A couple of years ago a friend of mine invited me to the opening of his new café. It was a beautiful day and his opening went really well. In between glasses of wine and canapes he told me that he’d put a lot of effort into drawing up and developing his business plan.
He had spent a small fortune in commissioning market research to help in selecting the location. He had spent many hours with lawyers sorting out the lease. Weeks managing the builders to turn the empty shell into a fully functioning cafe and gained several pounds researching all the products his cafe would sell.
All in all, including the hiring of employees, training his staff, purchasing furniture, sorting out the bank finances as well sorting out a myriad of other little details, he’d spent 4 months of his life on the project and was heavily committed, both emotionally and financially.
Everything was so well organised. It was a great location, he had a great looking cafe and the staff were friendly and welcoming. I’d known this guy for nearly 10 years and knew he was a sharp operator and experienced business owner. I knew the cafe would be a great success.
A few months later I bumped into him again.
When I bumped into him, I asked him how he was and how things were going with his cafe.
I was surprised with his response:
“Well I’ve sold it actually”
“I realised that running a café wasn’t what I wanted out of life, I didn’t want to build a job for myself. I wanted to build a business that would generate an income without actively being involved in the day to day operations.”
My friend was fortunate in that he realised early on into his venture that this wasn’t the business for him.
Thanks to his preparation and great choice of location, he managed to exit the business and cover his costs. But sadly too many business owners become trapped by a business which was supposed to set them free.
When would-be business owners make the leap from corporate life to being a being a business owner, freedom is usually top of the reasons for doing so. But when they get started they often surprised to find themselves working longer hours and are sometimes more stressed than they were when they were in jobs. In short, they’ve traded one job for another job.
Running a business is not for everyone and that’s ok.
Would be business owners or established entrepreneurs like my friend, could have saved themselves a self a of hard work, time and money, if they’d had a life plan in place first.
Create a lifeplan
If you’ve spent any time with a financial advisor, one of the fist things they’ll ask you is what do you want to achieve out of life; whether you want to educate your kids privately or retire early and travel the world. So chances are you have a fair idea about what you want to achieve out of life and a life plan is just the representation of this plan.
A life plan is your strategic plan for your life goals.
Before you develop a business plan you should have a clear idea what you want to achieved out of life and how you want to live. Don’t assume what the life of an entrepreneur is all about. It’s not always about fast cars, yachts and fancy holidays. Not everyone is cut out to be a small business owner.
Many small business clients looking for my help come to me because they are overworked and stressed out. When they started their business they didn’t appreciate that they were the ones responsible for marketing, customer service, accounting and building and packing the product. Quite often they’ve left corporate jobs where someone else was responsible for all the other things only to realise the person responsible is them.
Too many business owners start a business because they have a great idea or spotted a great opportunity, grappling with the thorny issues of marketing, sales, accounting and operations.
So before diving into all the details of producing the business plan, consider what you want from life before you start a business which might not be a good fit for you.
Don’t trade a crappy job, for a crappy business.
Once you have a clear life plan, you can develop a plan that will to the successful achievement of your life goals.
I was at a conference a couple of weeks ago and the speaker was asked about how they maintain a work / life balance. The speaker responded with the following:
“I don’t consider work and life to be separate things. Work is part of my life, so I look to maintain a life balance.“
It’s not possible to divorce business and life. They are both parts of your life and we need to stop compartmentalising.
So if you need more convincing about why you need a life plan, here’s three reasons:
- A life plan will give you clarity about where your life is headed.
- A life plan will keep you in check when things start getting hectic.
- A life plan will give you peace of mind, knowing that you are addressing the things in your life that are important to you.
What to include in a Life Plan
1. Your core values
Before you start to produce a life plan, you need to know what’s important to you and what matters most to you. For many people this will be some combination of family, friends, health and finances. Write them down. Then ask the people who know you well if they recognise these values in you. This way you can be sure you’re not mixing up what you think your values should be with what they actually are.
2. What’s not working
Work out what you’re unhappy with now and why. If you’re fed up working long hours for little reward think about whether it’s the long hours that are making you unhappy or the environment. Many people are perfectly happy to work long hours for a short time to get a project off the ground, or complete a period of study, but not for the long term. Especially if you’ve got a family.
3. What do you want out of the future?
When you’re setting your life plan, you shouldn’t just write your goals for a few months ahead. You should look at what goals you want to acheive out of life a year from now, 5 years from now, 10 years from now. After all, it’s called a life plan for a reason! Maybe your life goals are to educate your kids privately. Maybe it’s about retiring early? Or Maybe your plan is to travel the world and generate your income passively through investments or sideline businesses.
4. Plan your steps
Then for each goal you want to achieve, write out how you’re going to achieve it. Is it starting a business? Is it by putting $500 a month into a savings account? Or maybe your want to find your life partner. What ever it is think about how you’re going to achieve it.
Use a lifeplan as a framework for decision making
Once you have a life plan in place, you can use it as a framework for your decision making in the future. Whenever opportunities come your way, whether it’s investments or business opportunities, think about how it ties in with your life plan. If your life plan is to work less, then chances are that something that is going to be a massive time commitment isn’t going to work for you.