Your business planning process is important.
Think about it like this: if you’re an entrepreneur (or an intrapreneur), how do you successfully get your product onto the open market? It’s through a process. All the great company stories — and individuals — have one. (And yes, many times the first part of the growth model is having a garage to start in.)
If you don’t have a good business planning process, you’ll never get very far past the startup phase. In fact, Startup Genome did a report semi-recently analyzing 3,200 startups that failed. What do you think was the No. 1 problem with their business planning process? (Pause and reflect.) It was trying to get to scale sales too early, so called “premature scaling”.
You can probably figure out what “premature scaling” means, but to quickly explain:
- Founders invest to build the product
- When finished, they spend money hiring lots of sales and marketing people
- Massive development of sales and marketing materials
- Still, no one buys from you…
These are good things to be doing — don’t get me wrong. But this is what big companies when they are coming from a place of having a well-known brand. It can’t be the same business planning process for startups.
In short: you can’t spend money to build the business before you’ve nailed down exactly who your customers are, what they need, and why they’d get that from you. In short: you’ve got to be solving the right problems in the right way before you worry about scaling your sales.
What’s a better approach to the business planning process, then?
The three-step business planning process I endorse:
In this way, “scale” comes later into the business planning process. Let’s look at each quickly.
Business Planning Process: Discover
This is where you determine product/market fit. And I think most importantly, this is where you understand that you’re not really selling a product — you are selling what that product could do for people. Think of it like this. “Our product does this” is a list of specs. In some industries, that is very important and it might even be how you make the sale. But “Our product will do this for your problem” is much more powerful. You need to be understanding that at the discover stage. You also need to find out if there are enough companies out there that confirm that they really have a problem they want to solve.
Business Planning Process: Validate
If you’re going to be successful, even at a small level, you need to make sure that your overall sales process is repeatable. Sales processes that go all over the map all the time just burn people out. Once you know the product and the value of the product, you move to validating the sales approach and making it’s repeatable. Many different prospect types (size, industry, etc.), very company tailored value props and different sales methods are indicators that you didn’t find the repeatable sales model yet. You cannot scale what you have achieved.
Business Planning Process: Scale
Finally you gained few paying (!) reference customers based on the same sales model … and now you can scale! This is about filling the funnel, growing revenue, bringing on new people, and trying to figure out ways of production to push down costs. In other words, you generate predictable revenue. But you can’t be doing this stuff until you know the customer value, the product/market fit, and what the sales processes will need to look like.
What else would you add on business planning process?