Whether you’re a large corporation, a local Mom and Pop storefront, or a home-based business operating from a desk in your spare bedroom, a business plan is a must. Flying by the seat of your pants, crossing your fingers, and hoping that your business will be successful will almost guarantee failure. You need a plan.
Many entrepreneurs put off writing a business plan for various reasons. Some think it’s just another “thing” to do, requiring time out of their already hectic schedule. Others fear it’s too difficult, or they may believe it won’t be a genuinely helpful tool. But, if you get down to the heart of the matter, most people will admit that they’re afraid to put their ideas down on paper. If things don’t go as planned, they’ll feel like a failure.
But a business plan isn’t carved in stone. Think of it more as a road map for the future of your business. It should describe exactly what your business does, and it should also outline your business goals.
Lenders and investors will expect to see a business plan before giving you any money. Landlords may ask to see your business plan before granting you a long-term lease. Future business partners who may join your company will ask to see your business plan. Quite simply, your business plan ensures that all parties involved with your company are on the same page.
Ready to write your first business plan? Here are some points you’ll need to include:
1. Identify your strengths and weaknesses.
Start by thinking about everything you bring to the table—your passions, your ideas, and your strengths. Then, consider those areas where you’re weak. You may not be the world’s best salesman, or you may lack strong organizational skills. After thinking about these things, your goals should be centered on your strengths while at the same time, addressing ways to fix any problems that may keep your company from growing.
2. Set your goals.
What do you want your business to achieve? Think about where you want to be in a month, six months, and a year—and by all means, write it down. Don’t worry about failure at this point. Later on you can evaluate your goals see if you met them, or if they were unrealistic to begin with. Not meeting every single goal you set is not failing. It’s just learning as you go.
3. Take a good look at your finances.
Most of the time, new business owners underestimate how much money they’ll really need to run their businesses. Lack of funding is one of the biggest reasons, if not the biggest reason why businesses close their doors, especially during the first year. Having a written business plan will force you to look at your business financials—seeing where your money is coming from, where it will go, and if it will be enough to see you through the year ahead. As you write this section of your business plan, go ahead and write a budget for the year.
4. Look at what duties you’ll have to perform.
As a business owner, you’ll have to wear many hats—from secretary to salesman, to bookkeeper and CEO. This can leave you feeling distracted, disorganized, and worst of all, it can leave you feeling overwhelmed. Your business plan will help outline your mission and what roles you’ll need to tackle. You’ll need to address staffing issues, should you decide to hire other employees. Writing job descriptions is an important part of your business plan, especially if there will be others working for you.
5. Size up your competition.
As you write your business plan you’ll need to research the current market. Smart entrepreneurs want to see how well their product or service measures up against the competition. Look at the price your competitors set for comparable products and services, and then think about your price points. The ultimate goal in this part of your business plan is to make your company stand out above the rest.
6. Create a marketing plan.
Once you know who your competition is, and how they’re conducting business, the next logical step is to plan your long-term marketing strategies. How will you get others to hear about your product or service? Your marketing plan should spell that out very clearly. We’ll discuss this at length in my next column, as it’s one of the most important parts of your entire business plan.
Your business plan is not set in stone. Expect to revisit your business plan often. As your business grows and changes, so too will your business plan.