From passion to plan: How to create a strategy for your small business

Many small businesses are fueled by passion: Entrepreneurs get a great idea (or they end up hating their manager) and they start their own business. The business itself is loosely assembled and operates somewhat haphazardly.

Eventually, something has to happen.

Either, the wheels fall off and the small business crashes and burns (which is pretty common) or the entrepreneur realizes that things can be tightened up for a more efficient, more profitable operation (which is less common, unfortunately).

At this point, the business transitions from passion to plan. Of course the entrepreneur might still be motivated by his or her passion for whatever they’ve created but the business moves forward in a specific direction.

Making the transition isn’t easy (and if you ask many seasoned entrepreneurs, they’ll recall the passion-fueled years with great fondness) but it needs to be done to ensure your business’ survival. Here’s a simple way to transition…

1. DECIDE ON WHERE YOU WANT TO GO

What kind of business do you want to be in 1 year, 5 years, 10 years, 100 years from now? Do you want to be the biggest widget-maker in the world? Do you want to be rich and famous? Do you want to be the best at something? Do you want to leave a local, trusted business for your kids to run? Do you want your business to have a worldwide franchise? Do you want a steady income until retirement, at which point you’ll shut the business down?

This your exit strategy — either you exit your business (by selling it, for example, or by letting someone else run it after you retire) or you and your business exit the marketplace (by shutting your business down, for example). Every business/business owner will have an exit so you should think about it, create an exit strategy, and work toward it (instead of just letting it happen).

2. DETERMINE WHERE YOU ARE NOW

Next, you need to figure out where you are now. It’s easier if you compare your current business with your future one.

For example, if you want to be the next Walmart and right now you own one small corner store, then you know the kinds of measurables that you can use to describe Walmart and you can use those same measurables to describe your current business: For example, annual inventory turnover, annual revenue, annual dollars-spent per customer, etc. Use whatever measurables are appropriate for your industry.

You don’t have to use too many measurables — just a couple are fine.

3. CREATE A LIST OF MILESTONES, ACTIVITIES, AND RESOURCES

After you’ve developed an idea of what you want your business to eventually look like, and you’ve figured out where you are now, you need to build a series of steps to grow.

You’re going to do that by breaking your measurables down into milestones, creating activities to achieve those milestones, and then identifying resources to support your activities. Here’s what I mean in more detail:

Look at each of the measurables that you listed (in the example above, I listed inventory turnover, revenue, dollars-spent… but you might be using different measurables, of course). Break down those measurables into smaller “milestones“.

So if you’re measuring annual revenue, the journey from being a $10,000/year company to a $100,000,000,000/year company doesn’t happen in one step, obviously. Give yourself a realistic timeline and break it down. For example, decide to go from a $10,000/year to a $20,000/year company. Then from a $20,000/year company to a $50,000/year company. Then from a $50,000/year company to a $100,000/year company… and so on. Do this for each measurable you’re going to use.

Once you have these steps in place, figure out what activities you need to do to achieve that milestone. So, to continue using our example, to go from a $10,000/year company to a $20,000/year company you need to identify various marketing and sales activities that will double the number of people through the door or you need to identify various marketing and sales activities that will double the amount of money each person spends.

Create activities for each milestone. (Note: The sooner you plan on implementing this, the more detailed your activities are. You don’t have to plan as much for those 20-year-out milestones. Focus instead on what you can do in the next couple of years).

With your milestones and activities in place, you also want to figure out what resources you need to successfully accomplish those activities. You might need specialized staff or a specific tool or technology or some investment money for more inventory. This is where a lot of small businesses falter — they have some great ideas but they lack the resources to implement. If you know ahead of time what resources you need, you can invest effectively. If you don’t think you can afford those resources, you need to either get some investors, find an alternative, or adjust your timeline.

4. GET STARTED!

You’ve done a lot of work to get to this point. You’ve created what is essentially a business plan (although, in my opinion, it’s way more useful than the kind of business plan most people are familiar with). This business plan is a checklist of things you need to do to grow your business. It’s laid out for you in a measurable, step-by-step list that you simply do, cross off, and move on to the next thing.

  • You’ve identified these activities as your key growth activities so build your schedule around these activities. Evaluate all other demands (on your time and on your investment capital) against whether or not they will support or distract from completing the activities and fulfilling your milestones.
  • Check your milestones regularly. Are you moving toward them? Be extremely flexible and be willing to scrap different activities if they aren’t effective. Be sure to test your efforts, though, before you make major changes.
  • Keep up with trends. There are many trends — in marketing and internet marketing, in your marketplace, in your industry, in your community, in the economy, etc. — that will influence your milestones and your activities and your resources. Make constant adjustments to your course all the time.
  • Invest. Remember that you can invest time, money, and effort to accomplish your activities. Depending on which of those three are abundant and which of those three are scarce, you might need to constant revisit the resources section of your plan.
  • In spite of all of this strategic planning, don’t lose your passion! Just harness it with this plan.

Whew! There was a lot of text here. Hopefully you weren’t scared off by what I’ve listed because although it can take some time, it’s really a very fun exercise. And the time you invest now to build this plan will help you grow your business in the way YOU want for the years to come.

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