Have you ever seen Theo Paphitis or Duncan Ballantyne invest on Dragon's Den after perusing a detailed 40-page business plan?
No.
The dragons are more interested in the entrepreneur's personality, background and motivation, the pricing of the new product or service, and what makes the product different.
Yet, high street banks almost always instruct start-up entrepreneurs to present them with detailed business plans, They can be up to 40-pages long! "Most businesses don't plan to fail they fail to plan," is the bankers' mantra.
Yet, in my experience bank advisers have always been negative. "Starting a business is a risky," they say. Or "did you know that 1 in 2 businesses fail within two years!" Or even, "in this current economic climate I wouldn't advise going it alone".
When I launched my business, iAutoUK, I visited two banks. To be honest they seemed more interested in selling me insurance and pension plans than advise on how to make my company succeed. Do you have a business plan, they asked? No, I replied, but I do have my vision on how to succeed. That's what I'd like help on.
I appreciate start-ups need solid planning, structure and vision. Knowing your market place and competition is vital. But standard business plans are so depressing. It's like being interviewed by the police! I prefer to seek advice from business 'mentors' - such as those from the Entrepreneurs Business Academy. These people already run profitable businesses, are positive and encouraging, and come from a position of success. Banks are more intent on avoiding failure.
I've never had a business plan for iAutoUK. Despite this, in three years my company has reached a turnover of over £1m, with £100,000 annual profits. We've just launched a franchise operation.
My advice is that for your business to thrive you need instead a 'Success Plan'. This is an evolving strategy consisting of three elements. No 40-page business plan needed. In fact, you can write a Success Plan on one sheet of A4. My Success Plan is largely in my head and scribbled on notes.
Firstly, your company's Success Plan must have 'Distinction Elements'. You must understand your market place and how your business is distinct from competitors.
Look at any successful business - from Easyjet to Ben and Jerry's. They are all distinct. I thought hard - and still do - on how to make and keep iAutoUK distinct. Use customer feedback to continually monitor the market place and your Distinction Elements.
Secondly, the Success Plan must have 'Leaders Objectives' and, as a business leader, you must communicate them to your staff. This means they always understand the direction of the business and enables them to deal with day-to-day challenges. Done well, it works.
For example, iAutoUK has from day one aspired to offering the highest standards of customer care to car owners. I've done my best to drill this Leader's Objective into our staff. Staff once told me that because some mothers had to do a school run, this limited times in which they could collect their vehicles for servicing. Plus, sometimes they had to bring children with them to the garage. Our response was to fit car collection times around school runs, and also to put a children's play area into the garage.
The final element of a Success Plan is to make sure you make money! You must therefore always have a firm grasp of 'Income Assessment'.
So, have a system that provides you with daily earnings information, and which can monitor cash in the bank and in the pipeline. In this way, you can manage your business income and avoid running out of cash, particularly in your business's early days.
Of course, your businesses profitability should be increasing. An Income Assessment will soon highlight if this is not the case. So revisit your Distinction Elements and Leaders Objectives to bring in profit.
For example, if I notice one morning that sales the previous day did not achieve acceptable profit margin, I might need to respond.
Such a Success Plan is a short, relevant, real-world document. In modern business, I believe a Success Plan is more appropriate than a traditional business plan.
Look at companies such as Comet, Blockbusters and Jessops. I'm sure their business plans didn't include going into administration! Had they had a Success Plan, perhaps their futures may have been different.
Blockbusters, for example, surely must have realised years ago that its CD and DVD rentals and profit margins were declining. Clear revised Distinction Elements and Leader Objectives may have enabled the company to adjust quicker, survive and even grow.
So, while a 40-page business plan may be of use to banks in getting start up funding, don't look at it again. Instead, choose a Success Plan.