columnBy Phillip Chichoni
A good plan implemented today is better than a perfect plan implemented tomorrow.
Participants at one of my business plan writing courses last week expressed astonishment when I said true entrepreneurs do not need a business plan.
"But that is the whole point of why we are here, to learn how to write an effective business plan," one participant said grudgingly.
It seems to me that many prospective entrepreneurs, especially those who are young and inexperienced in business, pay too much attention to writing a business plan while neglecting the most important thing that will lead to building a successful business.
I remember someone telling me a while ago that he could not show me his business plan because he thought I would steal his brilliant idea, or tell it to someone else.
Now the most important thing when starting to build a business is not the plan, but a proven business model. You have probably heard the often quoted fact that only one in 10 new businesses actually succeed. This means nine out of every 10 new ideas will never develop into real and sustainable businesses. In other words, if I want to build a truly successful business, I may have to try nine ideas before I get to the right one.
Spending hours writing a long business plan is therefore a waste of time because, as you cannot see the future, you have no clue if your new idea will work. You may carry out desk research, but it will not be based on facts. Many ideas turn out to be failures when the entrepreneur discovers that his or her assumptions were totally wrong.
There are many business decisions that have been made on wrong assumptions. A restaurant owner once told me how he struggled for years to get more customers.
Even on the busy days of the week, the numbers remained low while a competing establishment just a block away was fully packed. The owner and his team tried everything, emulating their busy competitor's menu, their staff dress code, even the seating layout, but to no avail.
One day the owner decided to approach the competitors' customers as they were leaving the premises to ask if they found something wrong with his restaurant.
"Yes we have been there before, we just didn't like the food," one couple told the restaurant owner.
Quick questions to the few customers inside his own restaurant confirmed that his food was below their expectations. After appointing a new chef and changing the menu, business started booming.
Customers' opinions are the surest way of judging the quality of your product and acceptance in the market. Not even the best written business plan will tell you what customers think about a restaurant's food, or whatever product is being sold.
The modern thinking now about entrepreneurship is that a startup is not a business. It is an experiment to discover a business model that works. An idea becomes a business if it is validated by customers liking the offering, and the entrepreneur developing a viable business model that makes money sustainably from the idea.
You start writing a business plan when you have gathered sufficient facts from the market proving the viability of your idea. An investor is more likely to want to work with you if you have convincing proof that there is a strong need for your product in the market.
My advice then is two-pronged. Yes, you must know how to write a business plan. The more thorough your knowledge, the better you will be able to test your assumptions and develop a viable business model.
Read all that you can find on business planning. Although you can get someone to write a business plan for you, they cannot carry out all the tests needed to prove the business idea in a real market.
Besides, you are the one who will need to implement the development of the business and explain it in detail to potential investors and financiers, so you might as well get your hands dirty developing the plan yourself.
The second piece of advice is, if you think you have a business idea, test it in the market. Find out if your friends or associates do need your product or service and if they are willing to pay for it.
Their feedback will allow you to change the product and your business model to fit the market. The faster you test your ideas, the faster you will come up with a viable and profitable one.
On Friday June 6, the recently crowned ZNCC Businessman of the Year for Mashonaland region, Chomi Makina, will be giving an inspirational speech at the BusinessLink Networking Breakfast meeting. If you are interested in attending and networking with other entrepreneurs, please visit my website for more information.
Please let me have your feedback at my email address below.
Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs. You may contact him by email, email@example.com. You can also visit http://smebusinesslink.com