LESSONS #3: ‘PLANNING’ YOUR NEW BUSINESS
The third topic in our series on starting a business is all about ‘planning’. We launched with no business plan, no marketing plan and no financial plan. We agree that planning is really important for the successful launch of any new business. But what worked for us is a little different from what you might have thought.
- No business plan. Don’t worry about having perfect detailed business– just a rough guide is fine. We started a business plan but never finished it. It is still unfinished. Of course, if you need to raise capital from investors this is a different story, but the only documents we have were working documents on product development and branding that we found useful and don’t really share with anyone else.
- No financial plan. We didn’t have a detailed financial plan. By all means create one, but it is very difficult to know what your first 12 months of sales will actually be – let alone the first 5 years. What is important though is to have a budget and try very hard to stick to it. Starting a new business does not have to cost the earth. It clearly does cost money but it is important to prioritise. Look for creative ways to do things cheaper. While we don’t have detailed financial plans yet, the only thing we have kept good track of are the margins on our products. We know what they cost us to manufacture.
- No marketing plan. A friend asked us how we were going to market our products and we had no answer. We hoped that focusing obsessively on product design, creating products people would love, would be enough. And it turns out we were right. In this digital era, word of mouth is extremely powerful. Beautiful products get recognition and attention.
- Saying no. What you say no to is just as important as what you agree to. Understand your brand and where you want it to be. In the early days, every enquiry is tempting to say yes to, but it pays to be selective. Take each step carefully and thoughtfully.
- Stretch targets. While we don’t have detailed plans, we do create rough stretch targets for what we like to achieve. We talked about what we like to achieve in our first and second year in business. We don’t think of them or refer to them very often, but in a subconscious way it helps drive the business forward. We were a long way from out year 1 stretch target but it looks like we will make year 2’s stretch goal – much to our surprise.
- Lots of advice. People are usually very willing to help out. Draw upon your networks to find people who may have been through setting up a business. Ask questions – even if you think they are silly (e.g. we had no idea how to register a company name when we first started). Process the advice you get, but don’t follow if it doesn’t feel right. Use your intuition.