SOP Friday: Building a Business Plan for Your I.T. Company
Karl Palachuk / Karl Palachuk
Let’s start out with a reality check: Most really smart business owners don’t think they need a business plan. Their business is working fine and they know they can get up every day and do it again. The problem is: That behavior got them “here” and will keep them right where they are.
In my coaching practice, I have three clients who are planning to move themselves and their families from one state to another. That takes planning. That takes money. That takes a plan to make sure you don’t skip a beat.
Your goals may not be as clear or as big of a challenge. But you should have goals for yourself and your business. You should also have a quick sketch of where your business has been and where it is going.
And your business should operate perfectly consistently with your goals.
I believe that any IT consultant who has gross revenue under $150,000 can double that top line revenue in 12 months. And you don’t have to be a super salesman. And you don’t have to give up your personal life.
What you DO have to do is to make a plan!
You’ll have to work hard. But once you set your sights on your a specific goal, you can achieve it. You’ll have to make some strategic decisions. You’ll have to take some chances. And you’ll have to deliver what you sell. But in the days of managed services, you should be able to manage a lot of workstations and servers by yourself. Adding a dozen more clients will require some help. But that’s part of the plan.
Back in 2008 I wrote a five-part blog series on creating your business plan for the new year. You can find those articles here:
I’m not going to repeat all that here, but focus on the Process of creating a business plan.
Now, if you want a little assist with this project, you might also try Business Plan Pro software. As I said in one of the earlier blog posts, I have used Business Plan Pro . . .. I’m not sure I’d endorse it. After all, it is basically a tool that interviews you and has you do some busy work. When you’re done, you get a kludgy business plan, but at least you have one!
For a different approach, you should also take a look at The One Page Business Plan product. Again, just a tool that might be helpful.
Motivation is the killer when it comes to business plans. Everyone says they want to, but don’t know how to start. All I can recommend is that you make a commitment and spend a tiny bit of time each day. Don’t try to tackle the whole thing in one weekend.
As for excuses: You DO have the time. This time is an investment that will free up lots of time in the future. You DO know how. A business plan is extremely simple. It has a quick look back, a somewhat thoughtful look forward, some goals, and a statement of why you’re in business.
Your business plan might not be one page, but it can be extremely small. I revise mine every year and it’s eight pages – six of those are financial printouts. I print out P&L (profit and loss) reports for the last three years and the next three years.
When you boil a business plan down to it’s absolute basics, it needs to contain just a few things:
– Where we are and how we got here
– Where we’re going (overall goals) and how we’ll get there
Each of these has a finance component, which can be very simple.
Free Handout for Building Your IT Business Plan
I’ve created a simple Excel spreadsheet you can use as a starting place if you don’t already have one. Go to SMB Books (free stuff) to get it. (It’s all the way at the bottom of the page.)
You’ll get a zip file with an Excel spreadsheet and three PDF documents (the three pages of the Excel spreadsheet. Poke around and play with that spreadsheet. Make a copy for your own company so you can always go back to the original and look at formulas, etc.
I discuss that spreadsheet in some detail in the longer blog posts.
So that’s the piece that will get you started on the financial side. But a business plan is a lot more than that. I always tell my coaching clients: Your business exists to help you reach your personal goals. That’s what small business is all about.
So you can’t just go to work every day and do what you did yesterday. You need to make decisions based on whether they advance your goals – business and personal. This is an extremely powerful way to look at the world!
I ask you to take this seriously. Take 15-20 minutes every day to stop and think about your personal and professional lives. Sounds simple, but it’s not. The hardest part is sitting down to do this.
If you can fill out this tiny form with meanful answers, you’ve got a business plan:
– – – – –
1. What is your company mission statement
2. What are your three primary goals for the next calendar quarter?
3. What are your three primary goals for the year as a whole?
– – – – –
Do not do this fast. Work on it every day and review over and over. Again, from the earlier blog post:
“Don’t do hasty goal-setting in the week between Christmas and New Years. Goal-setting is arguably the most important thing in your life, and your business.”
You can absolutely reach your goals – if you have a plan. No one stumbles their way to amazing achievements. (Yeah, bring up some one in a billion exception. But we both know that my point is still valid.)
If you don’t have a plan to convert to managed services, it won’t happen. If you don’t have a plan to formulate your cloud service offering, it won’t happen. If you don’t have a plan to get ten new clients, it won’t happen. If you don’t have a plan to double your revenue, it won’t happen.
You get the point.
So go get a tiny little 1/2″ binder and print out the pieces you have:
– A Mission Statement
– Three specific, measurable goals for the next quarter
– Three specific, measurable goals for the next year
– Financial overview for the last three years
– Very rough first take on projected financials for the next three years
The easiest part should be the finacial reports. Oddly enough, most people set up their goals next (quarterly and yearly). But you really need to start with the mission statement.
Why, why, why, why, why are you doing any of this?
Building Future Business Plans
The really good news is that next year’s business plan will be a lot easier to complete. Your past financials will simply move up a year. The projections for the next three years will be a little clearer after you spend a year with a plan.
And your mission statement probably won’t change much year to year. If it does, you need to spend more quiet time fine-tuning your personal and business goals. Mission statements should be long term commitments about WHY your business exists.
So that leaves goals. As you can imagine, you’re going to need to set up new goals each quarter to keep that piece current. And after a year, you’ll see how quarterly goals roll up into your annual goals. It’s like steering a ship. No matter how big the ship, you can move it a little at a time until it’s heading where you want.
In the comments to the old blog post series, and in numerous emails, it is very clear that people have a hard time just getting started with this. I don’t know how to make you stop and do this.
Maybe you need to get one or two friends together and commit to each other that you’ll build business plans in a month. In fact, you can then help review each other’s plans for a “reality check” on numbers and goals.
I really believe this is approximately the most important thing you need to do right now. Everything else, no matter how important it is, is pointless unless it advances your mission and goals. And you might have a gut feeling about your mission and goals, but that’s pretty vague.
If you can’t articulate WHAT you want to do and HOW you’re doing to do it, then you need to keep polishing the business plan.
A partner of some kind is extremely helpful here. It could be a spouse, an employee, or another business owner. Anyone who is willing to help will do. Explain to that person what you want to do with your business and why you want to do it. They need to be totally honest with you. If you can successfully describe these things to someone else, then you have a plan.
Write it down and make it happen!
– – – – –
About this Series
SOP Friday – or Standard Operating System Friday – is a series dedicated to helping small computer consulting firms develop the right processes and procedures to create a successful and profitable consulting business.
Find out more about the series, and view the complete “table of contents” for SOP Friday at SmallBizThoughts.com.
– – – – –
Next week’s topic: How to Maximize Billability of Technicians
|Check Out the #1 ranked Managed Services book at Amazon:
Managed Services in A Month
2nd Edition – Newly Revised and Updated with NINE new chapters
Starts shipping Tuesday, January 2nd
Order Managed Services in a Month NOW and you get the old price ($19.95). The post-introduction price will be $24.95.
All material Copyright (c) 2006-2012 Karl W. Palachuk unless otherwise noted.