November 9, 2011

I recently encountered a would-be entrepreneur, who I’m going to call Brad, whose business aspirations were squelched at a fresh young age by the lack of a formal business plan. That shouldn’t have been a problem, but Brad depended on a consultant serving as a gatekeeper, and the consultant insisted on a finished business plan.

That plan became an insurmountable barrier. “I just had no idea,” Brad said. “No way to even start. Take sales. How could I possibly know, before I start, what sales could be?” Sadly, he just gave it up—which makes me angry. I wonder how many businesses and people run into the brick wall of not understanding how planning is supposed to work with uncertainty.

Here's three ways to reconcile your business plan with uncertainty.

1. Smash that sales forecast uncertainty

Let’s take the immediate problem first: “How can I forecast something that doesn't exist?” You break the uncertainty into its pieces—make components, build estimates, and go from what you do know to what you don’t know—in simple steps. Think of how you might make a map of tables and chairs in a restaurant, and go from there to potential meals served daily—and from there, monthly. Or how you might generate a sales forecast based on Web traffic, projecting the traffic as a function of generic traffic from search engine optimization, buying search terms and other communications programs. Go from unique visits to clicks to conversions to sales. You don’t have to jump to a sales forecast; you go into its components.

2. Learn to love uncertainty

So let’s go deeper into the problem and think about how many people get freaked out, and somewhat paralyzed, by realizing they don’t know the future. How can you start a new business if you don’t know you’ll succeed? What about your family? What about your career?

I’m not advocating running and jumping in willy-nilly; but when you think of it, nobody knows the future. That security you get in the status quo is a lot like the safety an ostrich feels with its head stuck in the sand. A friend of mine told me I was crazy when I left a good job to go out on my own with business planning. I suggested that our jobs with that market research firm were only as secure as the next client we landed anyhow. Sad story, but I turned out to be right.

Think of it this way: uncertainty, like variety, is the spice of life. How boring would living be if you knew ahead of time everything that was going to happen? Don’t be irresponsible, don’t just slam the doors and run; but realize that you don’t control the future regardless. Don’t sweat it so much.

3. Maybe you shouldn’t call it a business plan; Call it goal management

Neither Brad nor his would-be consultant understood what business planning is supposed to be. It’s not just a hurdle to be jumped over. The consultant and Brad should have gotten together on goals, and next steps, and numbers to measure progress. They write it down to keep track, and they get going, and then they follow up regularly looking at what the numbers are, what they were supposed to be, and using that analysis to make course corrections.

Yes, eventually, the business plan will gather up projections of sales, costs and expenses. But those are always educated guesses, and they are always going to be revised regularly to accommodate new information and actual results.

At its core, it’s not a plan, it’s a process, a long-term habit of setting goals and tracking them and, we hope, leapfrogging goals over goals and making progress. You set the goal, you work toward it, you evaluate, recalibrate and keep working.

That’s called living with uncertainty. And, we hope, living well.

Image credit: istockphoto.com

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