In My Experience: Business Plans
In the newest installment of the "In My Experience" series I'm going to discuss Business Plans. I recently was asked to create a formal business plan as part of an application for assistance for the new business I'm starting, The Trident Network. I spent a few days and put one together and while I actually don't think the application for help has been accepted (long story for a different day), I wanted to explore whether the exercise of putting together a business plan is worth it.
In undergrad, I wrote or contributed to more business plans than I could count. As an entrepreneurship major, it was an assignment or multiple assignments within pretty much every course and many times was also assigned in other classes for marketing or finance. The problem with creating so many hypothetical business plans is you get a little too comfortable with inventing. It becomes easy to say "I'll make X dollars in sales in year 3" without giving it much thought. It's all made up anyway, right? The professor is measuring the way in which you made that estimation, not whether it is at all realistic.
Then I graduated and went more than 10 years without really thinking much about business plans or any implications for embellishment therein. They were still etched permanently into the back of my mind. I will never fully be able to forget the components or the basic approach, but I didn't need to make a business plan. And maybe never would. My career had started going in a totally different direction. Perhaps I would never write another business plan again.
Then there was the whole pandemic and I found myself in a position where I was asking people to go on an entrepreneurial journey with me. It was the first time going through the process I'd gotten to know so well in school, but without the guardrails of professors or the safety net of hypotheticals. And likely thanks to all that training, a business plan started to take shape in my head, even if I hadn't yet had to put it to paper.
When I was asked to make a business plan, I had mixed feelings. On the one hand, I have a million things going on and I personally know that this business idea is viable and how it's all going to work now and in the future. Why waste time putting it to paper for like one person ever to read it? On the other hand, having to make the entire enterprise justifiable to even one other person in a concrete way might be a good exercise. And maybe there were details I hadn't thought about that I would through the process.
So I set about making a business plan. In the most broad sense, a business plan is the Who, What, Where, When, Why, and How Much of your idea. In outline form, a business plan would look more or less like this:
Let's go through each section, what it should contain, and how I went about it with Trident's plan.
Literally a short summary of everything else to come. Write this last to make sure it encompasses the most important pieces of the plan.
For Trident's plan, I essentially used this section as a written version of the pitch I've been making to people as I try to get them involved in the network. The general structure, the value proposition, the reason the market is ripe for this kind of business, etc.
The business focus section contains the mission statement, operational structure of the business, the leadership/ownership team (if you have one), the entity structure (are you a sole proprietorship? An LLC? S-Corp?), income sources, and goals (short, medium, and long term.)
This was the easiest section to write for Trident because this pretty much existed in my brain, but it was valuable for a couple reasons. The first, is it forced me to do more in-depth research on our planned income sources. What percentage does Patreon take from subscriptions? How exactly do you qualify for affiliate status on Twitch? There were a lot of holes in my knowledge that probably would have filled in over time, but there's no time like the present! Secondly articulating SMART goals (Specific, Measurable, Actionable, Relevant, Time-bound) was a powerful exercise to do at such an early stage in the starting of the business. What can we realistically achieve in the first 3 months? The first year? The first two years? Knowing exactly what we're trying to achieve can make each choice much more intentional. It allows us to be proactive more and reactive less.
This section can feel intimidating because of the name, but it is simply the area in which you articulate who your customers are, who your competition is, and where you conduct a SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) of your business idea within the context you've just filled in.
This section was fun and interesting for Trident's plan. Trident essentially has two customer bases. The contributors who provide content to the platform and whom we serve by amplifying their voices and connecting them to viewers and fellow artists. And we also serve our viewers by providing a variety of content for them to watch and listen to and by helping connect them with the artists who made the stuff they are enjoying. Because we are essentially considering both sides of the funnel as customers, I believe it puts us in a position of service to everyone we work with. No one is a cog or reduced to a product or a dollar sign. We are all in this together. By my estimation, this is both an opportunity and a threat. We do not have an instant or guaranteed income stream, but because we don't expect our contributors or our viewers to pay to play or to enjoy the content, we hope they will feel more inclined to contribute in whatever way they can because they choose to support the network of their own accord.
Trident also doesn't have a lot of direct competition. There are countless podcast networks and some video networks and even a few organizations running similar live streams on Twitch, but not many or any are doing all of that together and benefitting from the cross-promotional opportunities. Nor are they as freed by lack of attachment to a particular theater or pre-existing organization or even to a genre of content. Again, this could be a double-edged sword, because it means we have less of a clear brand and no established business to back us up financially or operationally. However, it also frees us to be flexible and open and adaptable to changing circumstances. I also believe that our competition can also be our partners. There is no reason why we cannot all work to lift each other up in this new space.
This is where you lay out your Value Proposition (what makes you worthwhile to your customer?), your pricing plans, and your marketing strategy.
For Trident, this is where the area starts to get a little grayer. Of course I know what our value proposition is, and with our current setup, pricing is more or less set, but because we hope to add income sources in time (namely from sponsors/ads) there is no way to anticipate exactly when that will happen or how that will work. We can say we hope to achieve that by a certain time, but there are simply too many moving parts to estimate exactly when that might happen. Similarly, with marketing strategy, we currently have no budget so all our focus is on organic and free marketing, but if we do start to bring in enough money to invest back into marketing, that strategy could change significantly. This is an example of how a plan is great, but not the end of a story. It is simply based on the reality you are in when you make it.
This was always the section I dreaded the most in college because it is where you have to do the most inventing. Even when it isn't just homework, you are dealing in a lot of hypotheticals as you lay out your estimated start up costs, income forecasts, and cash flow forecasts.
For Trident, start up costs were pretty straightforward (and mercifully low). But once you get into income and cash flow things get much much fuzzier. The way I tried to stay as grounded as possible was to look back at my goals and use them as a means of making somewhat informed guesses as to what income we might be pulling in in the first two years. It could be wildly off, but that is the most concrete way I could think of. When working on this section, you also must keep in mind that this is, at its core, a marketing document. You are trying to sell others on the viability of your business. And most people who are reading this document care most, and in some cases, exclusively, about the financial projections. This is not an invitation to inflate, but I caught myself being hyper-conservative in my estimates at first and felt like that was not helpful at all either. If anything, it reflected doubts in my own ideas, which is not true nor is it something I want to convey to others. This section is always a matter of treading the line between realism and optimism.
So was it worth it? I would say, yes it was. I believe putting together a business plan for a start-up is a great exercise. It forces you to think critically about your idea from many different angles and at the end, you have a final product that can come in handy. It's better to have a business plan on hand than for someone to ask for it and you not have it. I am glad I won't be in that position again as I move forward with Trident. And I will likely come back to this document, both as a reference and to update it as I learn more. This is a living document that will evolve and adapt as the business does.