Whether or not you are seeking financing from lenders, it is essential that you create a comprehensive, thoughtful business plan for your new company. Management of your operations, promotion of your business, and articulation of your objectives all depend on developing a good plan. Think of it as a road map for your business, helping you determine what resources you will need to make a profit.
Writing your business plan forces you to think objectively about your business, and you may even come up with new business strategies in the process. The plan will also serve as a record that you can revisit over time to remain on target or reassess your direction.
These 10 tips can help speed the process and make sure you end up with a powerful, realistic plan to attract investment and guide your decisions:
1. Create a vision. It's tempting to roll up your sleeves and plunge right in to the details of your business -- evaluating products, studying market segments, and sizing up your competition. But don't, at least not yet.
Before you get lost in the details, 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, big-picture road map for your business, you can plan your journey with more confidence.
2. Know that a budget isn't the same thing as a plan. You can't create a solid business plan without a budget and financial forecast. But a budget should ultimately reflect all of 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. We all know the saying "The customer is always right." This is most true when it comes to how they choose to spend their money.
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 underestimate competitors. Don't be cocky. 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.
Pay attention to the competition and you won't be unpleasantly surprised. Also, 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, as well as possible good and bad scenarios. It should also include a variety of strategies for meeting challenges and taking advantage of opportunities.
There's a difference between a calculated risk and recklessness, and your plan can help you make that distinction.
6. Get a second (and third) opinion. Even the most experienced entrepreneurs know that they 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, such as issues you might have missed, and highlight areas of strength.
7. Expect the unexpected. Every business plan needs some wiggle room to allow for unexpected events. Part of this involves creating budgets and marketing plans with some built-in flexibility. But adapting to change also means that you might have to modify or even abandon business practices that worked well in the past. Stay nimble!
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 is wise 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 the information to improve your own business plan.
9. Be clear about the rewards. 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. People work harder when they know what they're working for.
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. So don't just think about this step -- really do it.
Business Takeaways:
- Before you create a business plan, clarify your business vision, including mission statement, company values, and short-term goals.
- You must have a clear picture of your industry, customers, competitors, and market conditions to determine important budget numbers -- and have a sound business strategy -- in your business plan.
- Once you've created your business plan, get an objective second (and third) opinion to ensure that you're on the right track.
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