Bootstrappers start companies without outside investments. Instead, they hunker down and do what they can with what they have. Bootstrappers are also behind more than 90 percent of the real startups in the world. But just because they don't have outside investors doesn't mean bootstrappers don't need business plans.
There is considerable confusion about business plans. Too many people think of a business plan as a document used to describe a business to potential investors. Sure, it works for that. In the real world, investors or not, a business plan helps you reduce uncertainty, manage your business, budget and keep a handle on cash flow.
With that in mind, here are a few quick and practical business planning processes every company can use, investors or not:
- Set your review schedule. This is your first message to yourself about the real benefit of planning. It isn't to predict the future but rather to manage the future step-by-step. Set up one day a month (e.g., the third Friday of the month) to review your plan.
- Strategy is focus. It's not a document, necessarily, but you do want to write down the bullet points or even create a pictorial description for that sweet spot you're aiming at--the key market, the most important deliverables, your keys to success. Differentiate yourself from all others. Describe who isn't in your market.
- Set important milestones. Determine a few important things that have to happen in your business and when they have to happen. Write down the dates and deadlines. These are your milestones. Just as with that to-do list people never complete, plan too many milestones and you'll get lost in them, and the list won't have much importance. Focus on a few of the most important business milestones. Write them down and review them periodically.
- Do your basic numbers. Sales forecasts, expense budgets and cash flow are what drive your business. The bootstrapped business doesn't do less of this just because no investors are looking over its shoulder. In fact, bootstrapped businesses must keep a closer watch on their numbers because minding the cash flow is that much more critical when you don't have deep pockets.
- Do the monthly reviews. Your business plan will be wrong, but that doesn't mean it isn't vital to your business. Compare actual results with what you planned, and course-correct as necessary. It's like steering a vehicle, with lots of small corrections. Your plan should never be done. Keep it alive. Manage your business with it.
Do these five points sound like something bootstrapped businesses don't want? I hope not. In fact, I can't imagine trying to run a business--funded or bootstrapped--without some sort of planning. If you're committed to your business, commit to planning for its future. Taking time to plan at the outset will increase the chances your business will not only survive but thrive.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.