Edmonton Business Consultant | Why a Business Plan is Important
Why is a business plan important? I hear so many entrepreneurs, so many business owners say that they don’t need to have a plan. Well, as an entrepreneur in the former United States, Small Business Administration entrepreneur of the year, I can tell you it is very important that you have a plan for the same reason. It’s important when you go on a trip to know where you’re going. You want to have, hey, I currently live in Tulsa, Oklahoma, and I want to go up to Minneapolis to visit. It’s nice to know that you’re trying to go to Minneapolis. You know you’re in Tulsa, you want to go to Minneapolis, and as you are driving to Minneapolis, you’re definitely gonna run into construction zones. You’re going to run into auto accidents. You’re gonna run into detours. It doesn’t mean you cancel your Edmonton Business Consultant all together. It just means you’re not a moron and you don’t drive off the bridge that is still under construction.
You exit, you go where you need to go, and you get back on the path. And so many entrepreneurs just say, well, because I have to make changes along the way. I’m not even going to define where I want to go and I’m not gonna use gps or a map. And that is like not having a business plan at all. And so on today’s show we have Josh spurl, our a Canadian friend and CPA from north of the border on today’s show to talk to us about why a business plan is important. Josh, how are you doing, my friend doing great clay, thanks for having me. Well, I want to ask you this. If lack of demand for products and services is the number one reason entrepreneurs give for their businesses failing, how do the statistics suggest that he business plan will even help? Well, by some sort of magic hocus pocus, business owners who do a business plan are 50% more likely to grow their revenue and weight.
When you’re starting from zero, you know, 50% more likely from zero is a good thing. So what components of a business plan help a business owner increase their revenue? So the first thing you’re going to start with is your Edmonton Business Consultant. You know what sort of products and services you’re going to offer. What’s the average price for those products and services and then really drilling into how your Edmonton Business Consultant to differentiate yourself in a crowded marketplace. You know, I always tell my entrepreneurs that we’re working with, you know, we don’t want to find an area that you can compete in. We want to find an area that you can completely dominate. It. Dominate. Yes. So we’re looking for an area, you know, even you know, a particular, you know, neighborhood in town where there’s no one else doing what you’re doing. You know, if you’re an electrician for an example, you know, we want to do one thing that’s different than all the other electricians in this, in the part of town that you’re operating in.
So running out of cash is the number two reason entrepreneurs give for their businesses failing. How do business plans help entrepreneurs to keep them from running into cash? Well, one of the components of your Edmonton Business Consultant plan is really a budget for your business. You know, how much are you actually, you know, factoring on spending for the expenses that you’re going to have to incur. You know, while you’re building up your revenue and while you’re increasing your Edmonton Business Consultant. So it’s really the budget that you have to follow without it. You know, you’re going to run out of cash because you shouldn’t, you don’t know how much you should spend. And I’m going to give the listeners out there a very practical example from my own life. Um, one of the businesses that you’re going to go check out today’s elephant in the room, the men’s grooming lounge.
And when you go to the store today, uh, to see the opening of that thing, it’s gonna open up at 10. We’ll be cutting hair until five. Uh, and if you, if you haven’t checked it out yet, go to e I t r lounge.com. You can learn more about the franchise and the business. I personally own three locations. And what happens is we have 10 chairs at that downtown store and we can cut two people’s hair per hour. So if you had a store, you would want to know, okay, I have a potential to cut 20 haircuts an hour, and you have a potential in a day. From what, say 10 to five. Okay. If you’re cutting 20 per hour and you have seven hours, you’re open for the day or eight hours, whatever it is, you want to know how many potential haircuts you can even do per day.
And you as an owner have to know how many haircuts do we need to do per hour minimum just to break even. Otherwise, you’re going to go backwards. And if you go backwards enough, you’re gonna run out of cash. Now, when we first started elephant in the room, I had no idea what we were going to, what we were going to charge. I thought we could charge $15 a haircut, which was more than some of our competitors in less than most, and we could, we could make it work. Um, upon further review, uh, Andrew, after doing the math and working on the business for about a year, I determined we needed to raise the prices to $42 a haircut. Well. Um, in order to offer the level of service that would make us different in the marketplace and in order to g, but in order to justify the acquisition of new customers, I had to make the first haircut, uh, dollar long story short, the model works like this.
If we don’t convert a certain percentage of first time customers into members, automatic recurring billing members, the business model doesn’t work. And I know those numbers and it took me about a year and a half of contributing between two to $3,000 a week into the company every week for about a year and a half before I figured out the model. And I’m a sick freak and I’m an entrepreneur. And that’s why franchising is so great because when you buy it, the company already knows the unit economics. But for somebody out there who doesn’t know their economics, doesn’t know their numbers and they don’t know how many haircuts they need to do per hour to break even, they don’t know what percentage of first time customers they need to sign up for a membership. Josh, it gets weird. It gets weird. And you guys as an accounting firm over there at spurling and associates, you help people do this, does it, could you charge extra to help somebody make a business plan or what does that cost somebody?
No, we charge extra for making business plans anymore. It was a shift that we made maybe about two years ago. It took a while. You know, very much like how you guys onboard an elephant in the room for $1 for the haircut. You know, we view investing in that, that business owners plan, you know, we make money if clients stay in business and keep coming back. So really we view that as investment in our client. I’d rather work with a business owner to help them, keep them on the tracks, then, you know, continually be onboarding new customers because the old ones failed. So what are the three main reasons entrepreneurs should do a business plan in your Edmonton Business Consultant? Um, I think th the three main reasons is they need to be able to establish, you know, let’s say the budget, the working numbers of the business.
You know, how much they’re going to charge. You know, what those expenses are going to be like. Um, I think moving beyond that is how they’re going to differentiate their product or service. You know, it’s, it’s, it’s, we live in crowded marketplace, there’s a lot of people vying for the attention. So how are they going to be different? Um, how are they going to separate themselves from their competition? And then the third thing is the logistics on how that business is actually going to operate. You know, we went back to before is how the business owner is actually going to, um, what tasks they’re going to do, what their schedule is going to look like. Who are the key people, who are, they’re going to delegate tasks, who, if the business owner can’t do it themselves. So I’m looking at those three factors is probably the most significant in the business plan.
So why do you think a business plan keeps the entrepreneur focused on their objectives? I mean, why, why have you seen this seem to work? What’s going on is a, is it a magic sauce? It’s like any other goal in life. If you write it down, you’re more likely to achieve it. It’s no different in your Edmonton Business Consultant. And you know, if you can write it down, it’s something that you can be held accountable for. You know when you, you’re getting as a business owner, you’re getting a million things thrown at you. It’s something that you can revert back to. What’s truly important to my business? What is going to drive this thing forward? When in doubt, go back to the plan. You know, what are the things that are really going to move the ball up the field? So how many meetings does it take with your office to really get a business plan in place initially, are we talking about 10 meetings?
406 meetings. Four years of business college. Well, how much time are we talking about here? So normally for new clients, our planning processes usually four meetings long. So what happens in the planning process is the first meeting is really a lot about your, your personal assets, your personal liabilities, your Edmonton Business Consultant. Because that’s really going to drive, you know, what sort of risks you can take. We need to know what you take out of the business, what you have available to put into the business, um, and in efficient way to save you tax while you’re moving through the business. So the first meeting is really about gathering the personal details, meeting number two. Then we deliver a formal personal financial plan for the business owner. And in that meeting number two, we introduce them to the way we do business plans and our template. And then we send them home with some homework in between mission meetings two and three.
And in between meetings two and three, they’re going to dump their vision to the company into that business plan. And I tell them it’s not something that you need to spend, you know, a week on. This is something that you can do in four hours of less dump your vision for the business plan. In meeting number three, we sit with you and we try to understand what your vision for the company is. And then meeting number four, we can give you a finalized product based on our recommendations. And you know, based what we’ve seen on other clients, what’s worked for them, what hasn’t. So how often should a business owner update their plan once they have the plan in place, once they’ve created the, the plan, how often should they be updating this thing we recommend annually, annually is really that time to update the plan you mentioned, you know, things change.
You only obviously you’re going to have to make adjustments as you go. Uh, but really to update the formal plan, you know, annually. And I see a lot of entrepreneurs, either they don’t do a plan or they spent copious amounts of time doing that initial business plan and never do it again. And I tell people that rather than spending 40 hours on one business plan, spend four hours on a business plan, but spend four hours every single year. So every year your think it should take about four hours a year to update that business plan. Four hours on your own, plus a couple of meetings with your accountant. Okay. Okay. So how does having a second set of eyes look into your Edmonton Business Consultant plan help? I mean, how does it help to have a second set of eyes having somebody, are you referring to another person or actually having a second set of eyes?
I think if you had a second set of eyes connected to the same brain, it might be problematic, right? So what do you reckon? Well, how does that help having, you know, a second person look at your Edmonton Business Consultant for you. So what you’re trying to do in a business plan, as you’re trying to poke holes in it, as, as, as negative as it sounds, you know, where could you go wrong? What have you not thought of? You know, that’s what happens. You know, it’s something even even in our firm, um, I don’t do business plans by myself. I utilize my team because we want more than one person, more than one set of ideas. You know, we want to figure out what could go wrong before it actually does, so we can fix it. All right? Now here’s the deal. I think there’s somebody out there who’s probably, you know, overwhelmed.
They don’t have a business plan, they’re not being proactive and they’re just kind of drifting around with their business and they’re just overwhelmed with the idea of even making a plan. Uh, so if somebody is looking at step one, where do I start? What advice would you have for them? Um, really what you need to do is just book a time with a, with a CPA who’s, uh, experienced in, in doing business plans. You know, we do our free consults for free. Um, that’s really step one. It’s the most efficient step in getting to the finalized plan. All right, well, Josh, I thank you so much for being on the show and for coming down here from, uh, north of the border to come educate us, uh, Americans. And I think it’s so important that anybody out, if you are just fueling over wellmed, you’ve got to get it out of your head and you have to create a business plan. And so you can do it. I know you, I know you can, but you just cannot have everything trapped inside your Edmonton Business Consultant or you’re going to drift around and get frustrated. You’re going to get overextended, you’re going to be confused. Just take the time to make a business plan. Josh, thanks for being on today’s show. Thanks for having me. Clay.