Size does matter. It mattered to Goldilocks as she tried out each of the bears’ chairs and beds in search of the perfect fit and it matters in your business plan too!
After five continuous hours of Business Plan Pitches from College Students in the Dragon’s Den today, I became Goldilocks in search of a business plan that fit “just right”. The students fell squarely into 2 camps; those that would become instant multi- millionaires according to their plans, and those willing to take a vow of poverty. The poverty route is often necessary for many bootstrapping starters in the short term; but hovering around the poverty line should not be your long term financial goal!
Have the wannabe millionaires done their homework? No, often they have not. If your business concept is so lucrative, and the world is just waiting for your product or service, why didn’t you start the business yesterday and already pocket millions in earnings today?
The conservative ones seek praise for being realistic, but if low earnings potential is the reality, in fact you have no business. Dare to pump up your plan and the sales targets or toss it out and start over. Students and clients are always shocked when I advise them not to spend another minute developing a business with low earnings potential.
Determining the “right size” for your business is more complicated than Goldilocks sipping porridge, but is a very valuable step in deciding if the business is worth your time investment. Check out the E-Myth Revisited by Michael Gerber to be sure you are creating a company and not just a job for yourself. When you include all the time and effort it takes to start a business, the financial reward should be at least a part of the pay off. You wouldn’t take the same job working for someone else for so little money, would you?