When you start a new business, you obviously start with an idea. But a critical ingredient for success is understanding your “why”. Why do you do what you do? It’s amazing how many business owners and their teams go through the motions of running their businesses on a day-to-day basis without ever understanding the purpose behind what they are doing. You might as well be a zombie. Businesses without a purpose don’t have heart. They don’t stand for anything, and as a result, they don’t stand out from other, similar businesses, either. Successful business owners both understand their purpose and can articulate it to their team, their customers, their investors—in fact, to the world.

Think about the business brands you love. Don’t you have a visceral understanding of their purpose? Consider the nearly cult-like following that Apple enjoys. People identify with the brand because it stands for something. It speaks to them. That’s what you want for your business brand.

It should go without saying that part of your business purpose is to make money; but making money shouldn’t be the sole purpose of your business. There has to be a sense that the service or product your business provides brings value to the market, and that because of that value, the company makes money. If you don’t build a brand based on purpose, then you’ll find yourself in a commodity business constantly competing on price alone.

Customers don’t come to you because they want to make you rich. They come to you because they believe in the value you provide for them, whether that value is in detailing their car, grooming their dog, creating their estate plan, or selling them a lawn mower. And, by the way, they are willing to pay a higher price for that value. So it’s up to you to determine what that value—your purpose—is.

For me personally, knowing the purpose of my business is extremely important for another practical reason: it drives me and gives me the courage and confidence to “sell” my company.

I’ve never liked or wanted to be in sales. In fact, I tried a couple of sales positions during my professional career, and, well, let’s just say I didn’t set the world on fire. Yet everyone tells me I’m a master when it comes to selling my own business. The reason has to be that I don’t feel as though I’m selling, because I truly believe in what I’m doing and why I’m doing it. In fact, someone commented to me recently, “You don’t do it for the money, do you?” Of course I like–make that love–making money, but I am equally driven by my purpose. That is, I also love the excitement of doing something I feel is rewarding for the customer as well as for my business.

So ask yourself why your business exists. What value does it bring to the market? Why should customers or clients choose you over a competitor? If your answer is the same as every other business in your industry, then you haven’t adequately defined your value or purpose. Learn to tell your business story in a compelling way to engage your customer base.

Barry Moltz has founded and run small businesses with a great deal of success and failure for more than 15 years. He’s also the author of “Bounce! Failure, Resiliency and the Confidence to Achieve Your Next Great Success”. He is an enthusiastic speaker and teacher on entrepreneurship.

The 11 things that matter in a Business Plan

What problem exists that your business is trying to solve. Where is the pain?

What does it cost to solve that problem now? How deep and compelling is the pain?

What solutions does your business have that solve this problem?

What will the customer pay you to solve this problem?

How will solving this problem will make the company a lot of money?

What alliances can you leverage with other companies to help your company?

How big can this business get if given the right capital?

How much cash do you need to find a path to profitability?

How will the skills of your management team, their domain knowledge, and track record of execution will make this happen?

What is the investors’ exit strategy?

Please remember, the business plan is basically an “argument” where you need to state the problem and pain, then provide your solution with supporting data and analogies.

Barry Moltz

www.barrymoltz.com
Twitter: barrymoltz

Let me begin by saying that I never thought I’d be quoting Tyra Banks. On anything. But she recently wrote a piece in Newsweek about her life and her thoughts on, of all things, entrepreneurship. She compared starting a new business to having a new baby – you lose sleep, work 24/7, and look for only the best people to take care of your wonderful creation.

It’s a good analogy. No matter your child’s, or your business’s, stage in life, you have to have a plan. As a new father, I can attest to that. From the time you find out you’re going to be a parent (maybe even before!), you start planning for the future. How we will divide childcare duties? What’s the nursery going to look like? How will we afford to send him to college? Then the baby arrives, and there’s even more planning – you can’t leave the house for the afternoon without a plan!

A business is no different. Every business starts with a plan, maybe not a formal bank-approved business plan, but a plan to make your idea reality. But being up and running doesn’t mean you can stop planning. What are you sales goals in five years? How will you achieve them? How will you market your company to take it to the next level? Once you’re there, what’s the next step?

What would happen to your child if you didn’t take the time to plan ahead? What do you think would happen to your business?

Jay Snider
Palo Alto Software

Two out of three isn’t that bad. 37 Signals is a success, too. So I was curious when I saw “Advice for entrepreneurs: Throw out that five-year plan, build something now, and don’t take any money” on the 37 Signals blog.

It links to “Follow Your Dream” in Best Life magazine, with some good advice about starting your new business. It quotes experts including Scott Shane (author of Illusions of Entrepreneurship) and Greg Gianforte (author of Bootstrapping Your Business). I particularly like (and agree with) the emphasis on getting real, bootstrapping, as implied in the 37 signals blog post title.

Gianforte says:

The secret is to stop sweating your five-year plan and start moving the product from Day One. If your business idea requires more money than you have at hand, then shrink the idea.

That’s great advice. Frankly, I don’t like the plan bashing–that’s why I said two out of three in my first paragraph–but it’s still great advice. Ironically, I don’t like the plan bashing, but it’s not too different from what I’ve been saying about planning in my plan-as-you-go work: Get started, get going, use your planning from the first day. The plan bashing here is about the plan as an excuse for doing nothing. Some people use the plan like politicians use committees, as excuses to do more study.

The article itself has a sidebar on how to go and when to go, which includes four steps to take, called “Look Before You Leap.” The steps are 1) SCORE free advice 2) Find the unmet need 3) Make a plan and 4) Know when to go. For Make a Plan, it says:

Make a plan. Research shows that writing a formal business plan significantly enhances your chance of success. The folks at SCORE can help you do it right. Just remember that most investors won’t think much of your fancy hypothetical numbers until they see some real-life revenue.

For Know When to Go, more good advice, maybe:

Know when to go. Are your wife, kids and boss all crying out for attention while your sideline project morphs into a grasping mistress? You can try to juggle a job, a family and a thriving new business, but you will eventually drop a ball. So if your new venture has built up a solid client base, it may be time to take the plunge and make it your day job.

I say “maybe” because that’s good advice only if the new business succeeds. If it fails, it’s very bad advice. And we don’t get to know that until later.

Which is why I go back to fundamentals: Make a plan. Reduce your uncertainty. Don’t make a five-year plan that’s just an excuse to do nothing: Make a real plan, and do some real planning.