Wednesday, February 15, 2006

Fail to Plan, Plan to Fail

Fail to Plan, Plan to Fail
What’s In a Business Plan and Why You Need One
By John Stiernberg

Frequently, pro AV people (systems integrators, technicians, rental and staging contractors, designers, etc.) plunge into the integration business with good technical chops but without a business plan. Too often the results are disappointment and burnout rather than creative, technical, and financial success.

Can business problems be anticipated and prevented? Can pro AV people learn from the business world and apply lessons without “selling out” or "becoming a suit?” The answer to both questions is yes! Whether you are already making all or part of your living from AV, or just thinking about the possibilities, this article provides fundamental concepts and encouragement for constructing or updating your business plan.

Why have a business plan?

You may have heard the expression “Fail to plan, plan to fail”. Most businesses (AV-related or otherwise) do not have written business plans. They may have revenue, checkbooks, and even budgets. If they do not have a complete business plan, they are at risk, and many fail as a result. There are seven positive reasons to construct a written plan:

1. Road Map. The plan shows you the best route to your goals and objectives.

2. Measuring Stick. The plan includes financial and non-financial objectives and measurement criteria so you can track your progress along the way.

3. Opportunity Management Tool. The plan articulates what business you are in and how you conduct business. This allows you to identify viable business opportunities, and avoid or manage those opportunities that do not make sense for you.

4. Lower Stress. When you have a plan, you spend less time and energy worrying about whether you are doing the right thing. Your plan helps keep you grounded and calm.

5. Catalyst for Your Best Work. A business plan is like a system design, stage plot, or project schematic. It assures that everyone is working from the same blueprint and performing business tasks in the right order—without compromising inspiration or creativity.

6. Competitive Weapon. Relatively few businesses have plans. When you do, you have an automatic edge on your competition. This helps boost your confidence as you build your competitive position in the market.

7. Essential for Securing Financing. At some point in your business, you are likely to need cash for operations or business development -- above and beyond your revenue from regular business operations. Your business plan helps you anticipate cash needs. A solid business plan is a requirement of any worthy financial institution -- even your “rich uncle.”

What’s in a business plan?

A business plan is a written system of documents that puts your business and its market environment in context over the course of the next several years. It describes 1) what you are going to do, 2) how you are going to do it, and 3) what the consequences are.

The main text is 15 to 20 pages long. In addition, it includes financial schedules and supplemental material that are included in the reference section or appendix. The reason for the brevity is simple. If it is too long, few people will actually read and use the document. Here is a brief description of the contents of each of five main sections or “chapters.”

Chapter 1: Description of your company, business, and industry. This is where you talk about the pro AV industry and your role in it.

Chapter 2: Description of products, both goods and services. This is where you describe what you do in detail, plus the features, benefits, and advantages of your product vs. the competition. “Products” are what you get paid for. Examples of products include:

• Rental and staging technician: system set up, maintenance, show management, etc.

• System designer/consultant: pre-design consultation, system design, commissioning, etc.

• Systems contractor/integrator: system installation, end-user training, maintenance, etc.

Chapter 3: Market overview and marketing strategy. This is where you describe the size and growth of target segments, the competitive environment, your promotional strategy, product distribution channels, types of projects, your salesforce, and target client base. The marketing section is a “plan within a plan,” and is the most important section of the whole document.

(Editor's note: We'll include an entire article on "The Seven Links in the Marketing Chain" in an upcoming issue of Gary Kayye’s rAVe).

Chapter 4: Management and organizational overview. This section describes your business experience, history, and personnel needs. This is the place to identify key people, their job functions, and credentials -- even if it is a one-person business. Future needs refers to people who will be added to the business as it grows.

Chapter 5: Financial summary. This section includes $ projections for sales revenue, expenses, sources and uses of working capital (cash) over a three year period. These are summarized briefly in the text of the plan, and shown in full detail in the appendix.

Good business plans also include an Executive Summary. This is a one or two page document that includes the essence of the whole business plan. Executive summaries are helpful when seeking financing, especially when many people are reviewing the plan.

What If This All Seems Intimidating?

You may be a great AV technician, consultant, or integrator, but not necessarily a businessperson. You may find that aspects of running your business are tedious or even scary. That’s OK, but it does not take away the need for a business plan. Here are three key points:

1. Double the planning time and cut the implementation time in half. This is a tried-and-true rule of time management. It’s easier and less costly to do the planning on paper than to learn by the dreaded trial and error. This points to the value of constructing your business plan early in the game.

2. The biggest challenge is competing for attention. We are continually bombarded with information today, and “data overload” is unlikely to change. This points to the value of the marketing section of your business plan in the overall scheme of things.

3. Someone has to handle the business. If not you, find someone who will -- or just do AV for fun. This points to the value of identifying your strengths and weaknesses and building your team as your business grows.

The Payoff

Constructing a business plan is essential for long-term success. Are you thinking about going independent? Your business plan will guide you and help you prevent mistakes and disappointment.

Once you are implementing your business plan, you’ll find that you are spending more time providing great AV systems, bringing quality entertainment and communications to new audiences, and making a good living doing something you love. From my standpoint, it’s worth the effort!

About the Author

John Stiernberg is principal consultant with Stiernberg Consulting, the Los Angeles-based business development firm --

John has more than 30 years of music and entertainment technology industry experience, including eight years as musician and agent, 12 years working for sound equipment manufacturers, and 13 years as business analyst and consultant. In addition to pro AV industry affiliations (CEDIA, Infocomm, NAMM, NSCA), he is a member of IBMA, NARAS, the Folk Alliance, and the American Federation of Musicians. Contact John via

John's book "Succeeding In Music: A Business Handbook for Performers, Songwriters, Agents, Managers, and Promoters" is published by Backbeat Books. For details, visit


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