Plan, plan, and plan some more…

“When have any of our plans actually worked?
We plan, we get there, all hell breaks loose.” 
Harry Potter, in the Deathly Hallows, Part II

This column continues our theme of the importance and value of planning in small, entrepreneurial and family ventures.  Over the last two installments on planning, among other points, we have seen that 1) business planning exists on a continuum from informal, unwritten, in your head to formally written; 2) new start-ups exist on a continuum from small business ventures that are not scalable beyond local operations to highly scalable ventures that seek to redefine and dominate markets and maximize return to investors; and 3) allows the entrepreneur to balance and blend all these relationships: opportunity, resources and team, including but not limited to seeking funding on a continuum from personal funds, friends, family, and founders and highly sophisticated term sheets from angel and venture capitalist investors.

Against this backdrop, we continue to illuminate a number of deceptively simple, challenging questions that we must ask, answer and update as conditions change over time.  But just like Harry Potter in The Deathly Hallows, we sometimes feel that our plans are not always in sync with what happens next.  Indeed, plans and planning are often more on the front lines of organized chaos than calm.

Back to our roots…

No business exists in a vacuum, but rather in a competitive business environment. Today we examine four additional touchstone questions that inform how we define our business and competition.  1) What is your reason for being in this business? 2) What is the primary function of your good or service: 3) What are three unique benefits of your product or service?  4) Who is your competition?

From vision to value – it’s not about the money…

Contemplating the reason for being in business can seem a tad theoretical when all hell is breaking loose. In reality, it is one of our most applied questions.  Failure to pay sufficient attention to why you are in business can lead to mission creep, objective drift, and loss of perspective. It is very tempting just to blow by this question with the macho, “I‘m in it for the money!”  The reality it is not about the money.  In fact, money never really motivates, but its absence surely aggravates.  There is a huge difference.  Everybody loves to make money.  But that is not why we are in business.  The most fundamental economic driver for why we are in business is to provide goods and services to our customers. Period.  Moreover, we need to do this more effectively and efficiently than the competition and deliver value (real or perceived) to our customers.  If we do that, then we get the money, success, etc., but if we don’t, we get chaos, bankruptcy, and failure.

Continuing to build your value proposition…

The primary function of your goods and services is to consistently and clearly deliver value of sufficient scope such that your customer is willing to exchange value for it.  Confirmation of great business ideas only comes with this exchange of value; that is, the willingness of a customer to pay or barter for what you are offering.

Set yourself apart….

When building their business plans, I challenge my students to outline three unique benefits of their goods and services.  The conundrum here is that all good ideas by their very nature will be imitated; bad ideas are rarely if ever copied.  The good news is that unique does not have to be “one of kind” unique, but rather “total package” unique.  Take off your business owner hat for a moment and put on your consumer hat.  When are you the most satisfied with a business transaction?  Not when you pay for it, but rather when you realize the value you received meets or exceeds your expectations.  Now put back on your business owner hat.  Meeting the threshold of general acceptance of your customer will only get you so far (nothing unique here), but exceeding customer expectations will make you successful time after time.

Just who is your competition anyway?

In these price sensitive times, many small business owners suffer from “low price myopia.” There is tremendous pressure to try to compete on price.  Remember, price is never strategic; cost is strategic.  Price is what you charge your customer. Cost is the sum of expenses (fixed and variable) incurred in the delivery of your goods and services.  More importantly, knowing who your customers are and are not, is linked to knowing your competition.  If you own and operate a high-end specialty jewelry store featuring high end items, you need to compete in this space, for those customers, with those competitors and not be blinded by low-price myopia.

Continuing to build value…

The next four key questions further refine our entrepreneurial journey: What are three objections to buying your goods and services? Are your goods and services used in combination or connection with other goods and services? When and where are your goods and services available? What is the key message or mantra that describes your business and can you do this in three or four words?

The measure of company is not taken when everything is going well.  Rather, the true measure of a venture is taken when things go wrong and how we respond in that moment that defines us.  You can find these planning questions and more on our web site at https://cincyentre.wordpress.com/.  Till next time, all the best for continued entrepreneurial success!