One of the many benefits of a business plan is the discipline imposed on decision-making. The plan provides an expectation against which actual results or progress are measured. If results exceed expectations, do more of the same. If results lag behind expectations, make needed changes.
This discipline is critically important for startup companies. Early stage startups don’t yet have sales to manage. They don’t have marketing plans against which to measure results. For these firms, the business plan is more in the form of creating a timeline or logical series of steps to follow. Without a thought-out process to follow, it is easy to waste precious resources – even get completely off track. In fact, the business plan becomes a form of compass for guidance.
After a series of planning and implementation steps is vital for startups. Accept that the steps must be done in order. Don’t move from step three to step eight.
A real example will help explain. ABC Company (an actual firm with the name changed for this column) sees a need for a financial product designed specifically for entrepreneurial service businesses. Some initial market research indicates a strong desire for the product and accompanying educational support. It appears there is nothing quite like the contemplated product currently on the market. The partners have followed a structured approach to their market research and product design.
Up to this point, the partners followed their planning steps. Then what appeared to be an opportunity presented itself.
The partners believe that the name of their service will be important to their success. This is probably true, although it is difficult to know with certainty just how important the name will prove to be. They settled on a tentative name for the service, and learned that the name is available as a domain name from a third party for $2,500. They believe they should secure it immediately before another firm takes it or the price increases.
However, it is not yet time to secure a domain name. They are still in the market research and product-development phase of the business timeline. They do not yet have strong evidence that they have a viable product. They do not yet have a final plan for monetizing their service. At this stage of the game, $2,500 represents a substantial portion of the funds they have committed to their venture.An inherent component of planning decisions is that they are subject to change based on new information. Taking the planning steps out of order increases the likelihood that decisions will have to be revisited. Even worse, making decisions prematurely may lead to ignoring later information. Deciding on a domain name is among the last steps of the initial planning process.
Many possibilities will intervene, such as deciding on a different name or ending the venture. This is not the time to make a domain purchase decision. Do you see the necessity for disciplined and structured decision-making? Do you follow a series of steps in your decision making?
Bowser@BusinessValueInsights.com. Dan Bowser is president of Value Insights Inc. of Durango, Chandler, Ariz. and Summerville, Pa.