I have a confession to make. I don’t like formal business plans. In certain entrepreneurial academic circles, this is heresy. But over the years, I’ve seen the development of business plans as a major impediment to actually starting businesses. The people who are most entrepreneurial by nature are the most likely to freeze up when faced with the daunting task of formulating a business plan. And most of the successful entrepreneurs I know never had a business plan on paper when they started. They merely had an idea in their head and a personality wired for action.
It’s my belief that too much start-up planning saps the potential energy from someone with an entrepreneurial nature. This is especially true for individuals starting faith ventures to employ individuals rebuilding lives from homelessness, addiction or prison. Faith venture initiators are even more likely to bog down with the added dimension of the double bottom line where they are seeking both business profits as well as missional goals.
I understand that in order to raise money, it’s a requirement to have a formal business plan. But that’s for someone else to write later with a more developmental skill set. At the start, it’s more important for the person with the business idea to act, to start taking small steps towards executing what needs to be done to make the business cash flow. And in the process, it will become clear whether the idea is going to work. (An excellent book that argues this point is Making Ideas Happen by Scott Belsky which I plan to review soon)
First, limit your initial written start-up plan to answering the following questions in no more than one page:
• In three sentences, define the product or service your business will offer on the day it opens.
• What faithventure goals will your business serve?
• What are your start-up expenses?
• How will you get revenue right away?
• How will you market your product or service today?
• Who is your competition?
• What scenarios could cause your business to fail?
And now for the big question which you should answer in a monthly profit and loss pro forma spreadsheet in no more than two pages: How will this business cash flow over the next two years in a reasonable range of best and worst case scenarios?
The answer to that question is the most important one in the whole plan. Many potential investors immediately seek it out after learning what product or service the business will provide.
Together, these basic questions are the foundational issues for any faith venture. They provide the framework for all future questions as you test the viability of the business by executing the action steps that derive from these questions. Over time, you may develop the more detailed business plan as you move forward with the business. But in the end, this three page framework provides all you need to prove the viability of your idea.
Now, get to work and change the world.