At Bluehost, we love small-business success stories, whether the business revolves around pies, food trucks, minimalism, life coaching, or graphic design. If you run a small business or are considering starting one, we want to help you make your business a success story too. To kick off our “New Year, New Business” series, we’ll be providing insights, methods, and resources for building and growing a small business all month long.
First, we’ll look at the two biggest entrepreneur pitfalls — and what to do instead to create a successful strategy for your business.
Pitfall: A Plan That’s Only in Your Head
The pitfall: You’ve looked at examples of traditional business plans, and they’re filled with unfamiliar terms and information that doesn’t seem relevant to your business idea. Isn’t your small business, well, too small to need a formal business plan?
Why it’s easy to fall for it: You’re excited about your business idea, so you’d rather dive right into the actual work. Besides, it’s all up there in your head. Why waste time writing down anything at all?
Why it doesn’t work: Starting a business without any kind of plan would be like building a house without a blueprint, says Ash Maurya, entrepreneur and author of Running Lean. “While carrying your core business model assumptions in your head alone might seem like the fastest alternative,” he writes, “you need to beware of the reality distortion fields that plague entrepreneurs. Reasonably smart people can rationalize anything, but entrepreneurs are especially gifted at this.”
Do This Instead: Determine Your Motivations and Goals
If you allow your business ideas to reside only in your head, they’re bound to stay a bit hazy. Instead, start out by clarifying your motivations and prioritizing your business goals.
First, clarify your personal motivations for starting a business. Consider these questions, suggested by Sheryl Thai of League of Extraordinary Women, about what is motivating you, then write down your answers.
Do you want to
- achieve financial independence?
- make life easier for people
- challenge yourself?
- make a difference in the world?
- challenge the status quo?
- prove someone wrong?
Second, develop business goals based on your personal motivations. Consider using the SMART goal-setting method. This means each goal should be:
S = specific
M = measurable
A = attainable
R = relevant
T = time-based
For example, if your motivation is to achieve financial independence, a SMART goal might be to set milestone goals for your profits, such as $500 within the first month and $2,000 per month within six months (an attainable number will depend on your situation). If your motivation is to challenge yourself, a SMART goal might be to receive certification for a particular skill within the first month. Since you are likely to have a variety of motivations and goals, once you write them all out, prioritize them according to their importance, and add any relevant milestones to your schedule.
If you understand your own motivations and goals, you’ll be better prepared for the next step: developing a business plan.
Pitfall: An Unrealistic Business Plan
The pitfall: Believing you need to create a perfect plan to succeed in business.
Why it’s easy to fall for it: Conventional wisdom suggests that as soon as you have a business idea, you should draft a lengthy business plan with detailed forecasts and complex analyses. It seems intuitive — planning ahead is always good, right?
Why it doesn’t work: It’s true what they say about the best-laid plans: they often go awry. Entrepreneurs sometimes fall into “the process trap,” where they focus too much on taking a particular sequence of steps. Traditional business plans tend to be rigid and linear, with high up-front investments of time and resources. They’re difficult to adapt, so even minor setbacks can spell doom for the business.
Do This Instead: Determine Your Business Model
Planning is still worthwhile. Just make sure your plan is adaptable.
You’ve already done some critical thinking about your own motivations and goals, so now it’s time to do some critical thinking about whether your business idea is worth pursuing (if it has the potential to actually help customers and make money).
Fortunately, there’s a handy tool to help you do that thinking: the business model canvas. This tool is valuable for several reasons:
It’s quick and pragmatic. The business model canvas is quick — it takes less than an hour to complete the first draft — and it keeps all the info on one or two pages. If you are planning to seek a loan from a bank or funding from investors or crowdsourcing, it will help you gather all the information you need to make a compelling case for your idea. And even if you don’t need to make the case to others, it’s important to make the case for yourself to plan for the best use of your time.
It’s flexible. The business model canvas emphasizes experimentation over elaborate (read: time-consuming and expensive) planning. It encourages you to iterate, which simply means that you test your ideas early and often, and use the findings to shape your business offerings.
It’s customer-focused. The business model canvas makes it easier to sell your product or service by encouraging you to have the customer in mind from the start. As Ted Levitt taught his Harvard Business School students, “People don’t want a quarter-inch drill — they want a quarter-inch hole.” This approach helps you focus on helping customers drill a hole, rather than buy a drill — which in turn helps you make and sell a better drill.
How to Use the Business Model Canvas
Although the business model canvas was initially designed with tech startups in mind, it’s helpful for just about any small business. There are several variations of the business model canvas. Each variation is simple and straightforward, so it’s worth checking out all three before deciding which is right for you. Here’s a quick overview:
(The Original) Business Model Canvas
- Learn more online: Strategyzer
- Get the book: Business Model Generation, by Alexander Osterwalder and Yves Pigneur
- Download the PDF: Business Model Canvas PDF (or use this Google Draw template)
Big Idea Canvas
- Learn more online: Big Idea Course
- Get the book: Nail It Then Scale It, by Nathan Furr and Paul Ahlstrom
- Download the PDF: Big Idea Canvas PDF (or fill out the worksheet online)
- Learn more online: Lean Academy
- Get the book: Running Lean, by Ash Maurya
- Download the PDF: Lean Canvas PDF (Note: Download link is toward the bottom of the page.)
Your Next Steps
Schedule some time for developing your strategy. First, think about your personal motivations, write down your business goals. Then, skim the Big Idea Course and fill out a Big Idea Canvas worksheet. (Alternatively, check out Strategyzer or Lean Academy.)
Next Monday, we’ll cover how to navigate paperwork and manage your time and resources.