs associated with running each side of the business. You may think you understand your numbers, but do you really?
5. How will I manage my company's growth?
Here's where entrepreneurs fall into a very problematic trap. They end up wearing the CEO hat, along with the other six or seven hats necessary to run their business. If you have the mind of an entrepreneur, it's not likely that you will excel in performing every task needed to deliver your end product. When you're entrenched in the day-to-day operations, you won't have time or energy to grow the business. Perhaps you don't need full-time employees, but you do need to outsource. If you try to do it all you will burn out and fail. It's that simple.
6. What mindset do I need to maintain to become successful?
Do you have a lack mindset or a wealth mindset? If you are constantly worried about money, you fall into the lack category. If you believe with all of your heart that there will always be more than enough, you tend toward the abundant, wealth mindset. This is not to say that you don't watch your money, but that you understand the need to spend money to make money and you spend it wisely.
Please know that determining and changing your mindset is not likely something you'll do on your own. Find a coach who specializes in mindset and strategy and invest in yourself. It will be the best money you've ever spent.
7. What are my company's values and how will I develop its culture?
Oblivious to how things must change once they begin to bring employees on board, some entrepreneurs neglect to develop processes and what I call an intentional culture. Before long, the business is a mess. This is a costly oversight.
I use this simple question to help entrepreneurs lay the foundation for a healthy culture: When employees and customers talk about your business, what exactly do you want them to say and how do you want them to feel? I always say that if an entrepreneur does not put effort into building culture, it will build itself--and you won't like the results.
That's it. Throw away those pages and pages of notes. Stop losing sleep in search of the magic bullet. If you focus on these seven areas and believe in yourself, you will go much further in life and business.