Your LivePlan Small Business Plan – Start With Why and What
The questions are Why and What?
You should have a solid grasp of why you want to start a business and what you want to accomplish with it long-term.
Knowing and effectively communicating your Why will increase the likelihood that your business succeeds and that you feel a sense of success along the way.
And the entire LivePlan, the way I teach developing it in this guide, will work backward from the answer to the What question.
The answer to What is especially important when it comes to completing the financial forecasts because your financial goals will help you develop the other goals that go into the rest of your plan.
Read on to learn more about why you should answer these questions, what you should consider when developing your answers, and how you can go about doing so effectively.
Start With Why
As I thought long and hard about the concept of live planning, I always knew that having a grasp of why you start a business would be critical.
It wasn’t until about a year after I started thinking about creating this guide to creating a LivePlan that I read Simon Sinek’s Start With Why: How Great Leaders Inspire Everyone to Take Action.
In the weeks leading up to the launch of TheEmbarkment.com I read/listened to it multiple times.
It clearly articulates why it is so important for a business owner to understand why they are in business.
In a nutshell, Start With Why describes what Sinek coins “The Golden Circle”.
On the outside of the circle, a company defines what it does; what products or services it sells.
In the middle, a company defines how they do what they do.
And on the inside of the circle, they define why they do what they do.
Sinek points out that most companies start from the outside, defining what they sell, and work in on the circle.
Most never even get to the point where they understand and can articulate why they do what they do.
As a result, most companies are forced to use manipulative marketing techniques and compete on price first.
They are constantly looking for short-term results and, because of this, will never be leaders in their industry or be truly successful, as defined by Sinek.
In contrast to what most companies do, the best companies start with why and work out of the circle.
Companies like Apple and Southwest Airlines are great at this. They have a clearly defined Why and it guides everything they do.
Apple and Southwest Airlines are two companies that start with why.
Having a clearly defined why that resonates with current and potential customers and employees will help develop loyalty, which is key in building a long-lasting business.
Additionally, understanding and continually striving to satisfy your Why increases your likelihood of feeling a sense of success and fulfillment.
Sinek contends, and I agree, that there is a significant difference between feeling a sense of achievement and feeling truly successful.
Achievement is tied to more tangible, short-sighted accomplishments.
Money is often the scorecard when it comes to measuring achievement.
But, as I’m sure you have heard many times before, you shouldn’t get into business strictly to make money.
Working for money will only lead to a sense of fulfillment for so long.
You need a deeper purpose, which is where your Why comes in.
Striving to accomplish something bigger and more intangible than money is the best way to stay motivated in the long-term.
Only when you are constantly working to satisfy your Why can you truly feel successful, which is more important than feeling a short-lived sense of achievement.
Your first course of action if you are just starting out or have a small business but are not getting the results you desire is to Start With Why.
Seriously, read this book if you haven’t already.
As an alternative, Sinek gave, at the time of this writing, the third most viewed TED talk of all time.
Set aside 20 minutes and check it out.
Simon Sinek gave a TED talk on the concept of The Golden Circle. It is one of the most viewed Ted talk of all time.
Then, document why you are doing what you are doing.
The answer to your why question should be more qualitative, whereas the answers to your what question will be more quantitative.
The why should revolve around emotion and intangible characteristics.
When developing and communicating your Why, consider things like:
- What is your origin story? Stories are powerful. If you can explain why you are doing what you are doing by telling a story about how you got to this point, and you think it will resonate with others, start here.
- Who will your business impact? Do you want to have an impact on people in your profession, your community, or a larger group of people? Having a clear understanding of who you want to impact will help you define and communicate why you are doing what you are doing.
- Will your Why resonate with the people you want to impact? Having a Why that keeps you motivated likely won’t matter if it doesn’t resonate with others. One of the major reasons you develop your Why is to align yourself with customers and employees that will care about it.
Once you’ve given enough consideration to why you are starting a business, get it on paper.
It should make up a large part of your Company’s mission statement and should help guide everything you do.
You may even document it publicly like I have here.
Then, you can begin to think about What you want to accomplish, which will guide the entire LivePlan I help you develop.
Once you have a grasp of why you started or want to start a business, which should come first, you can start to think about what you want to accomplish.
Answering this question involves setting mid and long-term goals.
Ideally, you should have an idea of how you want to exit your business before you even get started.
This is difficult for most people to grasp, but it is a best practice.
It will help you run your business more efficiently and effectively than you would without a long-term, end goal in place and will help you avoid making compromises for short-term results.
If you aren’t able or willing to think about an exit strategy right at the outset, I understand, and that is okay.
You should, at a minimum, have some mid-term goals, which can be achieved within 1-5 years.
You should also have at least one or two long-term goals, which should take you longer than 5 years to accomplish.
Your mid and long-term goals should be specific and actionable. And most can be translated into financial goals.
For instance, a poor long-term goal for your business would be “I want to make a lot of money in my business and retire wealthy.”
It is understandable.
Most people want this.
But it is not nearly specific or actionable enough.
A much better long-term goal would be “I want to retire comfortably at the age of 60. In order to do this, I will need to have saved $1 million and will need to be able to sell the business for $3 million by the time I am 58 so that I can stay on and advise the new business owners for two years.”
This long term goal is so much better.
Everything that goes into your business plan could be reverse engineered from this one goal.
Your Mid and Long-Term Goals should be:
To devise a practical, actionable goal like this, you can do some research on Google to estimate how profitable your business will need to be to sell for $3 million.
You can also visit a site like BizBuySell to determine how much businesses in your industry are currently selling for compared to their level of profit.
Everything that goes into your plan could be based on reaching a level of profitability that would allow you to sell for $3 million.
This long term goal is based on an end goal.
Again, you may not be ready to define your end goal yet.
Your long term goals may be linked more closely with the qualitative Why you define before defining your What.
Maybe you want your business to be profitable enough within five years to comfortably donate $20,000/ year to a cause that is meaningful to you and your Company.
In this case, your LivePlan can be reverse engineered in the same manner to accomplish a goal like this.
Hopefully, you can see how determining what you want to accomplish with your business can make developing your plan much easier and more effective.
Active planning is an ongoing process.
But it starts right here.
It starts with Why and What.
Before you move any further into the planning process, it is imperative that you have a grasp of your answers to these two questions.
Want some feedback or help developing your Why and What?
Consider signing up for The Embarkment’s Online LivePlan Workshop.
The next group is being formed now. Get more information here.
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