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!