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Nomadic Business Plans

A few pointers for creating the all-important roadmap.

Now that he's moved on to cooking as an extension of being a genius at everything, I don't think Tim Ferriss talks all that much about the core idea that launched him into blog stardom, the idea that you should create a small business for yourself that runs on autopilot. He calls this business a "muse," not a name that entirely makes sense if you think about it, but in any case his view seems to be that you're best off if you throw some stuff out there and see what people should buy.

That's actually pretty sage advice, but there's definitely an undercurrent there that you'll jump in, find the product that works for you, and all the hard-to-control processes will fall into place. You don't see Tim Ferriss sitting around drafting business plans, do you? If you're going to have a four-hour workweek, you can't blow several hours on a business plan, can you?

And, honestly, there's nothing magic about them. Whatever your plan says, it's probably not the way things are going to sort themselves out. But all the same, you need one, at least you need one as soon as you get any indication that you're on to a workable idea.

If for no other reason, you need a business plan because you may, at some point, need to show to the IRS that you are serious about making a go at your business, even if you haven't yet turned a profit. If you're being reasonably smart about expenses and when you incur them, your business may well run fairly close to breakeven for a while. There's absolutely nothing wrong with this and you should definitely be taking appropriate business expenses, but should you be audited (it happens) you need to make a clear case that this is a business.

There are better reasons than IRS CYA, however. Creating a short, simple business plan lends clarity to your thoughts. More than that, it encourages discipline. You can see more clearly where you're trying to get and whether you are on schedule for getting there.

So write down the basic game plan in a nice Word document. No need to be fancy, just put down the basics. Make some revenue assumptions based on a projected number of customers, sales, price points. Try to be realistic about it, but don't knock yourself out over it, because it is almost certainly wrong. Whether too high or too low, your revenue projections are wrong. Promise.

Later, when the business has a little bit of a revenue track record, you can return to those initial calculations and update them with the more accurate world view you've acquired. It will be nice to have that foundation to work from.

And it's really nice just to think the whole thing through. Get it down on paper, print it out, and then keep it around handy as you are thinking things through during the startup phase. Amend as needed--it will organize your thoughts.

What goes into this thing? Sections as follows:

1. A description of the business. What does it do and where does the revenue come from.

2. Who is the customer? The conventional wisdom among people who think they are creating a "muse" business is to keep it highly focused for best results. Not dog owners but owners of poodles with specific health problems. I think there are plenty of exceptions, though I suppose it's also true that if you have a big audience, you run the risk of winding up with a business that is bigger than a one-man, highly automated shop.

3. What is your advantage in the marketplace? You have to be pretty brutal with yourself here, though on the other hand, you can also just sort of feel your way in, modifying as needed, until you've got an advantage--an advantage as perceived by your customers--that really works.

4. What are your basic costs per unit? In other words, aside from startup costs, what does selling each unit cost you?

5. What are your revenue projections for the first year (in detail) through the third year (laughably vague).

6. What are your overall costs for the first year and how do revenues compare to these costs?

For your own use, this is all you need. Yes, you could write about your marketing plan here. If you want to do that, go for it. But the value that I see in the exercise is committing yourself to a basic shape for the business. Lots to do after that, including running the business, but best to have a brief, easy-reader version of the fundamentals to give yourself a gentle reminder now and again.

One thing I've learned from working within corporations that were launching businesses is that corporations are in a position to create market share by spending money on it, something that you are probably not in a position to do. If they are creating a content web site, for instance, they can literally buy page views. They can then sell those page views in the form of ads on their site and turn a profit that they can fairly closely calculate up front.

Probably you can't quite do that, but to the extent that you can make those sorts of sober calculations, you should. How many readers can you develop through various channels and at what rate. Put your prediction down in your plan with specific deliverable dates and then revise the rest of the plan based on the actual results you see when those deliverable dates come up. Don't let yourself cheat on this. If you've got a hundred followers on Twitter, do not create a plan that says you'll get thousands of page views from that. Because you just won't. You won't go viral. And for far longer than you are probably ready to admit to yourself, no one is reading your blog.

Robert Richardson is the chief nomad at ModeNomad.
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