I often meet new entrepreneurs and an alarming trend among them is that they do not have a business plan. The entrepreneurs that I am referring to usually fall in or around one of the following scenarios:
- they are working on a start-up while they continue working their full time job for funding
- they have decided to open a business that does not require a lot of upfront funding they are turning a hobby into a business/side business, such as a photographer
- they are a professional who decides to branch out on their own, such as an attorney
- they have the equipment and absolute basics to take their business off the ground
Generally the underlying theme seems to be that they typically own the business by themselves, they do not require a business loan, and consequently overlook a business plan. Business plans are not, under any circumstances, designed solely for acquiring funding. In fact, at the exact moment one makes the decision to create a business, the absolute very first thing they must do is: create a business plan. Pull up a chair for a minute and I’ll explain why.
Business plans are a map and a compass. They illustrate where you came from, where you are at, where you are headed, why, and how. They define the value that your business provides to consumers. They outline goals and provide a mini-map for achieving them. Often times they determine how your business is going to deal with competitors, your marketing strategy, finances, financial plan, keys to success, competitive market analysis, defining and exploring your niche possibilities, sales forecast and so much more (I will link you some good examples in a few minutes).
Once you sit down and develop your business plan I am willing to bet you, that you discover something new about your business, rather it be a strategy, service, or marketing idea. A business plan is truly a path of discovery. Once you have this gem at your finger tips, you will still need it – so don’t be quick to toss it to the side. You need to update it – and update it often. If you decide to go in a different direction, take a different approach, or deviate from your original plan, change your plan accordingly. Put down the chisel, this bad boy needs to be on paper, preferably an editable computer file.
When you have a bad business day (everyone does and so will you) look to your old buddy to renew your faith in your dream, your business, and yourself. Your plan will remind you of how you got here and why you wanted to be here. When you are faced with tough opposition, decisions, or a competitor and you are not sure what the steps to take are, you can find the answer in your plan as well.
Still need convincing? Recent studies show that businesses with a completed business plan are twice as likely to succeed. Give it a shot – you have everything to gain.
A few words of advice…
Making a business plan can be intimidating. There are a lot of components, things that you may think does not apply to you. Think again. Even a small business owned by one person who provides one service should have a business plan that is around roughly 20 pages. Did you pass out? Don’t worry it should be double spaced and you can always throw in a few graphs and charts here and there.
You do not have to create it in one day, but you do have to be thorough, and believe it or not, once you get started you are going to find it hard to stop. You will find it more fun than you initially thought. If you have close to 10 pages, you aren’t doing it right. Be thorough and step up to the plate and work harder for yourself. You will thank me later.
Many bigger businesses or well thought out start ups, usually with partners, have financial plans, data, and statements that are really in-depth. This is where a small business plan becomes slightly easier. You do not have employees to account for and a lot of outsourcing to account for, but you need to think about all of your real office costs, cell phone, insurance, marketing, salary, equipment etc. This budget is going to go into your business plan, and you will be visiting it often.
A few other things to keep in mind:
- DO prepare a complete business plan
- DO your research (google is excellent for this)
- DO spell out your strategies, weaknesses, and strengths
- DO be brutally honest and realistic – you are the only person who is going to see it (unless you apply for funding)
- DO leave room and plan for realistic growth
- DON’T be optimistic when estimating future sales
- DON’T “low ball” when estimating future expenses
- DON’T focus solely on long term goals; focus on the first year, and save a sentence here or there for the long term
- DON’T discount your weaknesses – this is the time to spell them out and plan for them
As promised, here are links of some good examples of business plans (designed more for smaller businesses/sole-proprietors) that I have found to help guide you in the right direction:
Computer Consulting Business Plan from Entrepreneur – sample plan for a faux consulting firm
Maternity Clothing Online Store Plan from bpplans.com – sample plan for a faux store
When in doubt you can always look to the SBA (US Small Business Administration) for free advice. They are there for you and have a wealth of knowledge and support for small businesses.
What are you still doing here? You have a plan to write. Best of luck!
Source by Marybeth Shanafelt