Ep 12 | How to write a business plan? | The Brand Called You

We have talked about what it takes to be
an entrepreneur and when is the right time for an entrepreneur to take the
plunge to start his business. Today we are going to talk about the next most
logical step in the startup journey – how to write a business plan?
Hello sir. So far I have been working somewhere and today I have decided that
I am going to take the plunge and I will start my business. So the next step is to
write my business plan. Where should I start? So you know Arani, I’ve met lots
of young entrepreneurs who get very intimidated when they have to write a
business plan. The simplest way to think of a business plan is ‘an
articulation of the multiple steps that you want to take in doing your business’. Therefore there’s nothing complicated about it, there is no rocket
science about writing a business plan. What you really have to do is to start
putting down your thoughts and let me try and explain to you what normally
would happen when you’re thinking of a plan. When you start thinking of a
plan you say what business do you want to be in. You say who my competitors?
What is the comfort environment for that particular type of business that you
want to be in? How easy or difficult it is for competition to get in later on? And then you come to the last point which is how much money do I need?
When I wrote my first business plan for Guardian, I had a vision which
was that I want to build India’s largest pharmacy chain which would enable
customers to be able to shop themselves. I also wanted to make sure that the
employees of Guardian would be able to say that this is one of the best places
to work in and finally I wanted to say in a country that has been plagued with
fake medicines. I wanted to say the Guardian would be a place which would
give 100% reliable medicines. So my first line of my business plan was I want to
build ‘Boots’. ‘Boots’ is one of the largest British
pharmacy chain. I want to build ‘Boots’ in India and everything started to flow
from that. How would my stores look? How would my merchandising look? What would my colleagues in store wear and so on and so forth.
So when you are go to write a business plan think of everything that is going
on in your mind and put it down in paper so a business plan is essentially my
vision document that’s going to drive me. I am NOT an expert in writing business
plan. I may have a dream, I may have a vision but I really don’t know what
all goes in writing a business plan. Should I write my own business plan or
should I hire a professional? Remember that a business plan is not a document
that has to be filed in a library. It is also not a document that has to be sent
for awards because it does not need to have fantastic English in it. I’ve always believed that the
entrepreneur must write his or her own business plan because only then will the
business plan be a living document that it is supposed to be. It must be
able to meet first your own aspirations What am i setting out to do and how will I get there? When you Google business plan you will get millions of options in some 3 or some nanoseconds. Google will tell you here are all the options. Read those, get your ideas but
when it comes to putting pen to paper or put your finger on your keyboard instead
of pen to paper now, make sure that you write every single word yourself. There
is nothing complicated about writing a business plan. There is nothing
complicated about putting out a document that may work and be your guiding document. While writing the business plan myself I might not have
access to all the data points. I have to make assumptions. Is it okay to make such
assumptions or should I do a market research and get on to all those things
that big companies do before launching a product into the market or a company
into the market. Arani, market research is always important. I would never say it’s
not. Knowledge of your market is very important but when you are starting a
business, don’t get overwhelmed by data and research. As I mentioned a business
plan is a living document and therefore right through your life of your
business you will keep on modifying it, you will keep on enhancing it, you will
keep on adding to it, you will keep on deleting from it. No first business plan
is ever the best business plan or is ever the right business plan. What
is very important is what you asked me in your question. Should I make
assumptions? Make assumptions but record the assumptions you are making very
carefully because one year later you would have forgotten the assumptions you’ve
made and then you will wonder how do I justify what I have written. So once you
have written out your assumption and the assumption could be that I want to build 15 stores in Gurgaon. Now if that is your assumption then a lot of
things will follow. 15 stores means the market must be there, the real estate
must be there you, must have trained staff, you must have enough consumers.
If you go and say I’m going to put 15 stores out in the desert
without any consumers then obviously my business cannot work. So whatever
assumption I’m making must be linked to that particular aspect of the business
plan and that is what is going to bring some reality into your
plan. The other part of writing a business plan other than being a vision
document is planning my finances Now I’m assuming for most entrepreneurs
out there, their initial funding is going to come
from their savings. How far out should I plan to use my
savings and when should I ask for money? The topic of raising money is a whole
new ballgame and I’m sure we will cover this in great
detail in one of our podcasts but to talk about when to, how much money you
should use, a lot of entrepreneurs bootstrap their business. Basically
meaning that they dip into their savings, they dip into whatever is there other
resources and they start to do their business. I am firmly of the view that
unless you know that you’re going to strike oil right or you’r going to win big
in roulette or you know a casino, I don’t think any entrepreneur should bet
their bottom dollar to say that I’m going to put everything I have into this. And that’s because you have to be sensible when you make an investment. You have to be sensible for yourself and if you have a family you gotta be sensible
for them right. You cannot, because of your own desire to do everything
possible, make the mistake of betting everything you have. So ego should not
come in between my planning. Absolutely. And just to go back to your comment that
you know the business plan is your vision document, I want to just make a
small correction. The vision document is where you want to get but the business
plan is much more than that. It outlines all the steps that you want to take to
get there. So the vision is, say, I want to be able to build a social
media company which is going to be the best in the world. Just giving you
an example. Now what are all the steps that you would want to take in that and
that is going to be that you know you’ve got to have content, you’ve got to have
people who will come and talk to you you’ve got to have funding available, you
got to be able to reach out consumers who listen to your content, you will have to ensure that the database is available and all the things that will go into
building and if you want to look at your own business. There are so many things
that you do in your business on a daily basis which have to be articulated in
your business plan. We were talking about briefly other than it
being a vision document it has to lay down the path. Now in my business plan
I realize shortly after launching my business that it’s not right. There’s
something wrong in my plan that is prohibiting me from achieving my vision.
Now what do I do in such cases? Should I stick to my plan because you know I
thought a great deal about it, I consulted people while writing it or
should I modify it and how often should I modify, if I modify at all?
so a business plan must be modified because every day once you
start your business you learn new things. If you have all the answers then it’s
probably not a business you want to be in because then everyone has the same
set of answers. Your entrepreneurial journey is a journey of exploration. It’s
a journey of trying to achieve what you have the vision for and as you go step
by step there’ll be many things that will come across you and a lot of them
will make you change your core assumptions that you know I thought I
will do this, I assumed this will happen and six months later you may find that
may not happen. So you must be ready to make changes in your business plan.
Having said that, changing a business plan on a daily basis is not a wise idea.
That means you haven’t thought through what your business plan
should be. Ideally, when you and your team sit down to review a plan, it
should be done once a quarter and that once a quarter is when you can
make course correction and as you get better and better at it you will
suddenly realize that by the time you’re in your fourth or fifth or sixth quarter
you’re being able to predict fairly accurately. Then the challenge will come
if there are situations beyond your control
and what could those chance situations be? They could be either some action or a
law that has been enacted by the government which have no idea about.
They could be some natural calamity that may occur and affect your business, there
could be a situation where some of your key team members decide to walk out
and you are suddenly left without having planned a decent enough succession. So if
those kind of serious assumptions take place then quickly review your business
plan otherwise try and keep it every quarter. While making mistakes, of
course every business makes mistakes especially in the initial years. Now how
do I plan for losses? You know losses are a part of life of every startup before
your revenue start to flow in, before your profits start to flow in, you are
bound to make losses. What I tell everybody is that it is better to plan
for losses than to get surprises. So if you have planned that you’re going to
lose three lakh rupees in the year and if you lose thirty then you’ve got to
see this problem but if you planned for losses at
three and you go to four or you make it two then at least you have planned
correctly and there are not going to be some incredible shocks where you
suddenly say how am I going to manage this big loss. So plan for
your losses, there is absolutely no problem in making a loss
as long as there is light at the end of the tunnel which says that at the end of
6 months or 12 months or 18 months whatever is your own appetite for the loss as
long as that is there, go ahead and implement and don’t be shy of losses. Thank you. Now I have a bonus question for you.
Let’s take example of those startups that are not really planned. I’ll give
you my example. Seven years back when I started, I saw an opportunity and
I realized that to do this I need to leave my studies and I need to get onto
this and I did not really have a definite business plan. I saw an
opportunity and I took it. Now would you advise
someone to do that or if someone does that should we make a business plan
later on or should we just go with the flow and and take the route that
I’ve been taking? So I see no reason why people shouldn’t follow the
path you did. I mean you know iconic names like Jobs and Gates, all of them
worked out of their garages and I’m sure none of them wrote business plans before
they started implementing their ideas right but once you have started down
your journey of the business that you ever wanted to do then you have to start
bringing in some sanity into your business plan which will start giving
direction to you and also write out or lay out a clear path for your
organization which has got a lot of employees. So they must know what
is the direction you’re going. Being a maverick in the early days of your
entrepreneurial journey is fantastic but every maverick has to start, as his team
start to grow larger, has to start getting straitjacketed
into a business that will be able to guide what you have started to create. I’ve known several people who were Mavericks who
then become serial entrepreneurs. They don’t like being straitjacketed they
don’t like a business plan and therefore what they do is at the end of three
years four years they sell their whole business start something new okay that’s
the kind of people they are and it has often been seen that people who create
new businesses are not necessarily the people who run them later on. Thank you so much thank you

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