Author: Rolfe Larson

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What Do We Need: Strategic or Business Plan?

A planner on a desk

Depends. All too often, these two terms have become blurred. But they are different concepts. Here’s a good way to distinguish them, quoting from the Free Management Library’s strategic plan blogger, Carter McNamara:

Strategic Planning Should Be Organization-Wide

Strategic planning is best viewed as clarifying the overall purpose and priorities of the organization. There are many different ways to do strategic planning, and the contents of the plan vary, depending on the purpose of the planning. However, the focus of the planning should primarily be organization-wide.

Business Planning Should Be Product- or Service-Specific

Business planning is best viewed as planning for a specific product or service. The customers and clients for a particular product or service might be very different than for another product or service. You wouldn’t advertise or sell race cars the same way you’d advertise or sell minivans. Each needs a different business plan.

I would add several things to Carter’s description. First, while some strategic plans include financial projections and others do not, financials are an essential component of every credible business plan. Secondly, strategic plans often take a longer term perspective of 3-5 years or more as they envision an organization’s future; in most cases, business plans look out at most three years, as they focus on the more immediate changing realities of the marketplace. Finally, while it is possible to imagine that the strategic plan could be implemented by someone other than the current management team, a business plan is meaningless without identifying who will do it and why they will be successful.

Carter’s weekly strategic planning blog provides useful information on how to do strategic planning. We’ll provide the same service here in the business planning blog.

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For more resources, see our Library topic Business Planning.

Copyright © 2010 Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010
Author of Venture Forth! Endorsed by the late Paul Newman of Newman’s Own
Read my weekly blogs on Social Enterprise and Business Planning

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Where to Look for Good Venture Ideas

Photo of a library

It’s not hard thinking up venture ideas. Often they seem to come out of the woodwork. Get some folks together for an hour and you’ll come out with a couple dozen of them. Include some entrepreneurial people from outside your group and you’ll get some new ideas that you might have missed.

But also step back to take a look at what your group or organization has to offer. Start with any services or products you’re already offering, even if they don’t make any money for you. What could you do to improve financial impact through them? Perhaps increase your prices, lower your costs, or sell more to existing customers. Is there anything else you need? Next, look at what else you could provide to these customers, based on what you know about them or could find out by asking them. Do you want fries with that burger?

After that, explore where you might find additional customers for your current products. Best thing to look for: customers who are similar in some fashion to your existing customers. Seek out similar demographics or organizations in different locations. How do we get our customers to refer us to others? Finally, consider new products or services you could provide to new customers, but only do that last. This represents the most difficult, riskiest strategy. But in entrepreneurship, anything is possible. Just don’t spend too much time discussing the least likely to succeed ideas.

I often use the Venture Brainstorming Pyramid as a tool for working through these options. Start at the bottom and work your way up. In a future blog, we’ll discuss effective strategies for evaluating the ideas you come up through feasibility testing.

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Short Is Beautiful

Person working on a brief and simple business plan

Good business plans do not need to be long business plans. With rare exceptions, keep your plan to no more than twenty pages, including financials and appendix. If you can say what needs to be said in fewer pages, that’s even better. It’s unlikely anyone will actually read a longer plan, so don’t waste your time writing it. Short plans get read.

Of course, it has to be compelling, credible, and well written. But all that doesn’t matter if they need to plow through fifty pages to understand what you’re talking about. Your business concept might be novel, but you shouldn’t need to write a novel to explain it.

Speaking of length, it’s also a good idea to keep your financial projections brief as well. Forecast out only three years at most, and put them on two pages – one page would be even better. All too often I see extremely long and complex excel spreadsheets with tiny print spread out across five, ten pages, with more pages of financial notes. Trust me, they won’t get read. Instead, create a one or two page financial projection summary, along with key ratios and metrics. Add a page of notes explaining key assumptions and you’re done.

Writing a short plan forces your management team to focus: a important criteria for success in starting or growing a business. And if you’re using your plan to seek financing, a short plan is more likely to get read. That will increase your odds of getting the financing you seek.

For business plans, short is beautiful.

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For more resources, see our Library topic Business Planning.

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Executive Summary Says It All

Team members working on their organisation's executive summary

The most important section of your business plan is its executive summary. That’s right. It’s the first thing that people read, and it should crystallize everything that’s compelling and essential about your business and how you will succeed with it. And you need to do that all on one page. Gulp.

If you’re looking for investors, they won’t read past the first page if it doesn’t grab them. That doesn’t just mean great writing, but also great content that demonstrates that you know what you’re talking about.

Who will be running your business is clearly the most important part of your business. But for the business plan, it’s the executive summary that has to be good or they’ll never get around to reading about your amazing management team or anything else in your plan.

Now, please don’t conclude from this that a compelling executive summary is all you need. That compelling executive summary only works if it’s well supported in the body of the plan. Grandiose assertions don’t win over investors, and a business strategy built around such assertions will fail also.

So you need a powerful plan that’s topped off with the best executive summary you can write. And rewrite and rewrite and rewrite until it’s just right.

Indeed, Guy Kawasaki argues that you should spend 80% of your time writing a great executive summary. I think that overstates priorities a bit, but the point is, this section needs to do more than just summarize the plan. It “says it all” on one page in what might be your only chance to get in front of a key investor.

So work on it until it sings. And if you can’t make it sing, it might just be that your great idea is not (yet) such a great idea. Work on it until it is.

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For more resources, see our Library topic Business Planning.

-Written by Rolfe Larson Associates – Fifteenth Anniversary, 1995 – 2010 – LinkedIn
Twitter: RolfeLarson — Author of Venture Forth! Endorsed by Paul Newman of Newman’s Own

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Is the “Social” In Social Enterprise Redundant?

An office space with workers sitting at their desk

Do we still need a “social” enterprise sector? Many businesses have “social impact” at least with their customers. And these customers around the world are demanding greater accountability and environmental sensitivity.

Here’s what a reader to this blog wrote last week. “The underlying distinction made between social and business enterprise is thin,” noted Ashim Kumar Chatterjee. “All businesses have to serve some social need to be able to last. I would be inclined to believe that there is a direct relationship between the business of a business enterprise and social needs. So long as the deliverables of the business remain socially relevant, the business will survive and sustain itself. The entire gamut of eco-friendly products and technologies are a case in point.”

Several people who work in the business sector made similar points to me last week at the SEA Summit + World Forum in San Francisco. These are folks who share the goals of the social enterprise movement but don’t use that term in their work. For at least some of their investors and customers, “social” comes across as uncompetitive, higher priced, inefficient.

So should we call the whole thing off?

I don’t think so. We have a long ways to go before all or even most businesses incorporate public impact into their business decisions. Think BP. And the nonprofit sector has just as long an entrepreneurial row to hoe to have social impact given the challenging philanthropic realities of the 21st Century. I think social enterprise is still a powerful term that helps organize our thinking (and ourselves) as we set out to “harness the power of the marketplace to solve critical social or environmental problems.”

What do you think?

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View From the Summit

An elderly businessman working in his office

I just returned from the 11th Social Enterprise Alliance Summit+ World Forum in San Francisco. A record 700+ attendees from around the world attest to the growing strength of this vibrant sector. I met folks from Canada, the UK, Australia, the Philippines, Africa, and South America.

In an earlier blog I described social enterprise as a trillion dollar sector, and that’s just in the US. Now it feels more like a trillion kilowatts of energy, with all the electrons moving in the same direction, toward greater social impact, and in its wake, toward changing the world, one social enterprise at a time.

So many workshops, I was only able to attend a few. One that really caught my attention involved five teenagers of color from severely economically distressed sections of East Oakland. All had experienced urban violence first hand; one of them had been shot four times. They discussed their experiences launching their own ventures, from music to groceries to recycling, in affiliation with Ashoka’s Youth Venture. All I can say is if they can do it – and they were doing it – all of us can surely succeed in our own work.

Another workshop I attended included a presentation from RSF Social Finance, which borrows money from foundations, companies and individuals and lends it out to nonprofits to increase their social impact. They earn 90% of their costs from making those loans (goal is 100% within two years), have $70 million in outstanding loans, and have a tiny loss ratio (something like ½%).

If you want more information about the SEA Summit, be sure to check out the conference’s blog site at: http://www.sea-alliance.blogspot.com/ And to those flying back to their homes around the world, safe travels!

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Find and Feed The Feeling

Organised business activities concept

Business plans tend to be mostly head, and mostly left brain at that. They describe a business idea for making and selling stuff, and good ones present strong reasons and compelling data. That’s important, and trumps so many plans that offer little more than grandiose assertions and generic arguments.

But the heart of any business plan – and the heart of any business – can only be found in the hearts of its customers. And by heart I mean the kernel feeling this business will satisfy. What core need or desire or emotion will your products or services satisfy among your customers? What itch will it scratch, what nagging problem will it solve, what deep satisfaction will it give?

At our core, we humans are driven far more by our emotions than by our analysis, however much we may justify our decisions with arguments and data. And that applies to what we buy as well.

So as you plan your business, and do your research to understand your customers, drill down to what will truly drive them to desire your product or service. Find that core feeling, and organize your business around feeding it.

If you need help with this, think Steve Jobs. Somehow Apple has been able to figure out what millions of us really want, without us knowing it beforehand. And once that product comes out, be it the iPad or the iPhone or the iPad, millions find they cannot live without it. Research helps, but it never gets you all the way.

You don’t have to be Steve Jobs to do this. Just find the feeling and feed it. That’s the core of your business plan.

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For more resources, see our Library topic Business Planning.

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Social Enterprise Summit + World Forum Opens Tomorrow

A man presenting at a social enterprise summit

Tomorrow is the first day of the Social Enterprise Alliance’s annual Summit, a national conference that features a wide variety of presentations, workshops and networking in this field. This year’s Summit is being held in San Francisco. More information is available at www.se-alliance.org.

If you can make it to the conference, great, I know you won’t regret it. I might see you there. Incidentally, I’ll be co-presenting a workshop on Thursday morning on business planning for established social enterprises. My case study will be on the Greyston Foundation, operator of the Greyston Bakery, which is a social enterprise in Yonkers, New York that supplies all the brownies that go into Ben & Jerry’s ice creams. My colleague, Tamra Ryan, will be talking about the Women’s Bean Project, and in particular their recent nascent jewelry venture.

But if you can’t make it, you can still connect via the wonders of social media. Here’s one way to do it. SEA’s two Huffington Post contest winners will blog live from the conference. You can either follow the SEA blog or subscribe to SEA’s RSS feed to read their daily posts. Check them out at: http://www.sea-alliance.blogspot.com/

Even though I’ll be attending the conference, I plan to read them just to see how their observations differ from mine.

Alternatively, if you’re Twitter-inclined, check out TWITTER #socent10 at http://twitter.com/socent10. Or Facebook at
http://www.facebook.com/pages/Social-Enterprise-Alliance/59580246388?ref=ts

Frankly, I have no idea if these postings will be entertaining, informative or, well, something else, although I expect to find the blogs from the conference quite interesting. I would recommend connecting at least a couple times during the next few days to see if there’s some stuff there you can use in your own social enterprise work. We’ll see whether social media brings some value to those who cannot attend in person. I hope so.

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Who Needs A Business Plan? (You Do)

A question mark drawn on a black board

The benefits of having a business plan include:

  • Helping you to clarify your vision and deciding whether or not to forge ahead with the idea.
  • Determining if your product and/or service has a sufficient market to support it and whether or not it will be profitable.
  • Providing an estimate of your start-up costs and how much you’ll need to invest or finance.
  • Convincing investors and lenders to fund your business.
  • Defining your target market (who your customers are or will be) and how to best reach them through strategic marketing actions or expanding market coverage or reach.
  • Establishing or reevaluating your competitive position within the marketplace, by conducting a thorough analysis of the competition (finding out where your competitor’s weaknesses are and how you can take advantage of them).
  • Defining corporate objectives and programs to achieve those objectives.
  • Helping your business make money from the start by developing effective operational strategies.
  • Understanding the risks involved and anticipating potential problems so you that can solve them before they become disasters.
  • Setting a value on a business for sale or for legal purposes.

[Source: Wikipedia]

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For more resources, see our Library topic Business Planning.

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The Trillion Dollar Social Enterprise Sector

A social enterprise building

Many social enterprises in the US come from the nonprofit sector, and a common way to measure nonprofit social enterprise is through earned income. Generally earned income refers to selling goods or services in exchange for a quid pro quo payment. In other words, you only get paid if you deliver the goods.

Based on the Urban Institute’s report Nonprofit Sector in Brief, it is estimated that nonprofit organizations generate about $1.1 trillion from fees for services, another term for earned income.

So we know that social enterprise is a much bigger deal in the US than most people give credit.

Tell that to your friends who say they’ve never heard of social enterprise but assume it’s pretty small potatoes.