This post originally appeared on Entrepreneur.com - #Growing Your Business
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Congratulations on your decision to go into business for yourself! Now that you’ve taken the risk, there are a few things you want to pay attention to. For many entrepreneurs, the concept of being your own boss is simple, but how to do that not so much. It’s natural to want to seek help and for some entrepreneur that comes in the form of a business coach.
The internet has no shortage of misconceptions about what makes up running a successful business. The dreams of ‘set it and forget it’ seem to ignore some brick and mortar world’s tried-and-true business practices. Before you run out and hang that shingle, let’s discuss three key elements of any successful business.
Business Plan
A misguided hope about online businesses is that people will spontaneously find your website. They will magically buy your stuff, and you start making tons of money almost overnight. It does not happen for brick and mortar businesses, and it isn’t valid for online ones either.
Related: 5 Tips for Hiring a Franchise Business Coach
All successful businesses can benefit from a solid business plan. If you want to scale or attract investors, a thoroughly crafted business plan shows your ability to handle all that running a business entails. It also provides a solid base to help you subsequently establish your strategic plan.
The seven components of a solid business plan include:
2. Business Description
4. Organization Management
5. Sales Strategies
6. Funding Requirements
Each of these elements has a distinct role in building your business. The primary benefit is showing lenders and potential backers that you have a clear path for success.
Strategic Plan
A strategic plan is more than flow charts and buzzwords. It is a document that establishes the direction of a company, division, or department. Its length and complexity depends on the size and complexity of the business.
In the absence of a plan, work still gets done daily but often lacks a sense of direction and specificity. Making sure everyone on the team is rowing in the same direction is the desired goal. The plan’s benefits include examining where you are now, where you want to go, and how you will get there, specifically.
The seven crucial elements of an effective strategic plan are:
1. Vision Statement
2. Mission Statement
3. Core Values
4. SWOT Analysis
5. Long-term Goals
6. Yearly Objectives
7. Action Plans
Most business owners and executives have a myriad of reasons for not having a formal strategic plan. A strategic plan is a dynamic document. It drives your business outcomes and efficiencies. Integrating the strategy into every aspect of your organization helps every employee participate in moving the company in the same direction.
Financial management
A solid understanding of your numbers can lead to profitable and sustainable growth. “Knowing Your Numbers” is about more than just the dollars and cents. Having an accurate understanding is about the ongoing tracking and reviewing of your business’s critical financial and non-financial drivers. It will help you know how your business is doing and why.
Related: Six Benefits Of Working With A Business Coach
A financially sound business requires a general framework to ensure effective operations and continual improvement. Management decisions directly affect profits, cash flow, and the company’s overall financial health.
Along with the Business Plan and Strategic Plan, the budget adds to your roadmap of success. It provides the financial parameters against which you will measure success.
Your cost estimating system should include everything from bidding to the final delivery of your goods or services. Systems should consider items like labor costs, materials, overhead, profit, taxes, insurance, and miscellaneous expenses.
In simple terms, three elements can help your finances stay on track:
1. Earn more money than you spend.
2. Invest the difference back into the business.
3. Understand where you are and where the money is going.
It can seem overwhelming to put all of those pieces into place. That’s where whether to hire a coach comes into play.
What makes a great business coach
Besides earning an MBA and working for some of the world’s largest financial services companies like Morgan Stanley and Bank of America, I have also hired a business coach and other types of coaches. A good coach’s value is in their ability to collapse time and help you avoid costly mistakes.
Starting a business used to mean starting a company that added value to the world. While there are plenty of people still starting businesses, becoming a guru has become the new ‘start a business.’
People aspire to coach people without having first done the work to have lessons available to coach them on. Business coaches are teaching people how to become a business coach for business coaches, and along the way, they all forgot to start a business.
When deciding to hire a coach, consider whether business coaching is the primary way they make their income. A fancy website, $2,000 lifestyle photoshoot and a slick sales funnel does not qualify you to help someone else run a business. It’s only adding to the grim statistics on coaching business failures.
Many challenges come with running a business, and “on the job” learning can be one of the most expensive lessons. An investment in the right coach can cut the learning curve and save you money in the long run. Having a firm grasp on real-life business strategy and skill is a crucial element to coach someone else on how to be a successful entrepreneur.
It takes more than theory and fancy marketing to be a successful entrepreneur. Together, a solid business plan, an actionable strategic plan, and sound financial management are critical to owning, operating, and growing a successful business.
If a potential business coach doesn’t understand the essential elements of structuring and growing a business, you’ll end up investing resources that could be used for what will help your business grow.
