So you want to create a business - don't write a business plan (yet)!

 

So you want to create a new business?

Don't write a Business Plan (yet!) by Ken POPE MBA

Do not create a business because you ‘want to create a business’. Create a business because there is something that you want to be involved in and the only way you can do that is to create a business. And, make sure that you are fascinated by the business. The first years can be hard, and the rewards are few. If you do not love what you are doing it will be too easy to give up. Success with a new venture requires passion and persistence.

Do not start by creating a Business Plan. Start by creating a two-page Concept Paper: two pages is too short to be a Business Plan but too long to allow you to BS.  In the Concept Paper, be sure to include the following:

a)   The Big Idea (What is it that you want to do)

b)   The business model (How do you make money)

c)   Why you? (What expertise do you have, or plan to get that will ensure that you have the knowledge of the business/industry)

d)   Who are the customers? (Who will buy the product or service that you are offering, at the price you want to charge?)

e)   Why will they buy? (Where is the gap in the market that suggests you might have the chance to actually get customers?)

f)    What will be your legal structure? (Different countries have different rules. We will have information by country for freelancers - check it out.  In any case, you need to have an idea about how you will operate from a legal and fiscal standpoint)

g)   What will you, personally, do for resources while the new business is building to a point where you can be, at least, self-supporting? It may take a year or more!).

Write out your concept paper. Get down as much of this as you can, then share it with a mentor. Someone who will give you honest feedback. Sorry to say, but family members are often not objective enough.

Find a professional coach or mentor.  The idea is to use the Concept Paper as the basis for dialog between you and one or more mentors. Let them ask questions: "What do you mean by . . . . ?". "How does this work in practice?"

The idea of the dialog is to get inputs that will allow you to refine, improve, and clarify, your ideas to the point where everything seems to hang together and make sense. This may take three or more rewrites of the Concept Paper. Frustrating, perhaps, but better to have the frustrations now before you commit, than to go forward with vague ideas, and have mega frustration later. 

Once the Concept Paper makes sense, with no missing links, that is the time to draft a Business Plan, with some financial stuff to help validate your ideas in operational and financial terms.

For more information, and to get advice from a professional, go to kpzglobal.com

More on concept papers

Discussing the concept paper approach with one of my students today (M) we agreed that sometimes it helps to jot down some numbers in the Concept Paper just to see if the concept hangs together. We were discussing an internet idea where the revenue stream depended mainly on the click-through rate from ads. A few quick numbers showed that the original concept was a non-starter. This is one of the key rationales for the concept paper. Dialog and work towards a working solution. Your comments?

Decide on a legal status

You will almost certainly need to have some sort of legal status to be able to charge for your products or services. This is especially important if you are billing an organization that will likely want a formal invoice. The rules vary by country. We will try to give some links and suggestions here for various states/countries. Please add your own ideas and suggestions.

The status will often vary from 'self-employed', through one of the various forms of partnership, to creating a separate legal entity such as a limited liability company. For example, in France, one solution is to sign up with a company offering 'portage salarial' services. The service handles all the billing and collection, and manages the social security and related payments, provides a monthly 'payslip', and, after taking a small commission on the invoice values, transfers the balance to your bank account.

The really tough things about being a coach or adviser

In addition to my more visible day job as a teacher of personal development and of business, I have been a career and life coach for over 30 years – roles that grew out of the necessity of becoming a freelance start-up adviser when a family member became ill requiring me to WFH in 1983 (before WFH was a thing).

To explain: with an education in finance (Chartered Management Accountant) and business (MBA), and experience in major corporates and consulting, my natural choice of freelance role was helping folks create their own businesses; advising on strategy and finance was a natural choice. Anyway, strangely, I enjoy building financial and business models. However, it soon became clear that the budding entrepreneurs I was working with needed more than excellent ‘technical’ business help.

Taking the step (more like a huge leap) from working for someone else to working for themselves brought its own, very real, problems. Before the move, they usually enjoyed a regular income, an imposed time discipline, fairly clear objectives defined by others, usually a well-equipped working environment, perhaps supportive and social colleagues, and a calm home life. Afterward, the income is anything but certain, any financial savings may be drained to start to business and support the family, 24/7 becomes the norm, objectives are hazy, working ‘on the kitchen table’. The sense of being alone and un-helped may overwhelm the frequently tired budding entrepreneur. Often, too, family pressures add to the mix as partners may also feel more vulnerable without the previous routines and certainties.

So, without outside help the would-be successful own-business person may falter and fail. My natural reaction was to step in to provide support. Having had a long period, in my own life, without help with a very difficult domestic situation, I determined that I would not let anyone feel alone again if I could do something to help them. And, so, was born my coaching business.

The really tough things about being a coach or adviser:

1.    Our objective is to destroy our business

What does this mean? It means that our primary objective is to ensure that our clients no longer need us. At the risk of being accused of being paternalistic, it is rather like a parent waving off their happy and independent offspring knowing that they no longer need you; that we have done our ‘job’ however sad we might feel of their going.

2.     Adverting is negative

In most businesses, advertising is there to reach potential clients/customers effectively saying, “Look what we have that satisfies something you need.” Not so with coaching, and perhaps with any professional service offering: the reaction is, “If they need to advertise, they can’t be any good.” In my case the vast majority of my clients come directly or indirectly from my large network of wonderful ex-students – people with whom I have had the pleasure of working and, so, we have gotten to know each other. Some others came through the ‘word of mouth’ network. For me, advertising is a definite no-no!

3.     Helping by not helping

Those of us with a fair amount of life experience may be tempted to give advice – “Do this, it worked for me.” – and, yes, I am guilty of doing this sometimes, but this is not the best way to help someone. Taking the advice of others on life choices is to avoid the responsibility of making a decision, it diminishes the probability of success by denying the boost from post-decision justification and destroys the joyous sense of achievement from having determined one’s own goals and reaching them.
So, our role is to guide clients in teasing out their own ‘golden threads’ – those things that they have to have in their life – and distilling them into goals that will bring them a sense of purpose and fulfillment.

 

In conclusion, and despite the tough problems, I would not change my life’s work for ‘all the tea in China’. I love what I do, and strive to do better in every class, and for every client. But, sometimes, just sometimes, I wish it was not quite so tough!

Setting up a single person business in France (as a freelance, or business operator).

In France, it is possible to set up a business - as a start-up or as a freelance - in a few minutes, at low cost, and working mainly online. See here to know more (in French).

Coming soon to your area!

http://techcrunch.com/2013/11/14/ebay-debuts-new-angies-list-competitor-and-local-service-provider-marketplace-ebayhire-in-the-us/

The start-up scene changing Norway http://www.bbc.co.uk/news/business-24912717

Don't be afraid to explore those 'crazy' ideas further

Leah Busque: Taskrabbit's early days http://www.bbc.co.uk/news/business-24641936

How the small guy wins with disruptive technology

http://hbr.org/video/2688242135001/the-explainer-disruptive-innovation