Building a Business Plan Without Writing One -- Part 2 of 2
This article is a continuation from Building a Business Plan Without Writing One — Part 1 of 2. Be sure to read part 1 if you haven’t already!
Step 3 – Attend a Party!
Mission Statement & Vision
If you already know what your mission statement and vision are, good for you!
For me, this part was the hardest. And I still can’t say I’m 100% resolute about KLIK’s yet. But here’s one method that really helped establish KLIK’s:
Write down a few mission statements and visions that you could potentially pursue. Now attend a party (or networking event)! Every time you meet someone who asks you what you do, answer them using your mission statement or vision.
Here are a few examples that I used in my self-intros:
I’m building a company that aims to break beauty stereotypes and change attitudes surrounding beauty. Smart and beautiful are not mutually exclusive!
I’m working on streamlining and bringing efficiency to the make-up routine.
I’m starting a beauty revolution… bringing simplicity and technology to beauty!
Trust me, this works so much better than boring ol’ “I’m working on a portable make-up organizer.”
With time, you will notice what you identify with most, as well as what brightens people’s faces best. Your mission statement and vision will likely change as you go, and that’s okay. So relax and go with the flow!
Step 4 – Wine and dine… and talk about difficult topics.
If you’re working with one or several partners, absolutely make sure you agree on each other’s mandate, equity and compensation. Things will change, so make sure everyone is comfortable with that as well.
Working as a team is all about complimenting each other’s shortfalls, so make sure you are all on the same page about each other’s strengths and weaknesses. Have a frank, open conversation about what you Can Do vs Want To Do, and Can’t Do vs Don’t Want To Do. Wine helps the conversation. Beer too, if that’s your thing.
Step 5 – Get to your screen
Finally, the money part. Hopefully, now that you’ve got a clear idea of how your business looks like, the potential revenues and expenses of your business are straightforward to hash out.
Here at KLIK, our goal is the same as many Kickstarter projects out there – to raise funds to cover our initial start-up costs, so that we can continue on as a permanent business thereafter. Our financial plan was therefore structured accordingly. For other kinds of businesses, depending on what your goal is, you may need to build a cash flow analysis for a number of years – typically the first 3 to 5 years.
First, start with your revenues.
Write down how much you could dream of selling in your first year, second year, third year… Most people don’t have difficulty basking in their dreams here.
Then, work out your costs.
This part will be hard. It will require lots of research, lots of work, lots of numbers. There isn’t a shortcut to this part, sorry.
There are typically several types of costs:
Pre start-up costs: Costs to build your prototype/service, including the parties above, feedback sessions, coffee chats, hiring costs, material costs, free samples/trial sessions, etc. Also, the amount of time you will need and potentially your living costs during this period.
Initial costs: Costs to set up your production line or your service for launch, including advertisements, grand opening promotions, etc.
Fixed operating costs: Once everything is set up, your ongoing expenses including rent, salaries, accounting fees, marketing, etc.
Variable operating costs: For every product/service you deliver, there may be a cost associated with it. The amount depends on how much business you achieve.
Scraps/others: In any kind of business, you will have defective products, unhappy clients requesting for refunds or other types of losses. Always make sure you consider this in your numbers!
After your revenues and costs are complete, put your numbers together year by year. Add them together and figure out when your business will go from negative to positive – your break-even point!
Also, identify your assets and liabilities. In other words, figure out what among the things you possess has intrinsic value that is worth money, as well as the costs that you’re “stuck” with due to contractual obligations, or the costs that may arise should something happen. Make sure to always keep them in mind when you make decisions on the future of your business.
There you have it. Put your notes together, and you’ll have a full-fledged business plan right at your fingertips, without having had to slave (too much) in front of pages and pages of documents!
Finally, keep in mind that businesses consist of people, and people are nimble. Therefore Business Plans should be living documents, not a plan set stone. Pivot, evolve, and most of all have fun in your venture!
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