It takes a lot of drive and dedication to start a business, as well as successfully operating and growing it. A business plan is an indispensable tool to get you started and keep you on track. Write a business plan first, and then spend the money necessary to start your business. Following a good business plan is the ticket for turning your dream into reality.
Writing the Plan
We won’t concentrate on the details, but want to mention the important points you need to include in your business plan. First, make sure you do extensive research about markets, small business financing, projected costs and revenues. You will need this information in order to raise funding for your business. Use realistic assumptions and numbers — fooling yourself is a waste of everyone’s time, especially yours. Write the different plan sections using the details of your business — how you will organize and operate, cash flows, small business funding, marketing and selling, staffing, equipment, etc. Write clearly, in easy-to-understand terms. If necessary, have it professionally edited so that it has no grammatical errors — those can undermine your credibility.
Using the Plan
The primary use of the plan is to serve as guide to running your business. But also consider the additional ways a business plan can keep you focused:
- All Details Are Considered
As work out your plan, you will doubtlessly be confronted by issues that you have never considered before. The business plan forces you to go beyond general concepts and anticipate problems before they cost you money, time and distress. You can usually correct problems after they occur, but at greater cost and at the risk that the problem may overwhelm your ability to respond. The detailed contingency plans you build into your business plan may make the difference between survival and failure.
- Using the Plan for Funding
Lenders and investors want to see the cold, hard numbers before funding your venture. They will not provide small business funding without a written business plan that lays out all the numbers in a plausible way. Knowing this, you are forced to focus on the numbers to make sure they will support your presentations to lenders and investors. Nothing concentrates the mind like the challenge of making your numbers work, as your business’ future hinges on how well you meet your projections. If you are just launching your business, take care to include all startup costs, because you’ll be on the hook for omitted, unfunded costs.
- Manage According to Plan
Your business will include others, such as vendors, customers and perhaps contract workers, management staff and employees. The business plan is a tool to align all stakeholders to the same goals, policies and practices. The plan also helps you focus on the important issues and not waste time on secondary concerns. Let your plan serve as the structure that guides operations and decision-making.
As you can see, the time you spend on writing a business plan will pay dividends for years to come. Remember that the plan is just that — a plan, not a bible. This means you can adapt it to new information as it becomes available, while maintaining your overall mission. Think of the plan as a living entity that must evolve along with your business. Review your actual results every day and compare them to your business plan projections. You’ll quickly become aware of divergences, and this will allow you to take corrective action as early as possible. Make sure your share changes in the plan with your stakeholders, especially your lenders and investors.