Can’t Decide if you Need a Business Plan – Read This!
Depending on the type of person you are, approaching the task of writing a business plan can either be exciting, or an unbearable chore.
Regardless of which side of the fence you fall, with the amount of time it takes to write a really good plan I think it’s only natural to ask yourself “Do I really need a plan?”
Consider This
According to a new study, the Small Business Administration found that writing a plan early in the business planning stage could increase your chance of success with your new venture.
However, the reasons for this may be a bit different than what you may think, quite simply it appears that:
Those who plan, do!
As the author of the report states:
“…challenging prospective entrepreneurs to accomplish a formal business plan early in the venture creation process will likely enable them to engage in additional start-up behaviors that could further the press of venture creation”
Business Plans Speed Development
Not surprisingly those new ventures with a plan developed early in the start-up phase of their businesses more quickly completed other phases of the startup process.
It stands to reason that if they have taken the time and effort to create a formal plan, they are the type of individual who would want to act quickly on the plan they developed.
Activities vital to a businesses success early on, such organizing finances, getting your team together, or developing a marketing plan are more quickly acted upon by individuals who have a plan for them. This speed to complete important tasks cannot be underestimated in the early success of the business.
Improve Your Odds
By writing your business plan early in your start-up process you will improve your odds for success according to the study. Early in the process is the most important factor they found in increasing your chances for success.
Not only will you be setting a solid plan by which to follow, the simple act of writing a plan will help put you into action mode.
Also, by having a well thought out plan early on you may be showing potential investors and other supporters that your business is feasible and gain their assistance as your move ahead.
Your First Step
While the conclusions of the study can be debated, and there will be some who think a business plan isn’t necessary, for those of you who have been wanting to start a business but haven’t acted yet this study should give you reason to get going!
Regardless of if you think a busineness plan is essential, there is now evidence that the mere act of writing the plan will spur you into doing. Congratulations, you’ve just found your first step to get you moving in the right direction.
Start today and give your business the jump start it needs, and keep in mind that planners – do!
What do you think…are business plans necessary?
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Business Plans That Get The Money
The development of a business plan is a key component to getting your small business off the ground.
A business plan wears many hats in the world of an entrepreneur.
It helps validate the potential of a business idea, lays the groundwork for the management structure, details a marketing plan and budget, describes the types of customers the business will attract, assesses the competition, and is the single most important document when approaching investors or creditors who may provide your business with financial support.
So, how do you write a business plan that gets the money?
Write the business plan from the investors perspective
In your business plan you should be able to see your business through the investors eyes, and address any concerns of a would be investor. Your business plan should demonstrate you are an expert in your field, and that you have clear goals and a clear mission with your business. Give the investors a reason to lay their hard earned money on your idea, your business, and you.
Have a detailed management plan
Investors invest in management, not just concepts or ideas. Expressing your knowledge, passion, and dedication to your business, as well as the competence of those working around you, will go a long way in establishing the trust necessary to secure investors.
Show the investors you know you customers
Communicate in your business plan an understanding of your target customers. Who are your customers, how you will reach them, how will they reach you, and why do you think your business is fit to serve this market are all questions you will need to answer.
Demonstrate a sound marketing plan that aligns with your target customers
This is one of the most important parts of your business plan. How you intend to reach your target market will tell investors a lot about the potential profitability of your business. If the investors see from your business plan that a huge market exist, but your marketing plan falls short of reaching them, they are going to pass on giving you money (and they’ll give it to the next guy with the same idea, but a better marketing plan)
Illustrate the barriers to entry
You will want to show investors how you will keep competitors from stealing your customers. What barriers of entry are there (for others), and what barriers will your business be creating. They will want to see your strategy for keeping competitors out while you grow your business.
In Closing
If you develop your business plan to address the above you will be well on your way to obtaining outside capital, and having a business plan that will get you the money! This is a good exercise even if you don’t think you will be requesting outside capital…you’re still writing the business plan for an investor -YOU!
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Photo Credit: gurdonark
Business Plan Basics
1. Create a vision.
It’s tempting to roll up your sleeves and plunge right into the details of your business: evaluating products, studying market segments, and sizing up your competition. Yet it’s possible to get so caught up in the process of planning a business that you lose sight of what you’re planning for.
Before you get lost in the details, take a step back. Outline a clear vision and a coherent set of values for your company. Develop a mission statement and use it to define short-term goals and priorities. Once you have a clear road map for your business, you can plan your journey with more confidence.
2. A budget isn’t the same thing as a plan.
You can’t create a solid business plan without a budget and a financial forecast. But a budget should be the product of all the other elements in your plan. If you don’t have a clear picture of your industry, customers, competitors, and market conditions before you develop a budget, your numbers aren’t likely to reflect reality.
3. Don’t ignore your customers.
This may sound obvious, but too many entrepreneurs assume they know exactly what their customers need without bothering to ask. Take the time to learn about your customers and build your business plan around their needs and desires.
4. Don’t shortchange the competition.
If you assume your firm will be the only game in town or if you fail to take existing competitors seriously, you’re asking for trouble. Your competitors can be a great source of information about what works and what doesn’t.
5. Be prepared to take risks.
Creating a business plan isn’t about avoiding risk; it’s about understanding and managing risk. That’s why a good business plan anticipates possible challenges and includes a variety of scenarios for meeting those challenges. There’s a difference between a calculated risk and recklessness, and your plan can help you make that distinction.
6. Get a second (or third) opinion.
The most experienced entrepreneur can still benefit from a different point of view. Even if you’re the only person involved in your business, find someone who can study your plan objectively and point out possible weaknesses you might have missed. We offer business plan consulting for a very reasonable fee, and can provide a 1st draft of a business plan tailored to your needs if you are having trouble getting started.
7. Expect the unexpected.
Every business plan needs some wiggle room to allow for unexpected changes. Part of this involves creating budgets and marketing plans with some built-in flexibility; but adapting to change also requires you to accept that you might have to modify or even abandon business practices that worked well in the past.
8. Don’t forget what makes you unique.
A cookie-cutter business plan might help you get started, but it won’t help you succeed. And while it helps to look at your competitors, don’t model your business after them. After all, you’re in business to beat the competition. Learn from your competitors’ strengths, but also learn how to spot their weaknesses and use them to improve your own business plan.
9. What’s the point?
Building a business involves hard work and struggle. But it should also include a clear set of rewards, both for you and your employees. When you set goals in your business plan, include some concrete motivation that goes beyond the satisfaction of a job well done.
10. Don’t skip the plan!
Of course, the biggest mistake of all is failing to create a business plan in the first place. Planning is hard work, and there’s no guarantee it will make your business succeed. But a good plan is still the best way to turn your vision into a realistic, coherent business.
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