How You Know You’ve Made a Bad Plan

There’s nothing I love more than a good maxim from an ancient writer. Today’s comes from the writings of Publilius Syrus:

“It’s a bad plan that can’t be changed.”

Well said, Publilius. Let’s address the issue of changing a plan from two sides.

In the first place, every business and every business plan should have contingency plans. It is of the essence. You shouldn’t even consider a contingency plan to be as much a contingency as part of the plan. “If X happens, we will then proceed down road Y.” This is incredibly important and oft ignored by many business people.

On the flip side and despite the need for a contingency plan, it is important not to waffle between plans, especially during a crisis. When a business is going through a crisis, it’s important for the CEO or leader to pick a particular plan or direction and stick with it. Nothing breeds a lack of confidence in staff like plan hopping. That doesn’t mean you shouldn’t have a contingency plan, but it does mean that you need to go down road Y only when X happens and not just willy nilly.

As Publilius said, if you can’t change your plan, it’s a bad one. In that case, it’s not a plan. It’s a tunnel out of which you can’t see the other side. Even if you don’t emerge from a tunnel the way you expect, you need to know that you’ve created some way to get out. That’s what a contingency plan is.

How do you create your plans? Do you always build in a contingency plan? Why or why not?

4 Tips to Start Your Own Business

In my line of work I encounter many entrepreneurs, a lot of whom are serial entrepreneurs. I’ll share a few of my key findings based on their experiences starting businesses. As you read these tips, consider the actions you can take to positively impact your own business.

1. Start now

I hear business contacts and friends say things like this all the time:

“I want to start my own business.”

“I have a great idea, I should start a company.”

“I could do this job so much better than my boss, and I don’t like working for others anyway.”

Well, your time is now. People delay taking risks, and they find a dozen reasons to do so. But the main reason is this: they are uncomfortable with uncertainty. They are scared of the unknown. They sometimes are too cautious or lack self-confidence. If you truly have a great idea, bet on yourself. I won’t tell you that you won’t regret it, but I can almost guarantee that not taking a smart risk will be worse. If you want to start your own business, take the first step this week: come up with the company name, register your LLC or take any other concrete step.

2. Have a plan and a contingency plan

Acting on your business idea does not mean that you should act on it without careful consideration of the risks involved, preferably before you get too far along. Find business partners, identify your widget or service exactly, have brainstorming sessions with friends or family members and outline a preliminary business plan. Be prepared for roadblocks and, if you have the time and energy, create a contingency plan. What’s your exit plan if this goes up in smoke? A contingency plan can help if your initial plans face a significant challenge and you are unsure where to turn.

3. Set your timeframe

I see many people get scared in the early stages of a business plan and retreat to jobs at which they feel safe and comfortable, though perhaps less happy. Others are so determined to actualize their ideas that they are unable to objectively evaluate when it is time to stop trying and call the endeavor a good, but failed, learning experience.

Set a time frame – for example, twelve months – for how long you will try your business idea. Make sure to identify specific times (preferably specific dates rather than “every 3 months”) when you will evaluate the time investment and if you’re where you need to be in your business plan. If you give yourself one year, that is not set in stone. If things start picking up in the 11th month, you should probably keep working on the venture for a while and reevaluate the timeline.

4. Create a solid foundation before you focus on growth

Entrepreneurs are ambitious! They also want to show themselves and the world that their business is successful in just a few months. Set your pride aside (also known as checking your ego at the door) and focus on creating a solid foundation on which long-term growth is possible. The wider and better quality the foundation, the more it will be able to hold as you grow vertically.

Are you ready to start your business? Outline three concrete steps that will get you started and try to complete those steps (or set them in motion) in the next seven days.

Do you already own or run a business? Please share your own thoughts and advice.

The Importance of Preparation as Taught by Benjamin Franklin and Alexander Graham Bell

Before anything else, preparation is the key to success.

– Alexander Graham Bell

I’ve recently seen some rather poor planning, and I want to take a moment to emphasize the value of preparation.

The initial preparation-based document of most businesses is the Business Plan. You know, that document that your angel investor, banker, spouse, partner, etc. wanted to see to make sure that you weren’t totally out of your mind when you told them you were going to start a business that did this, that and the other?

The point of that document was, in part, to prepare you for many of the issues that arise over the course of doing business. Do you need special permits or authorization? How much will your operating expenses be the first five years? When do you initially expect to turn a profit? What are your competitors’ barriers to entry or can anyone steal your idea?

See? These are questions of preparation. Despite Mr. Bell’s assertion, answering these questions does not guarantee your success, but it’s certainly a step in the right direction.

Have you found that your business is flagging recently, that there’s a certain stagnation or that things aren’t headed in the direction you’d hoped? Perhaps things are going well, but you’re about to embark on a huge project.

Don’t just flail around grasping at straws and hoping for the best outcome. Do some preparation before you have a crisis and things move too fast for you to adequately prepare. I’ll invoke one of my 10 Ways not to Hire a Guy Like Me: leverage your business plan! That document is probably buried away in saved files – or maybe you put it together before the ubiquity of computers and it’s in your file cabinet, weathered and dusty.

Either way, pull it out!

Now make an effort to leverage it. What did you say you would do if things turned south? What were your contingency plans? Even if you’re not in this state, updating your business plan for posterity and ensuring that there is a plan in place should something happen to you and your ability to move the business forward is important.

Not sure where the business plan is, you don’t have one or it’s not proving helpful? It’s time to rethink your business plan, and use that as a means of preparing yourself to solve your problems before you have a crisis on your hands.

Remember the company that thought it was going to move from Minnesota to Orlando over the weekend? That was not preparation. We went in and got them adequately prepared for their move – and it was successful. In order to be successful yourself, I encourage you to spend more time preparing – before anything else.

Are you ready?

It’s 2012: Let’s Roll Up Our Sleeves and Get to Work

Happy New Year, everyone!

I want to welcome you and your business to 2012.

Unfortunately, in business we can’t just say, “Well, it’s a New Year. All from last year is forgotten. Here’s a totally fresh start. Yeehaw.” (Presumably, the yeehaw would have an exclamation point at the end, but that’s somewhat challenging in this fantasy statement since it can’t really happen.)

Despite the inevitability of continuity, some things from 2011 can be halted and considered “past problems” in some sense. For instance, though there are exceptions, by and large, the tax year of 2011 is now over. You may have concerns about what happened and spend the next four months dealing with them, but they’ve happened. You can’t change what happened – only handle it. There’s something relieving about that.

Also, it’s a new quarter. If you took a loss last quarter – or last year – that loss is definitely going to affect you and your business. There’s no getting around that. But it’s a fresh quarter and a fresh year, and that means a chance to make some changes, some positive impressions and, hopefully, some money. That is what you’re in the business of doing, right?

With the Holidays over, December – also known as the Month of Distractions – is behind us. People will return to their regular schedules. Children will go back to school (soon). If you’re in retail and prepare all year for December, only to hold onto your hat while it barrels you over, then normalcy has returned.

That all means that the New Year can be a time for fresh starts, new ideas and inspiration. I’m not one for the New Year’s Resolution Bandwagon (it’s fraught with problems, not the least of which is a total lack of stick-to-it-iveness), but there is something to be gained by using our culture’s mental break between years in order to be an inspirational leader who motivates one’s team and company to rally around strengths and successes and have a great year. If last year was a tough one for your company – as it was for many companies – you’re going to need to be that kind of leader today, this week, this month, this quarter and this year.

Business isn’t easy. If it were, everyone would be doing it. It takes hard work, dedication and a dash of luck. Whether 2011 was the best year ever or the worst on record, take the first work day of the New Year as a time to get back to business and refocus your company and your team. As a turnaround manager, it’s my job to roll up my sleeves, get down in the trenches and get dirty. If all business leaders did that, I wouldn’t have to. My advice to you is to do just that: roll up your sleeves and get to work.

If you are stuck and aren’t sure what to do and how to handle your business, your team, your finances and your general situation, then I want you to start by reviewing my five articles that ended 2011 about Resolutions for Your Business in 2012. Each of them is just as relevant in its own way right now as it was in 2011. These are ways to think about your business and get started in the New Year – an important balance of continuity with the past and innovation for the future.

Ensure continuity and preserve a feeling of consistency for your business and personnel.

Think about a contingency plan in case of an emergency.

Sit down and review your business’ financial documents.

Analyze not just your business, but also your business environment.

Engage your team in short- and long-term planning, and don’t be afraid to innovate.

What are you going to do differently in 2012? How are you going to manage and grow your business? Please share in the comments below.

5 New Years Resolutions for Your Business in 2012, Part 2

When was the last time you looked at your business plan? You remember, that thing you made so many years ago to ensure that you knew what you were doing and that everything was thought through? Wait, you did make one didn’t you?

If so, great – pull it out. If not, I’m not going to ask you to spend your time on that now, but I am going to ask you to think about a contingency plan in case of an emergency.

That’s right, the New Year is a great time to review your contingency plan.

We’re in the middle of a horrible economy. If things are going well for you and your business, I commend you and say, Keep up the good work. But even if things couldn’t be better, you should always have a contingency plan in place that you update at least every two years. At the cusp of 2012, this is a great time to review and update yours since I’d be willing to bet that you haven’t since before 2009 (pardon my assumptions if you review yours bi-annually).

So what should one think about with a contingency plan?

The first and most obvious thing is money. Capital is, after all, the life-blood of any business. Without proper cash flow you won’t be able to buy inventory, make payroll or pay your bills. So, do you have a line of credit? If so, is it currently in use? Could you stand to ask for it to be expanded?

Do you have good relationships with multiple banks? There are hundreds of banks across the country that are failing but can’t even be taken over by the FDIC because they lack the resources to do so. That should make you nervous if you’re banking at any of them, and it should also make you ask whether or not you can find multiple banks with whom to do business.

What assets could you liquidate in case of an emergency? Is there anything non-essential that would fetch a fair value? I’m not suggesting you sell it. I’m only suggesting that you know what you would liquidate and how if you had to.

Do you own your business? Are you it’s president? Is there a board? All of this is to say, think about a succession plan. If something terrible happened to you (God forbid, but you never know), can your business survive without you for one month, three months, a year? Is there someone who will take the reins? These questions are especially important to answer if you are going to ask banks for money any time soon.

What about your other key positions? Who is indispensable to your operations? What would you do if something happened to him or her? How would you replace that person?

Think about your industry and the kinds of emergencies that usually face it. Is it a highly regulated industry? Is it a litigious industry? Are your products safety related? What could go horribly wrong in your industry and business? Think about these things and use your core team to brainstorm potential solutions in case any emergency hits.

You never want to be left wondering what you’re going to do in the event of an emergency. As a turnaround manager, I assure you that having a contingency plan in place is essential and a great way to proceed into 2012.

Resolve to create or update your contingency plan this month.

Consider answering any of the questions I asked above in the comments below and share some of your creative solutions to help others.

Is Optimism Essential? Yes – But Bolster It with Realism

Optimism is essential to achievement and is also the foundation of courage and of true progress.

– Nicholas Murray Butler

I certainly can’t disagree with the value of optimism. You need to believe that what you’re doing is going to work or it’s going to be very hard to do anything. So, yes, be optimistic.

At the same time, though, all optimism must be supported by realism. Be optimistic by feeling good about a well thought out Business Plan, but make sure you have appropriate contingency plans. That’s realistic.

Some say, but contingency plans imply that you don’t believe in your primary plan, and that means you’re not optimistic it will work.

Untrue.

Contingency plans are part of the main plan. Having contingency plans should make you optimistic about your primary Business Plan because you know that in the event that life doesn’t work out to 100% of your projections – and it never does – you will not fail. You will have next steps ready to go.

So, yes, Butler is right that optimism is essential for progress, but bolster all optimism with realism.

What do you think about Butler’s words? Do you have a favorite quote?