Imagine deciding to throw the wedding of the century and not doing any planning leading up to the big day. You figure you’ll just wing it. How do you think the event will turn out? Unfortunately, too many entrepreneurs approach starting a new business with the same mindset. They do not begin with a business plan. More often than not, their results bear that out.
Successful entrepreneurs swear by the business plan. There is a reason for that. They are not just blowing smoke or trying to make themselves look good. All of them have the experience of building a business from scratch. Most of them have additional experience with failure. They know what it takes to succeed because they have done so.
Anyone planning to start a new business should settle right from the very first moment to come up with a business plan. Otherwise, there is no point in going any further. Dreams aren’t enough. Sometimes plans are not enough, either. But neglecting the business plan is almost a virtual guarantee of failure.
- Business Plan Basics
Note that there is no single way to write a business plan. There is no magic formula you can follow. Of course, there are lots of examples of good business plans online. Even the Small Business Administration can give an entrepreneur some pointers. But in the end, the entrepreneur decides for themself what the business plan will look like.
As a general rule, business plans tend to cover the following:
- The products or services to be sold
- The primary customer base
- A discussion of marketing strategies
- A projection of first year costs
- A plan for financing the business
- Goals and expectations for at least the first year.
It is important to understand that a business plan is not iron-clad. It’s actually pretty flexible. As changes warrant, a business plan can be modified.
- It Forces Entrepreneurs to Think
Among the business plan’s many benefits is its ability to force entrepreneurs to think. If there is one thing that dooms more businesses than anything else, it is a lack of thinking things through. Successful entrepreneurs do not move on a wing and a prayer. They think things through. They plan nearly everything.
Take the Umai anime clothing and apparel brand. One of the company’s founders creates all the original artwork found on their t-shirts, hoodies, phone cases, and stickers. But the artwork alone does not carry the business. It didn’t build the business on its own, either. Umai founders had to think things through. They had to come up with an effective business plan and execute it.
- Partners Want to See It
A business plan is equally necessary for bringing partners on board. What kind of partners? They could be anything. A partner could be a fellow entrepreneur willing to jump in and help do the work. It could be an investment firm offering seed money to get the new company off the ground.
At any rate, prospective partners want to see a business plan. They want to be assured that the entrepreneur behind the business is thinking rationally and logically. Without such assurances, it is exceedingly difficult for them to get on board. The same goes for banks and private lenders. Entrepreneurs will not get much funding without a solid business plan.
A business plan is non-negotiable for new companies. Entrepreneurs who choose to neglect the business plan are setting themselves up for a big fall. It will not be pretty when it happens. On the other hand, a solid business plan starts a new enterprise off on the right foot. That’s the way to go.