By now you probably know that your business plan should be a
living document. There are many good reasons for that. Things change over time
and the details need to be updated—demographics, competition, customer demand. Plus,
decisions have a domino effect. And then sometimes things just don’t work out
as planned. Enter Plan B. Despite being in love with an idea, try not to dig
your heels in on something that just isn’t working to your advantage. It’s a
waste of time and energy. Take the emotion out of it and make a smart "business decision."
Having a Plan B increases your negotiating power as well. If
you are dead set on a location, for example, it can be difficult to get what
you want at a price that works for your business. Once that landlord smells
your desperation, he or she is now in a more powerful position in the
negotiation. Make sure you have a BATNA (Best Alternative To a Negotiated
Agreement) when you go in to the meeting. You cannot make a wise decision in a
negotiation unless you have clear alternatives. With a strong BATNA, you won’t
need to concede as much because you’ll know you have other options, plus you
can push harder for a better deal. When I was negotiating for a lease renewal
in Brewerytown, I realized that unless I really got what I wanted, I didn’t
want to renew the lease at all, which is what ended up happening. Not renewing
was actually the best outcome for my business; I was able to focus on my first
location, which was about five times more profitable, and needed the attention.
Plan B can also play a role in refining your concept. You
may experience unforeseen challenges upon implementation. Perhaps it ends up
being too labor intensive, too expensive to produce, or you’re just not meeting
customer expectations. If you can’t make a decent profit and/or make customers
happy, change it before it’s too late. Not only will you waste time and money,
it could have an adverse effect on your reputation, which is a hard thing to
turn around.
Making a concept change can be easier said than done. The
initial concept for Mugshots was a coffeehouse AND juice bar. This was on top
of a fairly involved food menu, and it proved to be difficult to implement. As
avid juicers, we were both in love with the fresh juice concept. Put into
practice, it was labor intensive with a lot of clean up, equipment maintenance,
and storage requirements. With one employee spending 5-7 minutes on one drink,
they were pulled away from the counter, unable serve customers in line, who
were visibly frustrated.
Our level of customer service suffered, the hassle factor
was high, and the profitability wasn’t anything to write home about. Yet we
were too afraid to make a change, fearing that decision would disenfranchise
our juice customers. Plus, “juicebar” was on our sign and in our logo! When we
finally took the juice off the menu, we realized we should have done it MUCH
sooner. It was a no-brainer, but we let emotional baggage get in the way. Sure,
there were some disappointed customers, but we kept smoothies on the menu and
they got over it. The staff was thrilled, and our bottom line got the boost it
needed.
How about a Plan B for staffing? Management? Financing? Or
operational fail-safes? I always found it helpful to have a healthy number of
part time people on hand so that when someone quits or doesn’t show up, there
are people trained with some flexibility in their schedules. Along the same
lines, make sure your manager has a right hand; that person can step up if
necessary. When you’re shopping for financing, you’ll want to put your loan
package out to a number of financial institutions or investors at the same
time. Again, you’ll be in a better position to negotiate, but then you’ll also
have a Plan B if something doesn’t work out at the last minute.
I find operational fail-safes the most fascinating. Get
ready to test your resourcefulness! Any number of things can malfunction, and
will—your refrigeration, oven, water heater, the toilet. Do you have other
refrigerators or coolers so you don’t lose your product (or worse, make someone
sick)? Is there another method for cooking your signature dish? How can you set
up a makeshift hand washing station with hot water? If the health department happens
to inspect when your water heater is on the fritz, or your only bathroom is out
of order, guess what? They’ll tell you to shut down until it’s fixed (and then
you have to wait until they come back out to inspect it). That could be a good
24-48 hours, leaving your customers to wonder, and your cash register idle. Remember,
those fixed costs are, well, fixed.
I recently had a meeting with a local catering company in a
growth phase. They shared a horror story about showing up to a wedding only to
find the oven didn’t work. They very cleverly made an oven out of tinfoil and
some tealights to cook the main course, and they pulled it off! CAN YOU
IMAGINE?! Well, you should start imagining all the worst case scenarios now,
because they’re likely to happen at one point or another during the lifespan of
your business. Take a deep breath and relax—with the right preparation and
coaching, you’ll be a success!
