Hugely successful businesses don’t spring out of nowhere by accident. They are the result of years of experience, founders facing their fears, and a strong plan of action that brings concepts and ideas into the realm of reality.
In the early stages, entrepreneurs often find themselves in need of a business action plan, something which must be built from scratch and focus on key aspects of running and developing the company – the moving parts that make it all work in harmony.
A business action plan might sound vague or theoretical, but it’s quite the opposite of that. As many founders will confirm, this is among the most critical components to survival in the early phases of business building, as well as long-term success.
Here’s everything you should know about why your startup needs a business action plan, what the plan should look like, and how to turn that plan into something real, lasting, and lucrative.
Defining a Business Action Plan
Every company has a different idea of what a business plan should look like and the components included, but the overarching concept is the same across the board, regardless of industry, time, and place.
“The action plan is at the heart of a strategic plan,” says Nyron Drepaul, a Senior Business Advisor with the Business Development Bank of Canada. “It should offer specific tactical actions that deliver on the company’s strategic objectives. Some strategic plans only offer very high-level recommendations without concrete steps. The entrepreneur needs to know exactly what to do next, once the plan is completed.”
If one were to collect action plans from a wide range of businesses, they’d see that each one includes a few key elements.
“The business description is at the heart of any plan, because you can never afford to lose track of the central mission of the company,” said Juan Pablo Cappello, Co-Founder and CEO of Nue Life. “Executive summaries are also useful to communicate those core ideas to a huge audience of people, whether they’re within the organization or not. Additionally, the plan must include materials about the products and services on offer, as well as how those promises will be fulfilled for customers and stakeholders.”
These aspects of a business plan are just the essentials, however. Founders and strategists must go even more in-depth to round out a business plan with all the right ingredients.
“Marketing and sales are often neglected in the formation of a business action plan, and that’s unacceptable no matter what stage your company is at,” said Karl Hughes, CEO of Draft.dev. “You’ve dedicated weeks and months of your life to crafting the perfect product or service, so give yourself a chance to succeed by forming a plan of attack for marketing or sales. There are many fantastic free resources and services that can help you formulate a plan on these fronts, so it’s just a matter of applying the knowledge and doing the work.”
Why You Need a Business Action Plan
Anyone with real-world startup experience knows the vital importance of a business action plan. It serves multiple functions on different levels, for everyone involved in the organization.
“At the very beginning, founders create business action plans not for others, but for themselves,” said Jared Hines, Head of Operations at Acre Gold. “ Starting a business from scratch is a huge undertaking, and a business plan is a way to get all those bright ideas from your imagination and into the real world, on paper, or in digital form.
A strong business plan will also attract interest from those who may give your business some much-needed funding at the beginning of your journey.
“You can be certain that if you seek investment in the early phase of your business, there better be an extensive and compelling plan to support your 30-second elevator pitch,” said Jeremy Gardner, CEO of MadeMan. “Angel investors have fewer expectations in terms of projects since they’re used to more risk, but venture capital firms will want to see a lot more information upfront. A business plan can be the difference-maker when securing the funding you need.”
By the time your business hits the ground running, this action plan will serve as a handbook for employees as they navigate challenges with customers, partners, and other key players that keep the gears in motion.
“When your business is bringing on employees and interfacing with customers frequently, that business plan is going to be a lifesaver – granted you’ve put in the legwork everyone is sticking to the script,” said Julie Harris, Co-CEO and Head Of Coaching at Tim and Julie Harris Real Estate Coaching. “This plan can even inspire other resources like employee manuals and procedures that need to be systematized as you scale. From accounting and bookkeeping to marketing, sales, and customer support, there should be something in your business plan that sets a high standard from the start.”
Goals, Project Outlines, and Timelines
While a large portion of a business plan serves as an overview of products and procedures, founders can’t forget the “action” aspect of these documents. That means setting goals and pursuing them with determination.
“Research supports the prediction that the most effective performance often results when goals are both specific and challenging in nature,” said Dr. Leslie Riopel, Professor of Psychology at Northwood University. “A learning goal orientation often leads to higher performance when compared to a performance goal orientation, according to the research. Deadlines also improve the effectiveness of a goal. Goals have a pervasive influence on both employee behaviors and performance in organizations and management.”
Simply setting goals can have a massive impact on the mentality of those working on a business, but this can be compounded even further by putting deadlines on these action items.
“The psychological effects of a deadline are quite powerful, and business leaders can use this fact to their advantage when generating action plans for their companies,” said Hector Gutierrez, CEO of JOI. “Knowing that you only have a week or a month to complete a project can light a fire that wouldn’t be there otherwise. The only danger here is piling up the work and inviting burnout, so be cautious when assigning tasks in the short term.”
Metrics Tracking and Follow-Up
Too many business action plans are formed, initiated, and then forgotten about down the road. Tracking progress and following up will ensure that no business plan goes to waste.
“During the development of a business action plan, founders need to identify which metrics are most important to them and keep them front-of-mind for the duration of time covered by the plan,” said Tyler Read, Founder and Senior Editor at Personal Trainer Pioneer. “The focus should be on revenue and profits, of course, but you should also be ready to drill down into data like lead conversions, customer acquisition cost, retention rates, and customer service feedback. Combined, these metrics will give you a clear picture of how your company is doing overall.”
Simply tracking revenue and customer retention is a good start, but with so many metrics to look after nowadays, more advanced tools and technologies may be required.
“Part of tracking metrics is having the right tools to discover and record that data in a way that can be processed quickly and intuitively,” said Tavis Lochhead, Co-Founder of Looria. “Part of your business plan should be implementing software and systems that allow this to happen. Accumulating and analyzing data is the way of the future, so don’t miss the boat.”
Expanding and Scaling Your Business Action Plan
Before you know it, that business plan you took so long to make will be outdated and obsolete. This is just how the business world works, so always be ready to build a bigger, better plan that includes even more ambitious ends.
“Your business might undergo some major changes as a result of your action plan, while other changes may be completely beyond your sphere of control,” said Ryan Rottman, Co-Founder and CEO of OSDB. “Pivoting, scaling, and switching lanes in business is simply part of the deal, so be willing to alter the game plan as these developments take place over time.
Once your business is at cruising altitude with steady revenue and a wide audience, you can start developing more long-range business plans that position your company for success even further down the road.
“Remember that business action plans can cover various spans of time, and it may be wise to create several different plans that overlap and cast visions further into the future,” said Lauren Kleinman, Co-founder of The Quality Edit. “The world’s greatest brands are strategizing for decades in advance, and also have strong quarterly and monthly plans of action in the interim. You don’t need to plan that far out, obviously, but having a broader scope to your plan can give you some added confidence and perspective moving forward into uncertain territory.”
A company without a business action plan is like a boat without a sail, a rudder, or a captain. No plan of action means the business will be tossed around in the waves with no clear direction.
Forming a business action plan requires work, as we’ve learned, but according to every great entrepreneur, the results are well worth the effort.