Entrepreneurs! Write Your 2024 Business Plan TODAY

Key Takeaways

§? A new year brings new perspectives and a good time to shift to confront the new realities

§? Business planning for SME entrepreneurs is different from that of larger firms

§? Entrepreneurial firms need to grow fast and attain critical mass

§? The VUCA environment poses several opportunities and threats

§? Entrepreneurial marketing is different from its traditional counterparts

§? Financing to fund growth can determine how fast the organization grows

§? Business planning is not static but must have some agility built in

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As we end 2023, planning for the next year and navigating through the challenges and opportunities represents a chance to think ahead and formalize new strategies. Business planning is a requirement for all organizations, and while you, as an entrepreneur, must also lead the venture, you cannot keep your road map in your head. However, planning in a rapidly changing environment needs an entrepreneurial approach—iterate and pivot in a world of unexpected events.

There are several varieties of business plans, and often, the exact blueprint for the way forward is unnecessary. Think about a start-up enterprise and imagine writing down with great certainty where it is destined. Early-stage businesses are still trying to determine their business model, and writing a detailed plan wastes time. However, a road map of the things that need testing and results to assess its viability will determine its success. Sometimes, financial institutions need something in writing; therefore, you may be required to do one with some guesswork.

Why write a plan? There are several reasons for crafting your road map. First, the entrepreneur must look hard at the numbers—product costs, pricing, marketing expenses, and how all the other pieces will add up. Secondly, entrepreneurs must take a long look at where the venture is heading. There are too many variables for a back-of-the-envelope approach. The plan must answer the question: How does it cope with different scenarios in a dynamic and fast-changing world? A business plan must not be static; therefore, several revisions are needed to make it relevant. Thirdly, financial institutions or investors may require that you detail the different strategies to achieve market and shareholder success.

Vision & Mission Most successful entrepreneurs start with how they want to change the world or the industry they are in. No one can have a 20/20 vision of the desired future state.

Entrepreneurs seldom see the future, a myth that often prevails. They either see the future when it comes or invent it. Usually, it comes slowly, and the opportunity suddenly takes hold.

Take e-commerce; it did not catch on immediately; it was a slow and steep climb toward market acceptance. Jeff Bezos and other entrepreneurs often had to work in their homes to start their ventures when the market was evolving.

Entrepreneurs can also invent the future. If they come up with a new product process or management innovation, this can create a new market or disrupt an industry. Forty years ago, these did not exist: cell phones, coffee bars, mutual funds, biotechnology (the one that gave us the RNA technology for some COVID-19 vaccine), discount retailing and express delivery. The entrepreneurs who started FedEx, Star Bucks, and Motorola created a new market space. Some entrepreneurs face great uncertainty and stress, as they are not only lonely with their ideas but often snubbed. ?

Environmental scanning In a rapidly changing world, you might ask if planning can help when no one can accurately predict the future. While no one can forecast one hundred percent, the two strategies used (see the future when it comes and invent it) can help develop a road map with fluidity.

The U.S. military developed an acronym, VUCA, suggesting we live in a volatile, uncertain, complex and ambiguous world.

Volatility means events can emerge suddenly, such as a conflict breaking out in the South China Sea due to miscalculation. Uncertainty means that we are not sure of the probability that it would happen, if at all. Complexity involves different variables that many nations could bring to the table in a future conflict. Ambiguity is fuzziness in the scenario, and where could it go from a flash point?

Despite all of these, entrepreneurs must spot the opportunities and threats now and in the future. Since we established that predictability is virtually impossible in the big picture, entrepreneurs have something up their sleeves. An innovative enterprise is an experiment, small or big. If there is uncertainty, proceed inexpensively and iterate until you develop a workable business model.

Entrepreneurial marketing One of the most common mistakes entrepreneurs make is not knowing their target market. Use demographics, psychographics, and behaviourial criteria to segment your market. Frequently, entrepreneurs pursue blue oceans by changing their products and going after non-customers. Customers who like french fries might hate the oil it was fried in and was out of the market. The creator of the air fryer, William Maxson, changed the game in the 1940s and started the ball rolling with a prototype. Others, building on his success, were able to commercialize it. Frequently, this is the case for inventions that were ahead of their time.

Pricing and promoting a product or service can be a challenge. Previously, I wrote about the three common ways to price: calculate your cost, add your markup, and feel out the competition, but ultimately, the optimum way to price is to understand how customers view value.

Financial strategy Raising funds is as important as testing your business model. Depending on the stage of the business life cycle you are in, the financial strategy will be different. Please do not go to commercial banks at the start-up stage, as they are risk averse and for good reason. Most early entrepreneurs use the famous 3F strategy: family, friends and fools. The last F means sometimes, with little information, they will invest.

Cash flow tends to be negative as the early-stage firm is a cash sponge. The venture needs babying until it becomes self-sustaining.

While cash flow is more important than profitability, the enterprise must generate returns above its cost of capital. Since new ventures fail at a high rate, your financial plan must consider some common errors entrepreneurs make and avoid them.        

Operations strategy How you turn your inputs into outputs is at the core of a successful operation. Delivering quality at an efficient rate can give your firm an edge. The VUCA world can often disrupt your supply chain, and managing logistics could limit the enterprise's continuity. During the pandemic, the training side of my business had to stop, as I was caught off guard. I quickly learned to use virtual software and set up a learning management system (LMS). Remember, your agility talents will determine your ability to craft and implement your business plan in a VUCA environment.

Writing a business plan is like drawing a building plan. While that task is tedious, implementing the road map is the more significant challenge. As with a building, you need financing and a contractor to turn the paper-based concepts into reality. The implementation stage is often the majority of the work, with the seeds of failure all around. With a VUCA world, planning is making plans and changing minds. Agility in your plan will largely determine your success.

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This condensed version of my article appeared in my T&T Business Guardian column. [email protected]

Sajjad Hamid is the author of Build Your Legacy Business: Solopreneur To Family Business Hero. Sajjad is an SME & Family Business Advisor supporting entrepreneurs in scaling their ventures. In his spare time in Trinidad and Tobago, he tries to produce organic tropical fruits and vegetables and practise sustainable farming in his home garden.