You can start a business without a business plan, but if you are going to be successful, at some point, you’ll have to formulate one, even if it’s only in your head. No business can succeed in the long run, if its activities are unfocused. By far the best way to achieve the direction you need to impel your business into the future is to craft a written business plan.
Even if you are an inexperienced writer and are unfamiliar with the intricacies of formal business plans, the exercise of drafting a business plan will contribute to moving your business forward. Writing your own business plan will help you:
Crafting a business plan will force you to identify your principal business strategy. In your plan, you will clarify objectives and outline a path for the measurement of your progress toward them. A thoughtfully constructed business plan will lend clarity and definition that will contribute positively to your business’s bottom line.
2. Avoid going down rabbit trails.
This is the flip side of #1. If you adequately define your business, you’ll know when you are getting off track. Owners of growing enterprises frequently lose their places, and having good business plans helps bring them back to center. Adhering to well-written business plans makes chasing red-herring activities less likely.
3. Become realistic.
Fashioning a complete business plan obliges you to visualize your operation from start to finish, and the process facilitates viewing things realistically. If you’ve based your business model on flawed assumptions, you may find that parts of your plan seem absurd. As you uncover inconsistencies, you can rethink your approach, revamp your assumptions, and ground your plan in the real world.
4. Control your finances.
Many entrepreneurs are not independently wealthy, so surviving financially while developing a new business is important. Designing a written business plan will tell you how much money you need for startup and what you might expect to take for living expenses.
5. Do your homework beforehand.
Writing a business plan obliges you to carefully study the situation before jumping off the cliff into the abyss. Obtaining the facts before making decisions is one of the keys to embarking successfully on any new business venture.
6. Establish a timeline.
Part of crafting a comprehensive business plan includes constructing a realistic timeline. This will help you organize your finances, obtain bank loans, attract investors, anticipate major hurdles, and set milestones.
7. Understand your competition.
Analyzing your competitors’ capabilities will help you on several levels. First, a requirement of lenders will be that you have studied your business from all angles, and knowing what the other players are doing is part of that. Second, you may find that the competition in one arena is too fierce, so you direct your energy toward a less-competitive niche. Third, an awareness of what your competitors are doing will help you adapt to a rapidly globalizing marketplace.
8. Stay out of trouble.
If you follow your business plan, you will be less likely to commit serious errors. Knowing where you are and where you are going will help you eliminate legal conflicts, stay on track for the repayment of loans, understand the implications of signing agreements, reduce employee hassles, and avoid confrontations with the tax man.
9. Increase the quality of your wares.
Defining your business’s goals and purposes on paper will assist you in making good business decisions along the way. One of the byproducts of sound decision making is that the quality of what you offer will improve. Writing a solid business plan furthers the intangible elements that contribute to producing the best possible goods and services.
10. Project competence.
Having a written business plan will help you put your best foot forward in all situations. Your ability to explain what your business is about will improve, and you will leave positive impressions in the community regarding your professionalism and expertise.
11. Make adjustments to your business.
Having a written business plan will help you know when to make changes. Knowing where you stand at any given moment helps you see which path to follow as the marketplace evolves. Hopefully, you’ll be able to identify shifts in customers’ attitudes and make alterations that allow you to stay in the game.
12. Avoid repeating mistakes.
As you proceed with the execution of your business plan, you will find that some things work, while others do not. Whether you consider the latter to be mistakes or lessons learned, your business plan will help you identify them and avoid repeating them.
13. Establish marketing strategies.
Writing a business plan includes the identification of marketing strategies. Every business idea must be marketed in some way, and incorporating a marketing strategy into your business plan will help you take an aggressive marketing stance.
14. Secure funding.
Once you know what funding you need, you’ll have to convince the lenders or investors of the viability of your business. Of course, if you have enough collateral, you’ll have no problem getting the money no matter how many holes your business plan contains, but if you want investment money based on your personal ability and your proposed business model, you’ll need to show potential creditors or investors that you are likely to succeed.
15. Know your customers.
A study of your potential customer base is an important part of a business plan. Being familiar with your customers and their needs will help you produce the right product or service to attract them to your business. Your business plan will contain information about your customers’ operations that will help you predict the likely directions those businesses will take in the future.
16. Devise an exit strategy.
Never enter into anything without knowing how to get out. Fashioning an exit strategy is important, and if you do so, you’ll be more comfortable at every stage of the business-development process. You need to know what you would do if things don’t go as anticipated. In your plan, you might declare your intention to include termination clauses in leases and contracts. In event that things go well, you might include a succession plan.
17. Negotiate contracts.
If you are armed with a well-written business plan, you will gain the credibility to negotiate favorable contracts with landlords, suppliers, service providers, and customers. Knowing where your business is headed will help you cut the best deals possible.
18. Craft a mission statement.
Stating the purpose of your intended activity will assist you with drafting the other elements of your business plan. Having a concisely drafted mission statement will serve as a guide in the construction of your plan and help keep you on track as your business grows.
Your written business plan is a tool for you to use at startup and throughout the life of your business. The plan is dynamic, and you should review it frequently to ensure that it accurately reflects what you are doing. You should not change it too easily, but tweaking it along the way is an important part of your business’s evolution.
Overstating the value of having a good business plan is difficult. Of course, you’ll have to take affirmative steps to run the business, but your plan will help make your actions count toward the achievement of meaningful goals. The better the plan, the more efficiently and effectively you’ll progress toward running a successful business.