Article published in Business Success

An Entrepreneurial Approach to Planning and Developing your Business

By Christina Osborne, Chief Executive of Business Solutions

The widely-held stereotype about entrepreneurs is that they think on their feet, take wild risks and are publicity-seekers or egotists who do not know when to let go. Planning would seem to be the last thing they would turn to except maybe in a crisis.

In fact, the common success factors and skills of entrepreneurs provide a very different picture. The planning process may be informal or ‘entrepreneurial’ but successful entrepreneurs are always thinking ahead.

Success Factors
Different skills at different times
An entrepreneurial approach
How to use a ‘framework’ like an entrepreneur

Success Factors

The most common motivation to become an entrepreneur is the need to succeed. Entrepreneurs have a strong wish to control their own destiny and the way their organisation is run. Their commitment to the business that they have set up is rarely in doubt. The ability to work hard, persistence and determination are qualities that all entrepreneurs seem to have in abundance.

Different people will have different aims – some entrepreneurs will wish to build wealth or security, while others may wish to build up a business they can leave to their family or sell to start up another venture or retire to a beach with palm trees.

The first step in planning is to know your own personal objectives and be able to create a vision of success. The entrepreneurs who achieve their goals are driven by their clear sense of vision for the future of their organisation.

Another important characteristic of entrepreneurs is their ability to spot trends and come up with new ideas on how to meet customers’ needs, gain advantage over the competition and create something of value out of what are usually scarce resources.

Successful entrepreneurs also have a remarkably balanced view of risk – the reward must match the risk. This is very different from taking wild chances. It is about minimising risk. Often start-up capital is borrowed from friends and family – rather than taking the risk of getting into debt from the start when it is difficult to say whether you can pay back consistently and keep a bank happy. Entrepreneurs are prepared to take risks because they have seen an opportunity and, by talking to people, convinced themselves that there is a real need for their solution and the return on investment will be worth the risk. Business growth is similarly likely to be funded from retained profits rather than debt funded against projected profits.

Sometimes, the entrepreneur’s assessment of an idea will be wrong and this is when successful entrepreneurs display their distinguishing feature in their attitude to ‘failure’. It was Oscar Wilde who said Experience is the name we give to our mistakes. Uncertainty is recognised as normal and everything is viewed as a useful experience to learn how to become more successful next time. Entrepreneurs are problem-solvers and are often very quick learners with the energy and flexibility to try something, gain feedback and make any necessary changes. Back to Top

Different skills at different times

An individual entrepreneur may not be good at all the stages of running a business. The entrepreneur who started a new venture may lose interest when the business enters ‘maintenance mode’ and all is running smoothly. Sometimes a business is sold at this time to finance another new initiative. Others may enjoy growing their organisation organically or through acquisition or franchising – each stage then changes the structure and nature of the organisation without the need to move on. Some are ‘serial entrepreneurs’ and cannot resist the challenge to start up new businesses one after another – often running concurrently.

All entrepreneurs will face one major change if they wish their organisation to grow beyond the £1 million turnover barrier. This is when the entrepreneur needs to recognise that one person at the top is unlikely to have all the skills a larger organisation needs. Growth is only going to be possible if the entrepreneur can learn to delegate to a team that has been developed to take on the challenge. Back to Top

An entrepreneurial approach

Most entrepreneurs will back away from producing a formal plan unless it is a requirement to present a business case to someone who will help grow the business. However, most entrepreneurs use a ‘framework’ to filter out which new ideas are real opportunities for the business and which should be rejected. This ‘framework’ is constantly under review and the entrepreneur develops ‘shorthand’ measures that enable a quick assessment of whether the business is going in the right direction to achieve the vision.

The framework that I recommend plays to all the strengths of the entrepreneur’s approach and enables communication of direction to the team that the leader needs to develop.

Review of external trends ie how the entrepreneur spots strategic growth opportunities
Vision and values
Purpose and Source of Competitive Advantage
Growth and return expectations
What products/services to offer to whom?
How to decide what to focus on?
Being resourceful – what capabilities do we need to build?
What do we need to change?
The ‘shorthand’ indicators that we’re on track
What do we need to communicate to whom?

Some entrepreneurs keep all this in their heads and when they are focused on the next exciting new initiative, the rest of the business goes into decline. The framework needs to be owned by those who are going to action it. Successful entrepreneurs are very good at recognising the role they play best and identifying people who can play complementary roles to supplement their ‘weaknesses’ or the roles that they least prefer. To grow their business - the entrepreneur, who provides the drive and is the pinnacle of decision-making in the organisation, must learn to delegate. If the entrepreneur retains overall responsibility and sustains the vision, someone else needs to take on ‘production’, ‘sales/customer relationships’ and ‘finance’.

How to use a ‘framework’ like an entrepreneur

External trends – entrepreneurs are good at spotting opportunities and solving problems for customers. A simple brainstorm will produce enough information on the key external trends and which ones will provide strategic growth. Use a prompt such as PEST to think about Political/Legal, Economic, Sociological and Technological trends that could affect the business. Also what is happening in the world of your customers, suppliers and competitors.

Vision and values – entrepreneurs hold a clear vision in their minds of their purpose and what future success will look like. Visualise what you will see/hear/feel when you are successful – use this as well as more usual growth and return expectations such as turnover, size, number of locations – to inspire and sustain others with your vision for the business.

What products/services to offer to whom? – entrepreneurs always look to see how they can solve problems for their customers before anyone else has spotted the need. Creating competitive advantage comes naturally to the entrepreneur and needs to be communicated. High level segmentation is the marketing term for what entrepreneurs do in their heads when they picture their customers and think about how they are going to delight those with similar needs. Successful entrepreneurs achieve high repeat business and referrals by nurturing their customers.

How to decide what to focus on?- Most entrepreneurs have an intuitive checklist of criteria they use to make decisions. These criteria need a ‘head-to-head’ transfer so that the entrepreneur can devolve their instinctive good judgement to the rest of the team. Think about your objectives and a quick brainstorm will produce the mental checklist you use to make important decisions about which ideas are real opportunities to follow up.

Being resourceful – what capabilities do we need to build? The old adage Necessity is the mother of invention could have been written with entrepreneurs in mind. While some entrepreneurs may focus on their image, others quietly get on with growing the business without being particularly ostentatious about cars or premises. By enthusing the people who work for the business, many excellent ideas can be generated for free. Successful entrepreneurs are good at choosing people with the right skills and developing them to run the business so that they can focus on what is important to them. Other capabilities that may need investment are IT and Research & Development as well as the Production, Sales/Customer Service and Finance functions.

What do we need to change? Life is a series of projects to an entrepreneur so they are well placed to understand that their dream will only be achieved if the organisation becomes good at managing change projects. Speed and flexibility keeps the entrepreneur ahead of less adaptable competitors. A simple list of What Actions, By Who, By When will keep track of the priorities for the business and can be reviewed regularly as feedback comes in from outside the organisation.

The ‘shorthand’ indicators that we’re on track – successful entrepreneurs recognise that creating value for customers by solving their problems and being better at doing this than their competitors is the only way to create sustainable competitive advantage. When you are meeting real needs for customers they will be prepared to pay and Gross Margin is one indicator that entrepreneurs will focus on. The second financial indicator is cash flow – especially important when the business is growing rapidly. Debtors will be kept to credit terms and creditors will be negotiated with at time of purchase and then paid to terms. Pipeline is important as ‘shorthand’ on whether you will be in business next year. It maybe that numbers of enquiries give you the first warning that, given your usual conversion rates, orders will be down so that you can take corrective action promptly.

What do we need to communicate to who?- successful entrepreneurs make sure that they keep everyone in touch who needs to know about where the business is going. Stakeholders in the business need to be kept involved so that they can take on the role of advocates and ambassadors. As well as managers, team leaders and staff, there are external stakeholders such as customers, suppliers, professional advisers and partners who need to understand the contribution you need them to make to the success of business.

Entrepreneurs may not appear to be approaching their planning in the logical sequence of this ‘framework’. Inevitably a pragmatic entrepreneur who learns from ‘trial and error’ may start in the middle of the list and work upwards then downwards and back again to review in the light of feedback. Ideas will have been gathered through spending at least half their time talking to customers and networking with other high-achieving entrepreneurs. Through these conversations, you too will discover that truly successful entrepreneurs have thought about and communicated everything covered in this ‘planning’ framework.

Christina Osborne is author of management books published worldwide by Dorling Kindersley and has started up a network for Directors in the Institute of Directors West Thames region.

You can buy her books, also translated into other languages, through the Business Solutions’ website , or email christinaosborne@bsol.co.uk