Set an Effective Plan for your Business to Succeed
Anyone who’s ever been in business before or has a thorough knowledge of how to run a business is likely to tell you that the first step before starting any business is to write out a business plan. The wise will know that this is sound advice and much to the benefit of the entrepreneur or business owner, but what if you don’t know what a business plan is or how to write one? That leaves a lot of inexperienced entrepreneurs using the old “trial and error process” in starting out their first business.
However, there is very little room for failure in small business and many of those trying to build there own business are mainly driven by the principle of increasing their income. You simply cannot afford to loose your investment, but you’re also left confused – and sometimes even petrified – by terms like executive summary and break even analysis.
What’s the point? Just get out that checkbook, hire a qualified staff, and start selling! How hard can it be, right? Unfortunately this attitude can lead to very risky financial decisions that almost always end in bankruptcy or large debt.
Business Plans Don’t Have to Be Difficult
There really isn’t all that much to a business plan once you break it down. The average business plan is made up of a few key components; for example, the executive summary, financial projections, a break even analysis, profit/loss forecasts, market analysis, and a startup analysis; and takes up anywhere from 20 to 40 pages on average.
You’re Not Having a Drink with a Friend: You’re in Business
The major player in failing to plan is the constant feeling of humbleness from your business domain. When you’re sitting around with a friend having a drink and discussing an idea it’s easy to put a plan into play without ever writing it down. With your business it’s simply not that easy. You need to keep your plan on paper.
This makes things more serious. When you take the time to really analyze what you do and become consistent in following-up on that analysis you are in business. So don’t think of your business plan as a one-time startup effort. Once it’s on paper it will not be put away on a shelf or in a drawer collecting dust. You need to reread, rewrite, and rethink your plan throughout the entirety of your business.
Ask yourself the following four questions before even starting your business plan:
1) Do I know what the purpose of my business is?
2) Can I lucidly describe how my business will work to a total stranger?
3) Who is likely to be doing the same kind of business I’m doing?
4) Who is likely to be interested in my business and what I sell?
If you can answer these four simple questions then you already have enough information to start writing your business plan. These questions are basically identifying who you are (as a business), what you do (or what you plan to do), where your market is, and what chance you stand (if any) of competing in this market. This lays out the standard foundation for you to be able to evaluate weather or not the way you plan on conducting your business is going to be a good investment and time-well-spent or your worst financial and psychological nightmare.
Notice here that I used the phrase “the way you plan on conducting your business” and not “the business you plan on conducting”. Any business is feasible given the right circumstances so our objective here is to determine a means to feasibility and not necessarily the feasibility itself (which is likely to be endorsed by a more detailed feasibility report).
Let the Plan Take Its Course
Your business plan is not at all complicated and shouldn’t be viewed as a tedious process or avoided in any way. If you find something in your plan isn’t working then perhaps it’s time for a change. After all that is what the business plan is there for. If you didn’t write your plan down and keep track of changes, how would you know what works and what doesn’t?
Take the time to put your plan down on paper. There are plenty of free resources online and offline to help you put together your business plan. You can ask your local bank for a standard business plan template or get one on the Internet in minutes.
You won’t have to fill out the entire plan right away. Certain parts may take longer than others and it’s not a sequential process. Start with what you know first. Leave the executive summary (or description of your business) for later when you’re clearer about your business identity. Leave things out, or incomplete, if you’re unsure and fill them in later, or go back and make changes, when you have more information. It may not be pretty at first, but it is there to keep you focused. It also provides those people most interested in your business (such as you, your partners, shareholders, or investors) with concise and up-dated information about your business and the direction in which it’s heading.