When you go on a trip anywhere, there are three very basic things you MUST know:

1. Where are you going?
2. Why are you going there?
3. How are you going to get there?

Your business requires you to answer the same questions. As hard as it may sound, they are very difficult questions to answer. On top of that, they must be answered in the correct order.

Where are you going?

Most people want to jump to the second question (Why are you going there?) first without understanding that unless you know where you are going you don’t know why you are going there. What is your product or service? What do you plan for your business to do? Will the products / services be the same in the business’s final form be the same as it is in the beginning?

Take some time away from everyone else and just think about what you want your business to become. Do you have a grand design for the business? Now is the time to create one. Take time to write down exactly what you want out of your business; don’t worry, you can (and will) always go back and adjust things.

To use as an example, I’ll tell you about my current business. Our end-game business is a holding company that owns and invests in several different companies. The three planned kingpins of this holding company are a privately owned insurance company, a solar power utility company, and a real estate investment / holding company.

Why are you going there?

At the beginning, everyone thinks that this is an easy question. What’s everyone’s answer to why are you going there? To be rich! BZZZZ Sorry! It isn’t going to be that easy!

Why are you going there is the second question and can only be answered after the first question (where are you going?) is answered. This question helps to flesh out your business in terms of strategy. Why is your business going to be what you planned? Why choose those products / services? A great deal of research will need to go into this. If after you answer this question, you don’t like the answers, you will need to go back to the first question and think about where you want to go. If you’re going to Mammoth Cave to visit and explore the cave, but you’re afraid of closed places, I suggest you rethink about going to Mammoth Cave.

To continue our example using my business, the reason for a holding company is that it allows us to expand into other businesses as desired / required. It allows us to set-up a synergy between businesses that will accelerate the underlying businesses. The real estate business exists to create affordable housing to the middle and lower class. The insurance company, as well as offering various different insurance products, will also insure the real estate holdings. Finally, to create value in both terms of real estate and value to the tenants (savings on utility bills), the solar energy utility will be networked into all real estate holdings, along with reselling generated power to the traditional electric companies.

How are you going to get there?

This is the tricky question. It’s the hardest, most expensive, and most important question to answer. To answer this question requires you to make a judgment call. You have this grand plan for your business. You know why you want to do it. Now how are you going to do it? Do you personally have the knowledge and experience to pull it off or (most likely this is the case) will you have to bring others in with that knowledge and experience? How will you treat them? Will they become partners, employees, or independent contractors for your business? Don’t even get me started on investors and venture capital!

We talked about strategy earlier when planning the business, now we’re talking about tactics involved. What actions must you take to bring your business to where you want it? When you’re taking a road trip, it’s easy to figure out where and why. The how comes from when you pull out the atlas and start looking at what roads to use. Do you use the interstate? Do you use state highways? Do you use country back roads? It all comes back to where you are going.

I’ll hope you’ll forgive me if I don’t share the example of my business on the how to get there. I’m still working on it!

Answer these three questions and guess what you have, a very basic business plan! Sure, there are tons of actual details left before you have a workable business plan, but at least now you have something to work with. This is the foundation of your business. If you can’t answer these questions in detail, then your business is doomed to failure!

If you enjoyed this post, make sure you subscribe to my RSS feed!

Related Posts